Nothing is more morally repugnant in Washington than lawmakers and lobbyists battling to prevent multi-million dollar estates from having to pay a modest amount in taxes, even as the very rich propose to reduce the deficit on the backs of the most vulnerable Americans. The estate tax, which only affects the super-wealthy, is an important source of federal revenue, encourages billions of dollars in charitable donations each year, and is a means to make the tax system modestly progressive so that the wealthy pay a fairer share of taxes.
Congress faces a critical choice with respect to the estate tax in 2013. If it does nothing the current estate tax, which assesses a 35 percent tax on the value of estates over $10.2 million per couple ($5.1 million per individual), is repealed. It then reverts to the Clinton-era level, which would tax the value of estates over $2 million per couple ($1 million per individual) at a 55 percent rate.
President Obama has proposed a modest increase in the current estate tax by returning it to the 2009 level, which would tax the value of estates over $7 million per couple ($3.5 million per individual) at a 45 percent rate. This would generate $120 billion in new revenue over 10 years (and another $20 billion in interest savings) compared to the current estate tax.
Americans for Tax Fairness supports a more robust estate tax than the 2009 level. But, given political realities in Congress, at a minimum the 2009 estate tax rules proposed by Obama should be adopted for the following reasons:
 Center on Budget and Policy Priorities (CBPP), “Senate and House GOP Leaders’ Tax Proposals Would Provide Windfall for Heirs of Largest Estates,” July 24, 2012. http://www.cbpp.org/cms/index.cfm?fa=view&id=3810
 CBPP, “Myths and Realities About the Estate Tax,” Nov. 5, 2012, p. 2. Of the $141 billion, $119 billion is from the higher estate tax and $22 billion is from savings from reduced interest costs on the debt. http://www.cbpp.org/files/estatetaxmyths.pdf
 Based on Urban-Brookings Tax Policy Center (TPC), Table T11-0156 June 2, 2011. Calculation is 3,300 taxable returns out of 2,636,000 deaths = 0.13%. http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=3037
 Ibid. Calculation is 6,400 taxable returns out of 2,636,000 deaths = 0.25%.
 TPC, Table T11-0161, June 2, 2011. See Taxable Returns (All) – Average Tax Rate.
 TPC, Table T11-0164 June 6, 2011. See Extending 2011 Law – Average Estate Tax Rate for Taxable Returns. http://taxpolicycenter.org/numbers/displayatab.cfm?Docid=3045
 Lori Montgomery, “Boehner, House GOP leaders offer ‘fiscal cliff’ counterproposal,” The Washington Post, Dec. 3, 2012. http://www.washingtonpost.com/politics/2012/12/03/694dbc1e-3d84-11e2-a2d9-822f58ac9fd5_story.html
 Congressional Budget Office (CBO), Reducing the Deficit: Spending and Revenue Options, March 2011, p. 58. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/120xx/doc12085/03-10-reducingthedeficit.pdf
 The figure for 30 small, family-farms and businesses is at TPC, Table T11-0160, p. 2, June 2, 2011.
http://www.taxpolicycenter.org/numbers/Content/PDF/T11-0160.pdf. The figure for 60 small-family farms and businesses is at TPC, Table T11-0161, p. 2, June 2, 2011. http://www.taxpolicycenter.org/numbers/Content/PDF/T11-0161.pdf.
 Joint Committee on Taxation, “Modeling the Federal Revenue Effects of Changes in Estate and Gift Taxation,” Table A4., Nov. 9, 2012, p. 41. https://www.jct.gov/publications.html?func=startdown&id=4492
 CBO, The Estate Tax and Charitable Giving, 2004, p. 8. http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/56xx/doc5650/07-15-charitablegiving.pdf.
 Economic Policy Institute, The State of Working America, 12th Edition, 2012, (Table 6.1), p. 379. http://stateofworkingamerica.org/subjects/wealth/?reader