But - wild pitch - the downside is that the stepup in basis that applied to legacy back in the estate tax era no longer applies. Which can be a nightmare for estates well shy of the billionaire category. (Because, when they sell the assets they receive, the legatees will pay income tax on the gain based on its cost to the deceased, not (as before) the value of the asset at the time of his death.)
Would a retrospective fix (the tax expired on 31 December) be constitutional? Can any sort of fix pass the Senate? (The House passed a fix last year.)
Plus - how many more of these festering sores are there that the Dems (Congressional and WH) have failed to deal with?
Senate Majority Leader Harry Reid has apparently orchestrated a deal on a jobs bill with Senate Republicans. The bill will be introduced later today:
Senate Majority Leader Harry Reid (D-Nev.) will introduce a jobs bill on Tuesday that he said would have Republican support.
Reid told reporters the bill would be introduced on Tuesday, and that it would include an extension of the tax breaks, known as tax extenders, that expired last year.
"As of last night, there will be Republican support for this bill," Reid told reporters.
The apparent deal not only includes extensions on tax breaks, but also will allow a vote on the extension of the estate tax repeal. From a different article in The Hill, published two hours earlier than the one on the apparent deal:
Senate leaders are working on an estate tax deal to make it easier to move a bipartisan jobs bill.
The deal discussed by Senate Majority Leader Harry Reid (D-Nev.) and Senate Minority Leader Mitch McConnell (R-Ky.) involves moving an estate tax bill through the Senate that would prevent a huge hike in the tax from taking effect in 2011, staffers and lobbyists say.
It is unclear if the vote on the estate tax that has been promised to Republicans would require 60 or 51 votes in order to pass. Extending the repeal of the estate tax would certainly be a steep price to pay for a smallish jobs bill, so I will see if I can find out.
If we are going to achieve the 40% social investment economy, the public sector will require more revenue. More public sector revenue basically means more taxes. Clearly, the only new taxes that will be politically feasible will those targeted toward higher income groups. The best options are to repeal all Bush-era tax cuts, put a tax on all carbon (if this means 100% auctions on cap and trade, that's fine, too), and to eliminate the income cap on Social Security income taxes.
While these are both moderate (relative to other wealthy countries) and achievable (both President Obama and the Democratic congressional leadership have endorsed all, or part, of each of these three pillars of new revenue) goals, there are still major barriers. In fact, there are still major barriers in our own party. A prime example is Arkansas Senator Blanche Lincoln, who two weeks ago authored and, with the support of nine other Democrats, passed an amendment to reduce the amount of rollback the House had proposed on the estate tax. A reader explains over email (more in the extended entry):
The U.S. economy just keeps getting worse. Given the absolute pummeling the job market has taken over the past five months, we're going to need some much stronger medicine than policymakers are currently proposing. It's increasingly clear that President Obama's stimulus plan was devised for a far milder downturn, and this week we received further evidence of the recession's high human cost.
Via RandomNonviolence in Quick Hits I learned about a budget amendment being cosponsored by Senators Blanche Lincoln and Jon Kyl which would provide a deep cut in estate taxes.
I learned, after a digging around awhile and finding this chart, that the rich people in this country are very very very rich and, well, most of us aren't.
Hard to see it, but those with annual incomes in the millions are represented by the vertical red line on the left and those making less than a million (i.e., almost everyone) are the horizontal red line on the bottom. Lincoln and Kyle are concerned about the people on the vertical red line. Actually, as the OpEd piece linked above points out, the concern is not for everyone on the vertical red line but only the wealthiest of those wealthy.
Why would Lincoln, a Democrat, be so concerned about that tiny and very wealthy segment of the population I wondered.
I did some more digging and learned some interesting things.
One of the GOP's chief talking points over the past decade - a call to repeal the estate tax - appears to be losing its ability to strike fear into Democratic politicians.
A House vote on a Republican motion last week to repeal the estate tax failed, with just 10 Democrats supporting Republicans, down from 42 who backed repeal two years ago.
Al Wynn flipped on this because of the primary challenge, and he had given cover to a lot of members with his nonsensical arguments about small business.
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