Senate Votes Down Permanent End to the Estate Tax
This evening, the Senate voted on a proposal by Sen. Jim DeMint (R-S.C.), one of the most conservative members of Congress, to permanently end the estate tax via an amendment to the small business bill. The amendment failed, 39 to 59.
Partisan wrangling last year resulted in the estate tax dropping to zero in 2010, costing the government billions in revenue. Democrats hope to reinstate the tax for next year, exempting the first $3.5 million of a person or family’s estate and taxing the rest at up to 45 percent. That makes it the country’s most progressive tax, applying to less than one percent of estates.
An alternative proposal, by Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.), calls for an exemption of $5 million and a top rate of 35 percent. If the Senate does not act, the tax bounces back to 2001 levels, with an exemption of $1 million and a top rate of 55 percent.
Republicans argue the tax is onerous on small businesses and farms, as well as unfair. (Democrats argue even the Internal Revenue Service says it cannot find instances of families selling off farms just to pay the tax.) And DeMint said permanently repealing the tax would have created 1.5 million jobs.
“The death tax kills jobs, hurts small businesses, destroys family farms and President Obama’s plan to hike it from zero percent to 55 percent next year is unconscionable,” he said in a statement. “The death tax is an unfair, immoral double tax on property and assets that folks have already paid taxes on throughout their lives. … The Obama death tax is just the latest example of this administration’s assault on small businesses.”
But today, some very, very wealthy folks publicly lobbied *for *the estate tax — essentially saying, “Take my money, please.” They argue that the tax encourages charitable giving and planning among wealthy families — and is good for the country. Warren Buffett and Bill Gates have previously called for a high estate tax, and on fellow billionaires to give wealth away. And today, so did Bob Rubin, the former Treasury Secretary, a Disney heiress and a number of others.
One hedge fund manager argued, “You get out of a credit crisis by getting your house in order, and in America’s case bringing your deficit down. This implies tax increases,” best passed to “the least deserving recipients of wealth, which are the inheritors.”