Yesterday, the Alley argued that Senate Democrats, caught between supporting President Obama's tax proposal to raise taxes on the rich and not wanting to soak their wealthy donors, had dropped Obama's proposal to raise the estate tax from their tax bill. The move was designed to unite the caucus behind the legislation and insulate the wealthy from some of Obama's more sweeping reforms.
But a smart Senate Republican points out that by dropping the estate tax provision from the bill entirely, the Democratic plan would hit the rich even harder than Obama's plan.
That's because with no estate tax provision, the law would revert to pre-Bush tax cut levels where the first $1 million of an estate was exempt from taxes and the rest was taxed at 55 percent. That's even higher than Obama's proposal, which seeks to exempt the first $3.5 million and tax the rest at 45 percent, up from the $5 million exemption and 35 percent rate that's currently in law, according to a Republican Senate aide.
That fact is not likely to sit well with farm state Democrats like Claire McCaskill and Jon Tester, who face tough re-elects this year. And it also hits guys like Mark Pryor from the rural, red Arkansas.
Expect to see Senate Republicans play up the death tax argument later today as debate begins on the Senate floor.
Get us in your feed.