Would you trust Senators Max Baucus and Blanche Lincoln to design the next estate tax, our country's only levy on inherited wealth?
Unless progressives stand up, Baucus and Lincoln will team with the GOP's anti-tax point person, Senator John Kyl, to push through a bad estate tax reform. The Kyl-Lincoln reform proposal would gut the law and give additional tax breaks to multi-millionaires and billionaires.
Fortunately, Senate progressives have just introduced an estate tax reform with some spine. The Responsible Estate Tax Act proposes graduated rates on larger estates, closes loopholes, exempts farms and small businesses, and encourages conservation easements. It imposes a "billionaire surcharge" rate of 65 percent on estates over $500,000.
Led by Senators Sherrod Brown (D-OH), Tom Harkin (D-IA) Bernard Sanders (I-VT), and Sheldon Whitehouse (D-RI), this progressive estate tax would raise at least $264 billon over ten years. "At a time when we have a record-breaking $13 trillion national debt and a growing gap between the very rich and everyone else, people who inherit multi-million and billion dollar estates must not be allowed to avoid paying their fair share in estate taxes," said Senator Sanders in a prepared statement.
The politics within the Democrats on the estate tax are bizarre. In 2009, thanks to Senate inaction, the federal estate tax expired on January 1, 2010. In March, a Texas oilman became the first billionaire in U.S. history to die without any estate tax in place, costing the treasury billions.
The good news is that on January 1, 2011, the estate tax returns at its year 2000 level -- with a wealth exemption of $1 million and 55 percent rate. This is what will happen if the Senate takes no action, which seems to be the norm.
Now to us common folks, it seems like a tremendous bargain position for Senate Democrats. If nothing happens, we get a strong estate tax law. So how is the Senate Democratic leadership using this huge leverage?
You guessed it. They're like poker players with three aces in their hand and are ready to fold. Instead of using their leverage to press for something like the Responsible Estate Tax Act, they're allowing Lincoln and Baucus to dominate the stage.
Fair tax advocates are mobilizing to build support for the Responsible Estate Tax Act. Wealth for the Common Good, a network of business leaders and wealthy investors, is backing the legislation and has compiled fact sheets and other resources.
If Democrats are going to address the political impasse created by "deficit politics," they have to step up and support progressive revenue proposals like the Responsible Estate Tax Act.