When NewsLanc endorsed President Barack Obama’s compromise deal with the Republican leaders, we were aware that the top estate tax would be 35%, down from 55%, but we were unaware that the level where the top tax rate took effect had been raised from $1 million to $5 million for individuals and from $2 million to $10 million for couples.
According to the Associated Press: “At those levels, the tax would affect just 0.14 percent of all estates in 2011, or about 3,500 estates, generating about $11.2 billion in revenue… Under the current law, more than 44,000 estates are projected to be taxed next year based on the number of estate-holders in that value bracket who are like to die. That would generate $34.4 billion in taxes.”
More than any other aspect of the compromise, the combined drop in rate and rise in exemption will tend further widen the growing chasm between the rich and the rest of the population, a trend that not only is bad for our democracy but also our economy.
We are dealing with the basic difference in views concerning what America is about: Unbridled wealth bestowed at birth on a few or a more level playing field so all new born children have a fair chance to excel.
President Obama is correct that the compromise will have the effect of a much needed second stimulus for our economy. For that reason, we can accept the other painful medicine. But exempting all but 3,500 estates a year from taxes and lowering the maximum rate to 35% is even more than President George W. Bush was seeking. It should not be part of the deal.
