By Ezra Klein
The House Democrats are pushing to amend the estate tax deal in the compromise -- which may blow up the whole deal. That sort of risk might be worth it for a major amendment to the policy, but that's not really what the House is offering up here.
There are basically three versions of the estate tax on the table. If we do nothing, it'll exempt the first $1 million of estates and tax the value above that at 55 percent. That would affect 2 percent of estates and raise about $700 billion over the next 10 years. The version in the tax deal -- also known as the Lincoln-Kyl rates -- would exempt $5 million and tax the rest at 35 percent. That'd affect 0.25 percent of estates and raise closer to $300 billion.
And then there's what House Democrats are fighting for: A $3.5 million exemption and a 45 percent tax rate. Chris Van Hollen calls this "the common sense compromise," but it really isn't. It's the same level as the Bush tax cuts set in 2009. It would raise about $400 billion and affect 1 percent of estates. It's much closer, in other words, to the Republican vision than to what'll happen if we do nothing.
I could see the argument for getting the estate tax back down to its 2001 levels. The rich have gotten richer since then, and their taxes have gone lower. But I can't see the argument for blowing up the tax deal over the difference between George W. Bush's 2009 rates and the Lincoln-Kyl rates. Over the next two years, the difference between those bills is $10 billion. If House Democrats are willing to risk the whole deal to fix the estate tax, they should actually fix the estate tax. Simply affirming the Bush rates isn't worth it and is arguably worse than just taking a hardline on the necessity of the 2001 levels when the Lincoln-Kyl levels expire in 2012.
No comments:
Post a Comment