Monday, April 6, 2009

They Just Can't Kill The Beast

Senate vote on the estate tax showed support is lacking forincreasing the exemption and lowering the tax rate.

Congress is expected to act later this year to re-write estate tax rules to head off the repeal of the tax scheduled to take effect next year.

Obama wants to extend the policy in effect this year, indefinitely. It exempts from estate taxes individual worth of less than $3.5 million or $7 million for married couples, and tax wealth above that amount at 45%.

The proposal voted on today would have increased exemptions to $5 and $10 million, and lowered the tax to 35%. This is estimated to save the wealthiest 0.28 percent of estate owners about $440 billion over 10 years.

But it doesn't look like there's enough support.

Unlike the simple majority needed to approve the budget amendment, 60 votes would likely be required to alter that plan on the Senate floor, according to the Wall Street Journal.

What passed today was called the "Deficit Neutral Reserve Fund for Estate Tax Relief." It reserves the right to review reform later. A deficit-neutral reserve fund reserves your right to lift spending or lower your revenue floor in a way that doesn't harm the deficit. So if they can fund the tax cut, they can hold a vote to cut it.

Passing the bill would means they would have to find billions of dollars to cut from other government spending. The economic hardship facing ordinary Americans right now makes doing that very unpopular with the Democratic Congress.

No comments: