Conservative Lawmakers Want To Spend Billions To Give 0.1 Percent Of The Richest Estates A Tax Break
"Conservative Lawmakers Want To Spend Billions To Give 0.1 Percent Of The Richest Estates A Tax Break"
Instead of allowing that reset to occur, the Obama administration has proposed setting the estate tax permanently at 45 percent with a $3.5 million exemption. But conservatives in both the Senate and the House — led by Sens. Jon Kyl (R-AZ) and Blanche Lincoln (D-AR) — want to see a 35 percent rate and a $5 million exemption.
The Kyl-Lincoln plan to cut the estate tax would cost about $91 billion over ten years. Today, Bloomberg pointed to a Congressional Research Service report, which found that those billions would be spent to save just 0.1 percent of estates from a possible tax increase:
The Congressional Research Service says using [President Obama’s] parameters in 2011 would subject 0.25 percent of U.S. estates to any tax in 2011 and generate $18.1 billion in revenue. By contrast, a 55 percent top rate, with a $1 million exclusion, would affect 1.76 percent of estates and generate $34.4 billion in revenue, the CRS said. That’s enough to fund the departments of Labor and State. The Kyl-Lincoln approach would subject just 0.14 percent of estates to any tax and generate $11.2 billion, according to the CRS.
At the 2008 level, which is slightly higher than Obama’s proposal, just 0.6 percent of deaths resulted in any estate tax liability at all. Under Obama’s plan, just 0.25 percent of estates in the country would conceivably have to pay the estate tax, but Lincoln and Kyl want to spend billions to lop another 0.11 percent off of that.
And how rich are these estates Lincoln and Kyl are working so hard to defend? Well, at the 2009 level, 62.5 percent of estate tax revenue comes from estates worth more than $20 million and another 35 percent comes from estates worth between $5 million and $20 million.
With Congress refusing to fund unemployment benefits and middle-class government workers being asked to swallow a pay freeze, spending billion of dollars on a tax break for the richest quarter percent of households in the country would be completely unconscionable. But such a move is actually on the table for the current lame-duck session.