Unfortunately this will become a windfall for the leftwing cohorts ranging from charitable funds to the conscience stricken trust babies, most of whom come to detest the capitalist system that generated their good fortunes.

But that is a drop in the bucket to the windfall Middle Americans get when they inherit estates in the $1-2 million range which are quite commonplace, or certainly the benefit to the families of small farmers and businessmen whose holdings were being taxed at death.

The Trustafarian Leftists don't notice the estate tax as it is because they're wealthy enough that they can afford to take the hit without a slip in lifestyle. The people it hits are entrepeneurs on the way up who are big enough to have to pay the tax, but not so big that they don't notice it. (If you have most of your, say, $4.5m net worth in a big illiquid asset--a closely-held business--and have to pay tax at 40%+ marginal rates on everything over $1.5m, the tax is a big issue for you.) In effect, the estate tax is not a tax on inherited wealth so much as it is a tax on upward mobility.

Maybe that's why the Trustafarian Leftists like the estate tax so much--it reinforces social stratification by reducing the opportunity for the "wrong" sort of people to accumulate wealth.

MM:

Target! The tax serves a gate-keeping function to ensure the club remains exclusive. It also provides an opportunity for moral preening and the furtherance of the idiot notion that the quantity of wealth is static and must therefore not be allowed to concentrate.

The thing I always hear is that almost nobody ever pays the estate tax. Well, duh...people jump through hoops to avoid ever paying it.

It's ridiculous. End it.

The principle is? If we aren't willing to protect the richest of our brethren they'll be coming after us next.

The reason those trust funds exist in the first place is in large part due to the very rich trying to avoid paying that tax. You can only set up such funds if you are liquid enough to transfer the assets. When your wealth is tied up machinery or farmland, it gets much harder, which is why those family owned companies mentioned are against it,. People like the Gates family can be for it because they know they won't be paying it, while getting brownie points from leftists for their class betrayal.

h,

The principle is even simpler. Why is death a taxable event?

bart:

Right...one Democratic congressman said a few years ago he was voting to end the estate tax simply on moral grounds. Taxing people when they die (or their descendants) is odious and it rubs even unaffected parties the wrong way.

They tax estates because they can. If the testator or intestate has not already disposed of his assets, his heirs must resort to state processes to do so. This necessitates inventories and the like. The state now knows what you have, and takes a bite

Actually, we tax large estates for the perfectly sensible reason that people thought it would work against the development of an aristocracy. It was a tax that was imposed and supported by elites upon them themselves.

What's wrong with an aristocracy per se so long as they aren't using government to loot the general public?

Lou,

So, as in most things, the government does what it does with all the logic and morality of a Sicilian crime family.

OJ: No. The estate tax does not and cannot work like that. The estate tax is voluntary.

The tax makes a certain amount of sense in the context of an income tax, in that it (along with the gift tax) prevents a leakage from the system.

Unfortunately the rate structure got way out of wack after the 1986 revision of the income tax. maximum income tax rates droped under 40% but estate tax rates remained at 55%.

The correct system would have been to reset the gift tax rate at the maximum income tax rate and the estate tax rate at G/(1+G) where G is the gift tax rate. I.E. if the current maximum income tax rate is 35%, the gift tax rate should be 35% and the maximum estate tax rate should be 26%.

Unfortunately, the Dems thought that the purpose of the estate tax was to punish the rich, not to raise revenue. They stood fast on the rates and are going to wind up without the tax.

Note that the repeal does not repeal the gift tax, which shows how fundamentally unserious it is.