Kyl Estate Tax Amendment Would Cost Nearly as Much as Estate Tax Repeal

Aviva Aron-Dine has posted Kyl Estate Tax Amendment Would Cost Nearly as Much as Estate Tax Repeal on the Center on Budget and Policy Priorities web site.  Here is the abstract:

Permanent repeal of the estate tax would reduce revenues by almost $1 trillion between 2012 and 2021, the first ten-year period in which its costs would be fully felt. With the economy slowing and deficits returning — and with far larger deficits projected for future years — there is increasing recognition that estate tax repeal is unaffordable.

The estate tax “reform” proposal offered by Senator Jon Kyl, however, differs little from full repeal. Senator Kyl’s proposal, offered as an amendment to the Senate budget resolution, would increase the estate tax exemption to $10 million per couple and lower the top estate tax rate to 35%, with a lower rate applied to part of the value of an estate. Joint Tax Committee estimates suggest that this proposal would cost at least 77% as much as repeal.

Under current law, the estate tax rate has already fallen to 45%, and the exemption level is scheduled to rise in 2009 to $7 million per couple. Making the 2009 estate tax parameters permanent — as an amendment to the budget resolution offered by Senator Max Baucus would do — would itself be quite expensive, reducing revenues by about $500 billion over the 2012-2021 period or about half as much as repeal.

But going beyond 2009 law to the Kyl proposal would add about $250 billion to the ten-year cost, and more than $300 billion if interest costs are included. All of this additional cost would go toward tax cuts for the 3 in 1,000 estates large enough to owe any tax under 2009 law: those valued at more than $7 million per couple.