February 27, 2005

Permanent Estate Tax Repeal: Old Plan, New Names

The legislative arc of federal estate tax repeal over the past five years reads like a bad joke: call it the "death tax," use inflammatory grave-robbing metaphors to get the tax repealed-- but include a provision in the enabling legislation which brings the whole thing back to life as if nothing had ever happened. As things currently stand, the federal estate tax (like Westley in The Princess Bride) is only "mostly dead." After being fully repealed for exactly one year (2010), the tax will go back to normal in 2011.

People have been (rightly) making fun of this half-assed approach to estate tax repeal for the past four years. It got enacted this way simply because one year of complete repeal was all the Republican leadership in Congress could afford in 2001, when the repeal was passed as part of the first round of Bush tax cuts. Since then, Congressional Republicans have introduced bills to make the repeal permanent (even as these cuts have become even less affordable due to growing budget deficits), and Dems have sought to stop the gradual repeal in its tracks with no further cuts.

But this year there's a new wrinkle. Permanent repeal legislation in both the House and Senate has been co-sponsored by Democrats. That's Bill Nelson (FL) in the Senate and Bud Cramer (AL) in the House, for those keeping score. This is a danger sign for those who think (as I do) that estate tax repeal is an unfair and unaffordable giveaway to Congress' wealthiest constituents.

Senate Majority Leader Bill Frist (TN) signaled last month that permanent estate tax repeal would be among his top ten legislative priorities for 2005. As you can see from the list, these aren't all looking terribly hot so far, but it's worth keeping an eye on.


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