Earlier this month, Sen. Jon Kyl (R-AZ) warned that Democrats would be in for a “rude shock” when they tried to extend the estate tax, which due to a Bush budget gimmick is scheduled to disappear in 2010. The House has already passed a permanent extension at the 2009 level, which is 45 percent with a $3.5 million exemption ($7 million for a couple), and the Senate, led by Sen. Max Baucus (D-MT), tried yesterday to put in place a temporary extension at the same level.
But Senate Minority Leader Mitch McConnell (R-KY) and Sen. Jon Kyl (R-AZ), in their zeal to cut taxes for the very wealthiest Americans, blocked the extension, and pushed for repealing the estate tax entirely. Watch it:
So at the same time that they’re decrying the deficits and debt (that they largely caused) and demanding the creation of an inevitably ineffectual budget commission, Republicans saw fit to push for a tax cut for the very wealthiest Americans. And make no mistake: despite all of the GOP’s references to “small businesses” and “family farms,” trying to cut the estate tax is flacking for the heirs of the very largest estates in the country, the Paris Hiltons of the world.
99.8 percent of estates in the U.S. are exempt from the estate tax at 2009 levels, and as Chuck Marr of the Center on Budget and Policy Priorities pointed out, “many more farm and business estates of people who die in 2010 will face tax increases than tax cuts if Congress allows the estate tax to expire.” “Under current law, many of these people pay no estate tax, and their capital gains taxes on that appreciated value are forgiven at death. But if the tax expires, their heirs could face capital gains taxes on the increase in the value of assets they may have acquired years or even decades ago,” Marr wrote.
Kyl actually said that the problem with the estate tax “doesn’t have to exist if [Democrats] will just leave the existing law alone.” Well, under the existing law, the estate tax is scheduled to return in 2011 at a 55 percent rate, with a $1 million exemption. So is Kyl endorsing that? Were it coming down the pike, I suspect Kyl would be right back on the floor, railing against leaving the existing law alone and pushing for more tax cuts for the mega-rich.