Senator Norm Coleman today expressed his disappointment with the U.S. SenateÂs failure to move forward with legislation to repeal the death tax. Coleman voted in favor of a measure to proceed to debate which failed by a vote of 57-41. The House voted in April 2005 to repeal the death tax by a vote of 272-162, the largest margin ever on repeal legislation. Under current law, the death tax will be phased out by 2010. However, due to arcane Senate budget rules the death tax will return with a top rate of 55% in 2011.
Coleman is lying. It's not arcane Senate budget rules that are bringing back the estate tax -- it's a conscious decision by Republicans in the House and Senate. Repealing the estate tax will cost the federalgovernmentt about a trillion dollars through 2021. Republicans knew they would have a hard time getting re-elected after giving a trillion dollar tax cut to the wealthiest Americans during ... well, take your pick: a time of war, a time of deep budget deficits, a time of recovery from natural disasters. So they passed a bill that effectively increased the estate tax exemption. Then, to make the cost appear lower, they chose to end the increased exemption in 2011. Senate rules didn't require any of this: it was a wise political choice (provided your more concerned with getting re-elected than governing the country).
Coleman goes on to lament the grievous imposition the estate tax places on small business owners:
"We had an opportunity to do away with, once and for all, this economically damaging and unfair tax, but regrettably, the Senate was unable to take action supported by over two-thirds of the American people," said Coleman. "This is a tax that harms our economy by penalizing the success of hardworking Americans -- most especially those who serve as the main engine of our economy -- small business owners."
I'm old school. I think it's possible to work really hard every day of yourAmericann life and not wind up with a $3.5 million dollar estate. Turns out, that's the experience shared by hundreds of millions of Americans. According to the CBO:
The number of taxable farm estates drops to 65 nationwide at a $3.5 million exemption level, the level that takes effect in 2009. The number of taxable family-owned business estates falls to just 94 under the $3.5 million exemption.
Now, to be clear, not all small businesses are family-owned. So who knows how many businesses estates could be affected. Maybe as many as 100.
Democrats would go along with a sensible estate tax exemption. $3.5 million; $5 million; maybe $10 million. Republicans don't want compromise on this issue, because Republicans like Norm Coleman are far more concerned with making sure Paris Hilton gets her daddy's Monopoly (TM) money tax-free than reaching a compromise to protect the very few farms and businesses who are subject to the estate tax.
There is no greater test of hackitude than the estate tax. Any shills willing to pimp this profoundly bad idea demonstrate their willingness to plunge the country further into a sea of debt so that the children of the super-rich can buy nicer private islands and fancier personal jets.
For further backing on this, check out David Sirota's article on the estate tax in Montana.
By 10:23 AM, at
Here's the between-the-lines translation of every article I've ever read on the importance of keeping the estate tax:
"I HATE RICH PEOPLE!"
Taxing money as salary, corporate profits, dividends, and as capital gains can't possibly be enough...let's take a big chunk when they die, too!
If the tax affects so few people, how can it be so vital? It doesn't matter who it hits, it's WRONG.
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Actually, the current estate tax system is tilted very much in favor of 99% of Americans. The current system says this: if I buy a share of TechCo today for $10 a share, and it grows to $100 a share, when I die my heirs get a stepped-up basis. When they sell the shares, their capital gains are based on the price of the shares at the time I die.
That's because everyone is subject to the estate tax. There's not, in fact, a $2 million exemption. Instead, there's a credit equivalent to a $2 million exemption. The estate tax is based on the value of the property at the time of death, which mandates a step up in basis for the recipients.
So long as the estate is worth less than $2 million, the heirs get a huge tax advantage at no cost to them.
What happens if you elimiate the estate tax, then? Either you take this tax break away from the heirs to small estates or you give everyone the same step-up in basis. Sounds like you're really saying "I HATE 99% OF AMERICA".
Whenever you have more than one form of taxation, there will be "double taxation". I pay taxes on my wages -- so why do I have to pay sales taxes on my purchases? That's double taxation! The sales tax is morally objectionable!
Still waiting for a justification for the government confiscating a large portion of anyone's estate when they die. Why is this good policy?
Confiscating capital wipes out potential for investment, job growth and lots of other good stuff. Less capital lost to cap gains taxes, as would result from the stepped-up basis, is a pro-growth strategy. Isn't economic growth something we want to foster?
If it's good for 99% of Americans, why must we punish the other 1%? Maybe it's severely progressive taxation I find immoral. And stupid, in that punishing investment, risk-taking and achievement will get us less of it.
We have the estate tax the same reason we have every other tax -- to raise revenue to provide for the general welfare. Republicans haven't provided a justification yet for the $400 billion in annual deficits they've been running. Now I need to provide a justification for not adding another trillion dollars to the nation's debt?
Or, CL, are you just saying we need to eliminate the estate tax so that we can raise the income tax? Why do you want to punish people for working? Why do you hate everyone who's not fabulously wealthy?