In tilting at windmills news, the House of Representatives voted this week to repeal the estate tax. The bill also provides that estates would continue to avoid payment of capital gains tax on appreciated assets even in the absence of the estate tax.
Several quick points:
1. With President Obama annually proposing an increase in the estate tax rate from 40% to 45% and taxing capital gains on appreciated assets, while also lowering the threshold at which taxes become due to $3.5 million from $5.43 million, this bill has no chance of passing during the next two years.
2. Last year, only 5,000 estates paid federal estate taxes, a rate of 2 out of 1,000. I suspect that many of the beneficiaries of an estate tax repeal would be the same Wall Street weenies, most of whom vote Democrat, who already benefit from favorable taxation of their compensation due to calling it carried interest rather than earned income.
3. With this Quixotic bill passed, the House Republicans can now devote their energy to passing a 60th bill to defund or repeal Obamacare.
