One of the conservative goals former President George W. Bush was unable to get through the Senate was “making the tax cuts permanent.” He only got them passed — using Senate budget reconciliation rules — by employing a budget gimmick to mask the 10-year cost.
Simply make all the tax cuts expire in 2011, producing tons of revenue at the very end of the time period the Congressional Budget Office was using to estimate total costs.
Bush, those conservative congresspeople and their corporate patrons never intended to stick with that plan. They always assumed Congress would face intense pressure to keep all the tax cuts, no matter what the economic and fiscal picture.
Now, Bush is long gone, and the big business lobbies are quite worried about what may happen next.
Not that the middle-class tax cuts would expire. President Obama appears committed to keeping those.
But those massive tax breaks to the superwealthy don’t quite have the same juice they used to.
Especially, the estate tax — levied on the inheritances of the wealthiest heirs in America.
This year, because of the Bush tax plan from his first term to gradually phase out the estate tax altogether, the estate tax is literally wiped off the books.
But in 2011, it returns! Inheritance income above the $2 million threshold would be subject to a 55% tax.
And after fanning the flames of deficit hysteria to squelch progressive reforms, corporate lobbyists are terrified that the estate tax would actually help reduce the deficit.
The clock is ticking on estate-tax changes because, as 2011 nears, so does the prospect that congressional inaction would start to bring in billions of dollars to help reduce trillion- dollar deficits.
“That’s the real fear,” said Rosemary Becchi, who lobbies on tax issues for Washington-based Patton Boggs LLP, the top lobbying firm by revenue. “Then it becomes extremely difficult to change it.”
The nonpartisan Tax Policy Center in Washington estimated that a revived estate tax at pre-2001 levels would collect more than $34 billion next year and about $410 billion through 2019.
The wealthiest heirs having to pay their fair share. The horror!
And the best part is: this all happens so long as Congress … does nothing! Which it has proven incredibly good at!
The stunning thing is, the superwealthy’s lobbyist posse and the Senate’s conservative minority could just take what the House has already passed, locking in the estate tax at 45%, while exempting all inheritances below $7 million. That ain’t chump change!
Arizona Republican Senator Jon Kyl and Arkansas Democratic Senator Blanche Lincoln have proposed setting the rate at 35 percent, retroactive to Jan. 1. The measure would apply to the portion of estates that exceed $10 million per couple, and would adjust that exemption for inflation in later years…
…House Democrats voted in December to extend the 2009 rate of 45 percent on married couples’ estates after a $7 million exemption. Senate Republicans blocked action in that chamber…
…A 35 percent rate “is really that sort of sweet spot of what’s acceptable to all sides,” said Dena Battle, director of tax policy for Washington-based National Association of Manufacturers. “We don’t want to see the tax go up to 55. We didn’t want to see the tax at 45.”
Uh, a $10 million exemption and a 35% rate above that is not very sweet at all. It’s a bitter windfall to the Paris Hilton set.
But thanks to the combination of their greed, and their exploitation of deficit hysteria, the superwealthy may actually have to pay their fair share on their inheritances after all.