While the current meltdown begins in earnest in DC, the number of important issues for Congress piles up a mile high. One such issue that lurks beneath the surface is the dreaded death tax.
A real failure of President Bush and the GOP-controlled Congress was their press release attempts at repealing the death tax. Given the absurd static 5 and 10-year windows for scoring tax changes by the Joint Committee on Taxation and the Congressional Budget Office (CBO), it is understandable up to a point. However, the repeal efforts barely lowered the outrageous rate all decade until a complete repeal this year followed by a restoration of the old rules (55% rate and exemption up to $1 million) in 2011. Short of an outright repeal back in 2001, it probably made more sense to increase the exemption up to $5 million and to slash the rate to 25% from day one permanently rather than to waive a piece of paper that screamed, “we repealed the estate tax.”
Fast forward to the summer of 2010 with Speaker Pelosi, Senate Leader Reid and President Obama and we see yet again how the GOP for all its failures on spending and tax policy would act a good deal differently were it in charge of tax policy. Rather than work out some sort of compromise similar to the $5 million exemption and 25% rate referenced above, the energy in the Democrat Congressional majorities is to raise and expand the death tax even higher than it was before 2001. CongressDaily, reported late last week that Senator Sanders (I-VT), Senator Whitehouse (D-RI) and Senator Harkin (D-IA) filed what they call the “Responsible Estate Tax Act.”
Now if you think the definition of responsible might differ for average Joe Americans versus big government DC insiders, you would be correct. This legislation includes a “billionaire’s surtax” that kicks in at $500 million per spouse on top of the 55% rate along with an tiered rate schedule that falls to 45% for those who die with $3.5 to $10 million in assets (identical to the 2009 rate).
“It’s time for multimillionaires to pay their fair share,” say the Senators, as if current confiscatory income tax rates over 50% in most major states leading up to death are not enough nor that the richest 1% of income earners already pay about one-third of the federal tax burden. It is outrageous that wealthy Texas billionaires are dying leaving these resources to their families rather than the federal government. Just when you start to wonder what planet these Senators are on come this gem from Senator Whitehouse on the Senate floor detailing the legislation and the debate over extending unemployment benefits:
“We have an entire party that is dedicated to preventing working people who have lost their jobs through no fault of their own as a result of the economic meltdown, from getting unemployment insurance. But they are completely satisfied with an oil tycoon worth $9 billion having his estate go tax free to his heirs.”
Wow, where do we start here? Comparing adding $35 billion to the national debt to extend unemployment compensation (which has already been extended 99 weeks or two years?!) as akin to not confiscating the wealth of a man who dies after being in the top marginal tax bracket his entire life is an interesting stretch for the ideological left. There are hundreds of millions of unobligated TARP balances alone that could be used to “pay for” the unemployment compensation but Democrats in Congress have no desire to be fiscally responsible after the past 18 months of profligacy.
There was a well-known book 15 years ago entitled Men are from Mars, Women are from Venus. We know Republicans are from this earth, but I am not sure what planet Democrats are from these days.