Thursday, December 03, 2009

Give the rich 2010:

The Washington Post argues, unpersuasively: (emp add)
Extend the estate tax

Congress should vote to make the 2009 levels permanent.

... the estate tax, having gradually dwindled, is set to be eliminated entirely next year -- only to spring back to life, full-force, in 2011.

The least bad, hold-your-nose alternative would be to set the tax permanently at its 2009 level, exempting the first $3.5 million of any individual estate -- $7 million for a married couple -- from taxation. At this level, 99.8 percent of estates are not subject to the tax. (...)

Making the 2009 level permanent would drain nearly $400 billion from the federal treasury from 2012 to 2021 compared with letting the estate tax revert to the rules in effect in 2001, when the tax was set at 55 percent with a $1 million exemption per person.

... the ordinary legislative inclination -- do nothing and let the tax expire in 2011 -- is also unsustainable. People are entitled to some stability for purposes of estate planning. Once the estate tax has lapsed, reinstituting it at any level will be portrayed as a tax increase, and good luck with that in an election year. In an era of increasing income inequality, at a moment of trillion-dollar deficits, it seems hardly too much to ask of the wealthiest that -- after transferring $7 million to the heirs -- they pay some tax on the rest.
What the Post does not tell you is what the 2009 rate is. It's 45%. "Doing 2009" is not simply a matter of 2001 with a higher exemption, but the Post is willing to let you think that's the case. Why is the Post not informing their readers?

Also, the "instability" that the Post is fretting about is hardly one that will bother estate planning. 2010 is a pure gimmie for the ultra-rich. Let them have it, and then take the schedule back to 2001 levels.

And the already-in-the-law reinstitution is, if anything, a Bush tax increase. The Post is of the mindset that even in these days of massive deficits, a tax increase for the wealthy is something that cannot be implemented, even if it's on autopilot. The Post would rather cut Social Security benefits or Medicare or something like that.

UPDATE: A bill along the lines of what the Post advocates, passed in the House 225 - 200.

 Democratic22526 6
 Republican 174 3


The Post would rather cut Social Security benefits or Medicare or something like that.

Under Hiatt's watch, the Post editorial page has been fixated on cutting both of those programs--and more. Hiatt is a true believer in the idea that the rich deserve to live tax free, or as close to it as they can get. The poor and middle class MUST shoulder the burden of financing the government. And the poor and middle class do not deserve anything that mitigates against poverty.

So the only real surprise here is that the Post did not come out in full-throated support for the complete elimination of the estate tax. That, frankly, is what I would have expected.

By Anonymous Anonymous, at 12/03/2009 4:10 PM  

Unless there is a way to bequeath estates without actually dying, I think it will be worth it to see if there is an uptick in the top 0.2% of inheritances in 2010.

By Anonymous Anonymous, at 12/04/2009 6:29 AM  

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