What’s in an Estate Tax Name?
June 27, 2006
On June 22, the House voted 296 to 156 in favor of Chairman Bill Thomas’s estate tax bill, the Permanent Estate Tax Relief Act of 2006.
“Permanent” might strike the average reader as an odd choice for the title. No tax law has ever been permanent because each Congress has the right — and apparently feels the duty — to change every rate and rule in the code.
But “Permanent” is a well chosen word in this case because the bill aspires to replace estate tax laws that are about to give taxpayers a wild ride. Current estate tax law has been like a boring roller-coaster since 2001, with rates gently sloping down each year and exemptions slowly creeping up. The terrifying part of the ride is set to begin in 2010 with a thrilling dive to total repeal, followed by a neck-jerking restoration of the old 55% in 2011. We recently blogged on the awful consequences of these sudden, dramatic changes.
The Thomas bill would smooth this out somewhat by establishing rates of 0%, 15% and 30% that would not change from year to year, and exemption levels that would only change with inflation.
“Relief” is also a well chosen word for the title, to contrast it with “Repeal,” a word that was part of the last estate tax bill the House passed, over a year ago now. Republicans and a few dozen Democrats have championed repeal for many years, so settling for “Relief” strikes some of them as settling for too little. Economist Bruce Bartlett, author of a recent book bashing President Bush, is one of the most articulate voices for total repeal.
For more on the federal estate tax, be sure to see our recent report here.