The Estate Tax, Back on the Agenda
Still giddy over the passage last month of a $70 billion income tax cut for affluent Americans, Senate Republicans are hoping this week to go further, and gut the federal estate tax. And they'll probably try to accomplish this gift to the super-rich under the guise of compromise.
Their fondest wish would be to permanently repeal the tax. But planning, during a time of war, to give away nearly $1 trillion over 10 years may look too radical even for this crowd. So the senators are also considering a so-called middle-of-the-road approach. Sponsored by Jon Kyl, Republican of Arizona, the "compromise" would drastically raise the thresholds at which the estate tax kicks in, while slashing the estate tax rate. Together, those changes would cut taxes for the wealthiest families by $652 billion between 2012 and 2021, the first full decade of the proposed cut. Because the government would need to borrow to make up for that lost revenue, the tax cut would also cost all taxpayers some $175 billion in higher interest payments.
And for what? Fully 71 percent of the additional benefits would go to people who stand to inherit more than $10 million. Almost all of the rest would apply to estates worth more than $5 million.
There is no economic justification for doing this, any more than any tax cut can be justified when the economy is growing and the government is running a big deficit, as is now the case. The notion that small businesses and family farms are unfairly targeted by the estate tax is nonsense.
There is no moral justification for cutting estate taxes. Much of the wealth taxed after death has never been taxed because profits on stocks, bonds, real estate, artwork — you name it — are not taxed until an asset is sold. Obviously, people with big estates never got around to selling their assets.
And yet, some multimillionaires, and their Congressional supporters, have the gall to say that the wealthy should not be "penalized." Estate taxes imposed after one's death are no more of a penalty than income taxes withheld from paychecks.
Any senator who votes for this bill — or to end an expected filibuster — does not care about the budget deficit or tax fairness, no matter what he or she may say to the contrary.