While other critical tax issues have been largely overshadowed by the looming expiration of the Bush income tax cuts for the wealthiest 2 percent of Americans, Congress is also debating what to do about another massive giveaway to the rich implemented under George W. Bush — a dramatic cut, followed by the complete elimination of the estate tax, which conservatives derisively refer to as the “death tax.”
In 2001, Bush signed a law that gradually lowered the estate tax rate until 2010, at which point it was completely repealed. Congress extended the tax temporarily at the end of year (leaving people who died that year off the hook) and set the rate like this: The first $5 million of wealth go completely untaxed, while wealth above that line is taxed at just 35 percent. That temporary patch will expire at the end of the year, and if Congress does not act, rates revert to the much higher Clinton levels: An exemption on just the first $1 million and a 55 percent tax on all income above that.
Hanging in the balance is hundreds of millions of dollars. The nonpartisan Tax Policy Center estimates the government would collect $161 billion by 2021 at the current rates, as opposed to $531 billion over the same time frame under the Clinton rates.
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