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Death and Taxes
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BLANCHE LINCOLN
U.S. Senator (D-Ark.)
Washington
The writers are members of the Senate Finance Committee.
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The estate tax law scheduled to take effect in 2011 would not create a $2 million per couple exemption but would return to a $1 million per individual exemption, requiring complex estate planning to spread the exemption between spouses. Allowing portability between spouses is a key reform included in the Lincoln-Kyl proposal and supported by President Obama.
But not every family business is owned by a married couple, and it would be clearer to speak of the exemption as the amount allowed for each individual.
Moreover, the federal revenue argument for a 55 percent rate ignores the fact that under the 2011 law there is a credit for state death taxes that sends 16 percent of an estate to state governments, leaving just 39 percent going to federal coffers. Cutting that 39 percent to 35 percent is not likely to cause a substantial revenue loss.
Imposing a tax at death is a double or triple tax on people who have already paid other taxes, and it destroys family businesses, jobs and capital -- capital that our economy desperately needs. If getting the economy on track is the key to improving the federal budget picture, then the Lincoln-Kyl proposal would be a step in the right direction.
