President Obama this week announced a tentative deal with congressional Republicans to extend the Bush-era tax cuts for all Americans for two years in exchange for a 13-month extension in unemployment benefits. While the deal included other popular tax credits and incentives, one provison in particular has drawn fire from progressives and Democrats in Congress: reinstating the currently-expired estate tax. In what the Washington Post’s Ezra Klein called an “ugly surprise” in the deal, Obama and the GOP agreed to exempt inheritances up to $5 million and to set the tax rate at 35 percent instead of an exemption at $3.5 million and the tax rate at 45 percent, which the House passed last year.
Democrats have been publicly expressing their displeasure with this giveaway to the rich. And today on MSNBC, Rep. Chris Van Hollen (D-MD) called the estate tax measure “egregious” and said he may not vote for the deal with it in place:
VAN HOLLEN: This was not the best deal especially as it relates to the very egregious provision to provide a huge bonanza on the estate tax. … It has no beneficial economic result. … That provision would create huge concerns and possibly be a deal breaker. [...] This provision makes it very, very difficult for me to support it in its current form.
Also today, Fox News host Megyn Kelly defended the estate tax deal in an interview with Rep. Anthony Weiner (D-NY) — who has also been critical of it — saying that these Americans shouldn’t be taxed twice. Weiner pointed out the obvious flaw in that line of thinking:
KELLY: I don’t have a five million dollar estate, I’d like to someday, but if I work all my life and I pay my taxes on my income and then I die and I want to pass on what it would be great if it were a $5 million estate to my kids, why should I pay the government again? Why should there be a 35 or 45 or 55 percent tax on that again?
WEINER: You aren’t paying anything in that case because you’ll be dead. … Do you know how much this adds to our debt? It adds an enormous amount. No one can be in favor of that and then come on your show and say, “Oh I’m so concerned about the debt!”
The Wonk Room’s Pat Garofalo notes that, if the tax cut compromise goes through, the estate tax rate will rest at its second lowest level since 1931 (outside of the zero percent rate this year).