House Set to Vote on Pomeroy Estate Tax Bill
by Gary Therkildsen*, 12/2/2009
The House plans to take up estate tax reform as early as tomorrow with a vote on Rep. Earl Pomeroy's (D-ND) Permanent Estate Tax Relief for Families, Farmers, and Small Businesses Act of 2009 (H.R. 4154). The Pomeroy bill would permanently extend current estate tax law at a $7 million exemption for couples at a 45 percent rate. Without congressional action this year, the estate tax will expire in 2010 and then come back in 2011 under its pre-Bush tax cut levels of a $2 million exemption for couples at a 55 percent rate. OMB Watch has submitted a statement of support to Rep. Pomeroy's office, and several other non-profits have come out with reports to back up the legislation.
An analysis put together by Chuck Marr and Gillian Brunet over at the Center on Budget and Policy Priorities (CBPP) calls the Pomeroy bill "more than reasonable." In their analysis, Marr and Brunet cite that the federal estate tax has shrunk considerably over the past few years and that now only 1 in 500 estates pay any estate tax under current law. The CBPP report goes on to warn that any further cuts to the estate tax would be unaffordable in this economic downturn and would only benefit the wealthiest 0.2 percent of estates.
A similar report released today by Citizens for Tax Justice (CTJ) concludes that H.R. 4154 is somewhere in the middle of the spectrum between good and bad tax policy. CTJ's Steve Wamhoff summarizes the Pomeroy bill thusly:
On one hand, it (H.R. 4154) would be a tax cut of hundreds of billions of dollars for families who pass millions of dollars on through consecutive generations. On the other hand, it would prevent the estate tax from disappearing in 2010 and could make lawmakers less tempted to make permanent a repeal of the estate tax or to cut it more than it has been cut as of 2009.
The CTJ report goes on to lament that a stronger estate tax bill, such as the more progressive measure (H.R. 2023) Rep. Jim McDermott (D-WA) introduced in April, is not the consensus bill among congressional Democrats. The report concludes that "any lawmaker who is paying attention to the federal budget deficit and the lack of funding for public services that their working class constituents rely on should support a progressive estate tax proposal" like McDermott's.
On the other side of the debate, legislators looking to further reduce or eliminate the estate tax are preparing to introduce their legislation as well. A bi-partisan bill (H.R. 3905) sponsored by Rep. Shelley Berkley (D-NV), which almost mirrors a Senate proposal introduced by Sens. Blanche Lincoln (D-AR) and Jon Kyl (R-AZ), would reduce the estate tax to a $10 million per couple exemption at a 35 percent rate.
The Berkley bill would shrink government coffers by $82 billion more over the first ten years than just extending the 2009 estate tax levels, which will already cost the government $391 billion in foregone revenues and higher interest payments on the debt. Moreover, as detailed in both the CBPP and CTJ analyses, a reduction in the estate tax would not help any farmers or small businesses – a common refrain of lawmakers that support cuts to or repeal of the estate tax.
Image by Flickr user johnsolid used under a Creative Commons license.