Tax the heirs of the rich (at least of few of them)
Efforts to keep the estate tax would help trim looming US deficits.
The famous American philanthropist Andrew Carnegie believed inherited wealth spoiled the heirs. "I should as soon leave to my son a curse as the almighty dollar," he said more than a century ago.
Most of the rich apparently have a different view today. They do not want Uncle Sam to take a sizable chunk of their wealth after they pass on.
Before the end of this year Congress must decide what to do with the estate tax, known by its critics as the "death tax." The Bush tax cuts of 2001 shrank the estate tax year-by-year, until it was to fully disappear in 2010, only to be resurrected at the higher 2000-year rate in 2011. This freaky plan was an end run around a Senate rule that tax cuts must be paid for in future revenues.
All sorts of scenarios are being imagined, such as people putting sick relatives on life-support machines late this year, or next year somehow hastening the departure of their rich beloved.
In his budget for fiscal 2010, President Obama assumes that the estate tax will be frozen at the 2009 level. Only estates worth more than $3.5 million would be taxed at the rate of 45 percent and only on sums above $3.5 million. Widows and widowers would continue to be exempt from paying the tax on the estates of their spouses.
Under that regime, an estimated 15,400 executors would need to file returns, according to a study by Mr. Burman and two other experts for the Tax Policy Center. And heirs of only 6,200 multimillionaires would have to pay any estate tax at all. Because of the basic exemption, charitable giving, and other exemptions, the effective average tax rate on an estate would be much lower than the marginal 45 percent. Only about 550 small-business owners or farmers faced the estate-tax burden last year.