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Friday, December 04, 2009


How rich are the rich, and how beholden is the Congress?

Very. The House voted today to make the current estate tax rate permanent, setting it at 45 percent for individual estates worth more than $3.5 million. If that sounds like a progressive thing, think again. First of all, all the Republicans and some of the Democrats would like to abolish the tax altogether. And if this bill didn't pass (or doesn't; it still hasn't passed the Senate, but I get the impression it will), here are the consequences: If Congress does not act, the estate tax will disappear in 2010, then return in 2011 under the higher rates -- 55 percent and a $1 million exemption -- that existed before President George W. Bush took office.

And the difference between 45% above estates of $3.5 million and 55% of estates above $1 million? An estimated $234 billion in revenue over the next 10 years. That's the gift which the Congress is giving to the rich, a gift which could pay for healthcare, or to eliminate the budget deficits of all the states, or any number of things which would benefit tens of millions of people, rather than the tiny number of people who are actually affected by this tax.

And remember that "60-vote requirement" in the Senate which is seriously distorting the debate on healthcare and so many other issues? Well, by that same requirement, just 40 Democrats in the Senate could defeat this bill, thereby allowing the older, higher tax to come back into effect and generate $234 billion in revenue. Will that happen? I wouldn't bet on it.

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