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Lincoln-Kyl Estate Tax Amendment is Both Unnecessary and Unaffordable
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Issue
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| Contributor | ArmyDem |
| Last Edited | ArmyDem Apr 06, 2009 09:13am |
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| Category | Analysis |
| News Date | Friday, April 3, 2009 03:00:00 PM UTC0:0 |
| Description | By Chuck Marr and Jason Levitis
Updated April 3, 2009
On April 2 the Senate narrowly adopted (51-48 vote) an amendment to the budget resolution by Senators Blanche Lincoln and Jon Kyl that would substantially weaken the estate tax. This proposal is both fiscally irresponsible — it would pave the way for a significant increase in long-term deficits and debt — and unnecessary to protect small businesses and farms, nearly all of which are already exempt from the tax under the 2009 estate tax rules, which President Obama has proposed to extend. The amendment also would lead to significant reductions in charitable contributions, while benefiting only the wealthiest 0.28 percent of estates.
• The proposal would benefit only a tiny number of estates but carry a large cost. Only the estates of 2.8 of every 1,000 people who die would benefit from the Lincoln-Kyl proposal; Tax Policy Center data show that those are the only estates that would owe any estate tax in 2011 if the 2009 estate rules are extended. Yet the proposal would cost $91 billion more in the first ten years that its effects would be fully felt (2012-2021) than would making the 2009 rules permanent, based on Joint Tax Committee estimates. Relative to current law, under which the tax will revert to pre-2001 parameters in 2011, the total cost of the Lincoln-Kyl proposal would be $442 billion over this 2012-2021 period.
These new cost estimates are lower than last year’s estimates for a similar proposal, probably because of the sharp drop in the stock market, real estate values, and other asset values. But over time, as asset prices recover, the long-term cost projections of the proposal would also increase — and by quite substantial amounts. |
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