Needless giveaway

Now is not the time to expand the federal deficit

Republicans in Congress want to repeal the federal estate tax — a giveaway that would hand $270 billion in tax breaks to millionaires and billionaires over the next decade — at a time that the federal budget, with its yawning deficit, can ill afford it.

The measure, which the House passed last week, is unlikely to gain approval in the Senate, and certainly not from President Barack Obama. But it reflects the extreme anti-tax agenda that has come to characterize many in the GOP Congress.

Foes of the estate tax claim that they represent the interests of struggling small businesses, even though virtually no small-business owners pay the tax. It affects only individuals who inherit estates worth at least $5.43 million, or married couples who inherit at least $10.86 million — the richest 0.2 percent of Americans.

The maximum tax owed on an estate is capped at 40 percent, but most heirs can take advantage of large loopholes to reduce their liability. Estates worth between $5 million and $10 million pay an average of 7.7 percent of their value in estate tax; those worth more than $20 million pay 18.8 percent on average.

Revenue from the estate tax, like that from the income tax, goes toward the same essential government functions including national defense, deficit reduction and health care. But the benefits of the estate tax go well beyond that.

The tax has been one of the most powerful tools for progressive taxation. Opponents call it a “death tax” that punishes heirs for the hard work of their family members. But such a label misstates the roles of the tax: to limit the concentration of wealth and power in the hands of a few and to require wealthy Americans to pay a fair share of taxes on fortunes they did not earn.

Mr. Obama and other Democrats want to restore the estate tax to 2009 levels (on individuals who inherited $3.5 million or more) and increase the capital gains tax, but those plans aren’t likely to go anywhere. That’s why lawmakers must preserve this sensible revenue tool — and leave the estate tax right where it is.