Republicans used to be champions of the estate tax, paid by heirs who receive millions of dollars in wealth they did not create. It was part of a Republican philosophy of self-reliance and duty.
For example, Andrew Carnegie believed large inheritance "deadens the talents and energies" of the next generation and discourages entrepreneurship, savings and work. President Theodore Roosevelt proposed an estate tax in 1906 as a way for those who benefit most from American society to pay a share of government services. The estate tax we know today was established in 1916.
Today's Republicans, in contrast, seek to eliminate that tax – an agenda that Yale University scholars Michael Graetz and Ian Shapiro have facetiously called the "Paris Hilton Benefit Act." For his part, President Barack Obama in the past promised to keep the estate tax at the 2009 levels, affecting fewer than 1 percent of all estates, part of a phase-down of estate tax rates that started in 2001.
Some compromise is urgent, because if Congress and the president do nothing, the estate tax on Dec. 31 reverts back to higher 2001 levels that affect more heirs. The House, Senate and the president are headed for a clash, however.
You'd think that the most reasonable compromise would be Obama's middle-ground: Keep the tax at 2009 levels, which exempts estates up to $3.5 million ($7 million for couples), with the balance taxed at a rate of 45 percent. At that level, the Tax Policy Center estimates that the heirs of only 80 small business and farm estates will owe any estate tax for 2009. Overall, it will affect the heirs of only 2 out of 1,000 estates (far less than 1 percent).
But no. The deal that Obama cut with Republicans essentially ends the tax.
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