Editor's Note: Each week we cross-post an excerpt of Katrina vanden Heuvel's column at the WashingtonPost.com.
It’s been said that only death and taxes are certain. But the “death tax” is anything but certain now. There’s no estate tax this year—costing the Treasury billions–because Congress allowed it to expire.
With less than a fortnight before Congress’s August recess, United for a Fair Economy held a press conference call with a wonderfully eclectic mix of participants—including former Treasury Secretary Robert Rubin, AFL-CIO president Richard Trumka, heiress and filmmaker Abigail Disney and hedge fund pioneer Julian Robertson—urging reinstatement of “the most progressive tax in the code and the only national tax on wealth.”
They are facing some stiff opposition. Sen. Jim DeMint (R-S.C.) was on the Senate floor this week talking about heirs being forced to sell their property and how reinstatement of the estate tax would cost 1.5 million jobs as well as the collapse of many family farms and small businesses.
In fact, the American Farm Bureau was unable to find a single example of a farm having to be sold to pay the estate tax, as Lee Farris, UFE’s tax policy coordinator, pointed out. And the Senate and House bills supported by UFE—introduced by Sen. Bernie Sanders (I-Vt.) and Rep. Jim McDermott (D-Wash)—would be paid by only one-quarter of one percent of estates, or seven-tenths of one percent of estates, respectively.
The McDermott bill allows a $2 million exemption per spouse and has a 45 to 55 percent rate; the Sanders bill allows a $3.5 million exemption per spouse, the same 45 to 55 percent rate, and a 65 percent rate for amounts over $1 billion. In the dog days of summer, it now seems unlikely that this Congress can take action before the August recess. But it must take action this year, or else the estate tax reverts to a $1 million exemption per spouse and rates from 41 to 55 percent in 2011.
Another proposal in play is exactly the wrong way to head at a time of rising inequality in a nation starved for revenue. It’s offered by Sens. Jon Kyl (R-Ariz.) and Blanche Lincoln (D-Ark.), and would create a 35 percent rate and exemption of $5 million per person. Trumka said it would “substantially weaken the inheritance tax to benefit literally a handful of the wealthiest families in the country at the expense of increasing the deficit and weakening our government’s capacity to address the economic crisis.” He noted that it would benefit less than 1 percent of all estates but reduce federal revenues by $544 billion between 2012 and 2021.
Maybe Lincoln is trying to save the ranch? Guess again. Only 83 families in Arkansas owed estate taxes in 2008.
Read the rest of Katrina's column at the WashingtonPost.com.