A few weeks ago, Sen. Blanche Lincoln (D-AR), who is playing an instrumental role in the financial regulatory reform debate currently going on in the Senate, sought to reassure everyone that one of her other priorities — cutting the estate tax to reduce the tax bill for the heirs of multimillionaires — was still garnering her attention.
And according to Congressional Quarterly, Lincoln and her counterpart on the estate tax, Sen. Jon Kyl (R-AZ), have been hard at work trying to find ways to offset the cost of their huge tax cut for the wealthy, in order to comply with pay-go rules:
Key Senate negotiators are making significant progress toward resolving the tangled legislative mess known as the estate tax. Notably, Finance Committee members Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., are finding revenue-raising offsets within the estate tax code to cover the costs of the more generous rate and exemption they want…If they can use estate tax offsets to bridge the estimated $60 billion to $80 billion gap between their proposal and the House-passed bill (HR 4154), Kyl and Lincoln could shield themselves from some class-based arguments about tax fairness.
Kyl announced yesterday that the full proposal is “near completion.”
This strikes me as absolutely crazy. We’re going to find $60-$80 billion in offsets and then spend it to partially cover the cost of a tax cut for the 0.2 percent of households that have to pay any estate tax at all? With unsustainable deficits in the coming years and a series of job creation bills languishing in the Senate (after being passed by the House of Representatives), cutting the estate tax is what Lincoln and Kyl are proposing we spend money on?
Sadly, the Lincoln-Kyl estate tax proposal — which cuts the rate from 45 percent to 35 percent and raises the exemption from $3.5 million to $5 million, compared to 2009 levels — seems to be gaining some steam. Just this week, Senate Budget Committee Chairman Kent Conrad (D-ND) suggested that the Senate make a “grand bargain” by passing a variety of tax measures, including the Lincoln-Kyl estate tax cut, in one huge bill.
It’s quite shocking that there is such a dearth of voices saying that cutting the estate tax now is simply nuts. Last year, taxes in the U.S. were the lowest they’ve been since 1950, while the labor market is still incredibly fragile. Yet, we would waste billions in offsets to cut taxes for those who need it the least, the Paris Hilton’s of the world.
We need to be looking at ways to responsibly raise revenues and find cuts in spending that won’t harm already vulnerable residents, not cut taxes for those at the very top of the income scale. Lt. Gov. Bill Halter (D-AR), who is running in a primary against Lincoln, made this point yesterday. “Folks, we don’t need more tax breaks for people with $10 million in wealth, especially at the expense of debt or deficits on the backs of your children and grandchildren,” he said.