Facts and the Estate Tax

Just a couple of quick points on the estate tax, the elimination of which I still believe faces opposition from the principles of CST.  I agree with Greg that policy judgments require wading into the facts, but my impression is that the case for elimination is grounded more in rhetoric than in fact-based concern for the common good.  From a report by the group Public Citizen:

A 2005 report by the Congressional Budget Office found that at the current exemption level of $2 million, very few family farms would owe an estate tax. If the $2 million threshold existed in 2000, as many reform proposals would have allowed, only 123 farms in the entire country would have owed estate taxes that year. The CBO study also found that among the very few that would owe taxes, the vast majority would have sufficient liquid assets (savings, investments and insurance) to pay the taxes without having to sell off any farm assets. For example, at the $2 million threshold, only 15 of the farms would have had insufficient liquid assets to pay.

Like the allegations about family farms, the notion that the estate tax forces family-owned enterprises out of business is equally fallacious.  Of the 2.5 million people who died in 2004, only 440 left a taxable estate with farm or business assets equal to at least half the total estate, according to the Tax Policy Center, a joint project of the Urban Institute and the Brookings Institution, and 210 of these owed less than $100,000.

I'll also note that this is not an inconsequential debate: the same report estimates that a full repeal of the estate tax would cost the government $1 trillion over ten years.

Rob