Options for Reforming the Estate Tax

Under current law, the estate tax is reduced gradually through 2009, repealed in 2010, and then reinstated in full force in 2011. Few expect things to actually play out that way. President Bush and many members of Congress would like to repeal the tax permanently, and many would like to do so before 2010. Repeal would be expensive, however: Immediate repeal would reduce revenues by more than $400 billion over the next decade. Even making repeal permanent as of 2010 would cost $270 billion in the next 10 years. Repeal would also be regressive, would reduce charitable giving by more than $15 billion a year, and would invite significant tax sheltering activities. It would increase the concentration of wealth, and may also increase the political power of a wealthy elite