The Senate is expected to vote on cloture on the estate tax repeal legislation tomorrow... taking a break from the hard work of repealing freedom of speech and discriminating against a substantial part of our citizeny to give tax breaks to the wealthy. Your government at work, kids--gaze at it in all its destructive awe and power. And then retch violently.
But I am here to report, there is hope... if you care to go to the flip...
Today's BNA Daily Tax Report (subscription only) quotes Grassley saying that they think they are short of the 60 they need for cloture on full repeal.
The question is then, which of the two substitutes is going to pass? There's one floated by Kyl which has a 15% flat rate and a $5.0 million exemption. Then there's a Baucus proposal that has a $3.5 million exemption and a graduated rate of 15%, 25% and 35%. Grassley is quoted thusly:
"On the Kyl compromise being approved, Grassley said, "It is my presumption it would, but have I seen the names on a sheet of paper? The answer is no. And I believe that we're in a political situation where no one wants to be the 60th person to sign on, but that there would be 60 votes if forced to it because here would be several people [for whom] it would be very difficult to explain why they couldn't make that extra vote."
The Center for American Progress, Podesta, et al, did send a letter to Senators in opposition, primarily citing deficit issues. BNA says that the Podesta letter states that
"the $3.5 million per-spouse exemption to take hold in 2009 will leave only three in every 1,000 estates owing any estate tax, and only those top estates will benefit from repeal or compromise proposals on the table. The letter notes that the Kyl plan would lose about 84 percent of the loss under full repeal and the Baucus proposal would lose about 75 percent over the 10 years following a one-year repeal--currently scheduled for 2010. "
Remember, under current law, the exemption would be $3.5 million each in 2009, with repeal coming in 2010 and a sunset back to a $1.0 million exemption in 2011.
From a deficit perspective, neither the Kyl nor the Baucus proposals is great--but I suppose both are better than the alternative of full repeal. Yours truly supports $5.0 million exemption and the Durbin rate structure, because the Durbin structure treats this just like we would the sheer luck of lottery payment--its found money by the heirs, taxed as ordinary income. Accident of birth should at least be treated no differently. I'd also like to see the $5.0 million indexed for inflation.
I'll try to keep posting as I hear more....