We can add to Senator Frist's list of failures. His promise to repeal the estate tax (the death tax, he calls it) has run into a typical congressional problem: legislators will have less money to work with if the repeal is successful. So, he hasn't been saving this political favorite for a rainy day; he hasn't brought it up because there aren't enough votes for it.
But proponents aren't giving up. Senator Kyl, who really should be a 2006 target by Democrats, if a decent candidate can be found, is determined and leading the charge to amend the tax, if it can't be ended. His starting point is to raise the exemption to $3.5 million (it stands at $1.5 million at present), meaning only 0.3 percent of estates would be taxed at all. And that's only the beginning. The NYTimes reports:
Where Mr. Kyl's plan really implodes is in its drive to cut the tax rate on big estates by some two-thirds, to 15 percent. A $3.5 million exemption, together with a top rate of 15 percent, would cut the taxes of America's wealthiest families by some $550 billion during its first 10 years. That would be nearly as bad as repeal itself.The Republican plan in the old days was to cut the size of government. Cutting taxes like the estate tax fit in with the overall strategy of cutting and even ending spending programs. But now that they are in charge, they have found themselves as fond of over-spending as any Democratic congress ever was. As long as the GOP leadership remains in place, I predict they will have a harder time actually cutting taxes, with the exception of the occasional election-year high-profile cut (secretly offset somewhere else by an increase). Still, they will talk about their desire to cut taxes all the damn time.
Mr. Kyl contends that a 15 percent estate tax rate is fair, because it is the same as the capital gains tax rate that is applied to investment profits during one's lifetime. That's a false comparison. The capital gains tax law does not allow you to exempt a huge portion of your profits before the tax rate is applied. The estate tax law does. Once the $3.5 million exemption and other deductions were factored in, a 15 percent tax rate would translate into a mere 6 percent levy on a $20 million estate.
Do you think that, like with the Bolton appointment, Bush-Cheney are getting tired of Frist not being able to get their initiatives passed?