Estate Tax Repeal Is So Not Hot

The federal deficit exceeds $400 billion, critical government programs are on the chopping block and tens of thousands of U.S. troops are fighting abroad without adequate equipment. What's on the agenda of the House of Representatives? More tax cuts for the ultra-wealthy. The right-wing leadership in the House has scheduled a vote on the permanent repeal of the estate tax, which was paid last year by just 30,627 of the wealthiest Americans. (That's less than 1 percent of everyone who died.) Under current law, the first $1.5 million of all estates are tax free. Tell Congress to get its priorities straight and vote against the estate tax repeal.

FISCAL SUICIDE: No one who is serious about fiscal responsibility can vote to repeal the estate tax. Although very few Americans pay the estate tax, repealing it would do serious damage to the federal deficit. The estate tax repeal would cost more than $1 trillion over the first ten years after the full repeal goes into effect. You can find out how much you would pay in estate taxes with this handy calculator. Unless you are reading this from your Lear Jet, however, it's probably zero.

UNCHARITABLE IMPACT: Permanently repealing the estate tax would be a disaster for the nation's charities. The non-partisan Congressional Budget Office has "found that the estate tax encourages wealthy individuals to donate considerably more to charity, since estate tax liability is reduced through donations made both during life and at death." If there were no estate tax in 2000, for example, "charitable donations would have been between $13 billion to $25 billion lower than they actually were."

MEND IT, DON'T END IT: There is bipartisan support to amend the estate tax to make sure it impacts even fewer people. The proposal on the House floor today would permanently repeal the estate tax beginning in 2011. If instead the tax exemption was raised to $3.5 million, only 8,500 estates would face the tax in 2011, just 0.3 percent of all people expected to die that year. Meanwhile, the revenue from a reformed estate tax could fill in between one-quarter and one-half of the expected Social Security shortfall over the next 75 years. E.J. Dionne asks: "Why should Congress be more concerned about protecting Paris Hilton's inheritance than grandma's Social Security check?" American Progress has its own plan to reform the estate tax.

THE RURAL RUSE: President Bush claims that the estate tax is "bad for rural America." That's not true. The fact is just 440 estates with any significant farm or small business assets paid any estate tax last year. That amounts to "1 out of every 665,989 people in the U.S.," hardly a group you could define as "rural America.[more]

• More from the Center for American Progress [here]