Senate negotiators labored over the weekend on a last-ditch plan to avert the “fiscal cliff,” struggling to resolve key differences over how many wealthy households should face higher income taxes in the new year and how to tax inherited estates.
….Negotiators were trying to resolve a dispute over the estate tax, a critical issue for Republicans who have dubbed it the “death tax” and argue that it punishes people who build successful businesses and family farms.
In an agreement brokered between McConnell and the White House in 2010, estates worth more than $5 million are exempted and taxed above that amount at 35 percent. Republicans want to maintain that structure, while Democrats want to drop the exemption to $3.5 million and raise the rate on larger estates to 45 percent.
Do you know how many people leave estates valued at more than $3.5 million? Something like 0.01 percent, give or take a bit. This is a tax that’s a huge deal for the super-rich, but completely irrelevant for nearly everyone else, including the merely ordinary rich. And needless to say, all the talk about small businesses and family farms is just a pretense. Virtually no family farms are affected, and the ones that are have extremely generous rules for dealing with estate taxes.
Meanwhile, Republican base voters are super-focused on gay marriage and buying as many guns as they can at Walmart. Because they’re smart!