BLANCHE LINCOLN NEGLECTS TO DO HER HOMEWORK…. It’s peculiar to me that Sen. Blanche Lincoln (D-Ark.) would invest so much time and energy in repealing the estate tax. With an enormous budget deficit, and a budget in which scarce resources are needed for a variety of policy goals, pushing tax cuts that exclusively benefit millionaires and billionaires seems to reflect misguided priorities.
But Lincoln has worked on this issue for years, and whether it makes sense or not, she’s not giving up the fight.
Sen. Blanche Lincoln (D-Ark.) on Thursday told The Hill that a fix for the estate tax should be aimed at helping small businesses, and not wealthier taxpayers since they have the resources to weather whatever tax rate Congress throws at them. […]
“I don’t think there’s any American out there who believes you should work all of your life to find that when you die, 55 percent of [your estate] has got to go to the government,” the senator said. “Coming up with more balanced exemptions and rates is critical.”
That may sound reasonable at first blush, but Pat Garofalo explains that Lincoln’s description of the policy is simply wrong.
[T]he estate tax — like the personal income tax — is calculated on marginal income, the particular percentage is only levied on amounts above the exemption. So if the exemption is $3.5 million, the first $3.5 million of the estate is passed on entirely tax free. Tax is only paid on the first dollar in excess of that. So an estate worth $3,500,001 would have a tax bill of .45 cents under 2009 law.
The effective tax rate — the amount paid as a percentage of the entire estate — owed by people who actually had to pay any estate tax at all in 2009 was about 14 percent. There were no grieving widows who have to hand over half of everything they own to the government.
As for Lincoln’s concerns for small businesses, her argument is, again, unsupported by reality.
It’s bad enough that the conservative Democrat’s concerns for the Walton family have compelled her to push this bad idea, but the least she could do, after years of effort, is get the details right.