In order to make the tax cut not look too expensive, the Bush people wrote a tax cut law that expires in 2011. The biggest issue in the tax law expiring is the repeal of Estate tax expiring. Because, if grandma is a billionaire and dies in 2010 then there is no estate tax at all, and if she hangs on until 2011 then full force of the estate tax comes back in to effect...which is silly of course.
When the Bush people wrote it, they fully expected the tax cut to be made permanent sometime between now and 2010. They were just fibbing to pretend that the cost was less, because they might not get their tax cut passed if they told people how expensive it was going to be.
Now the other shoe has dropped. The Bush people are trying to trade on a war-time president's popularity to get the tax law made permanent.
I am very much against a full repeal of the Estate Tax.
It is possible to set the initial exemption at whatever level you/we/they want... 1 million, 5 million, 50 million. (It had been $650,000. I believe it went up to 1 million this year, and is slated to increase each successive year and be eliminated in 2010.) The exemption probably did need to be increased. It is possible to set the tax such that it never really effects the small business owners or farms. In fact of the $50 Billion that used to be collected, at the old $650,000 exemption level, only 2% came from those sources.
Additionally, you will hear pundits tell you that taxes have been paid on the wealth already, they are deliberately misleading you in a self-serving way. The initial exemption of the estate tax is a capital gains tax break you can drive a $1 million dollar truck though. If your Grandma was smart enough to buy some Ford stock in 1932, she can leave it to you in her will no one will ever pay taxes on the gain... ever.
Nifty, if you can pull it off. (The most important thing you can do of course is chose your parents well.)
There are two main reasons I'm against repealing the estate tax.
First, as a young worker I amof the group of people who will be taxed into oblivion when the Social Security system goes belly up in 15-20 years. We got a reprieve because Clinton was willing to bite the bullet and balance the budget, but the Republicans took care of that nasty little surplus.
Second, I believe in democracy, equality, and most distinctly in not having an aristocracy. An Estate tax encourages people with an obscene amount of money to set up foundations (like the Gates), libraries (Carnegie), endow charities and Universities, or otherwise give it away. A capitalist society tends to create wealth in a very disparate way. If that huge accumulation of wealth gets handed down generation after generation you pretty rapidly acquire an aristocracy. And that means that a lot of productive capacity is in the hands of a few people, who generally consider it beneath them to work. An estate tax encourages a sense of noblesse oblige.
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