The U.S. Senate is tantalizingly close to getting rid of the nation's death tax - surely the most cockamamie part of the most cockamamie tax code in the world. The issue could be settled by the Senate this week.
Permanent repeal of this most onerous and unfair tax - a.k.a. the estate tax - already has passed the House, and it would surely also pass the Senate if all it took was a simple majority vote.
The problem is a supermajority will be needed first to break an expected Democratic filibuster, and GOP head-counters said earlier this week they're still three or four votes shy of getting there. It would be unconscionable if they don't.
There should be a special place reserved in the Hall of Shame for senators - and there apparently are several of them - who say they would vote to repeal the death tax, but they will not vote to shut off a filibuster. That is a sickening example of cowardly politicians trying to have it both ways. Such hypocrisy is what turns people off of politics and breeds contempt for the government.
A review of the death tax's recent history explains why it's in such absurd shape. President Bush's 2001 tax cut law began a near-decade-long phase-out of the death tax, until it dies altogether in 2010. But without extension or complete repeal, it doesn't stay dead; instead, it springs back to life in 2011 at its original pre-2001 confiscatory rate of 60 percent!
Is that not insane tax policy, or what?
If you die in 2010, your heirs pay no inheritance taxes. If you die a year later, 60 percent of their inheritance is eaten up by the government. This alone is reason enough to kill the estate tax and keep it dead, but there are many other reasons as well, including:
- Double taxation. Taxes have already been paid on wealth accumulated at time of death. Not even socialist countries tax the same money twice. They realize it discourages business incentives and long-term investments.
- Terrible unfairness. What is more cruel to a family grieving the loss of a loved one than to see a lifetime of hard work and thrift snatched up by the government? Persons work to amass fortunes for their heirs, not the government.
- The death tax is ineffective. A host of studies show that it often costs the government more money to collect the tax than it does to simply leave it in the hands of heirs. This indicates that those who oppose repeal are more concerned about punishing wealth than they are in boosting government revenues.
- Job losses. Small and medium-sized businesses are the nation's most prolific source of jobs, and forcing heirs to sell those businesses to corporate giants to pay the estate tax usually results in less innovation and expansion, and more consolidation and job cutbacks.
There is some talk of compromise, such as leaving the death tax rate at 15 percent or applying it to only super-wealthy families in the $10 million range - but this still doesn't change the fundamental unfairness or inefficiency of the tax.
Permanent repeal is the only fair, compassionate and sensible action for the Senate to take.