[A] funny thing happened on the way to [estate tax] repeal:
Over the past 10 years, there has been a gradual recognition that it makes little sense to shower tax breaks on a tiny sliver of the nation's wealthiest citizens (only about 0.6% of estates were subject to the tax in 2008, according to the Tax Policy Center), even more so when less affluent Americans are feeling the effects of a brutal recession. ...
For all the hype about how the tax kills small businesses and family farms, the facts are that very few are actually hit by the tax — an estimated 550 in 2008 — and fewer still have to be sold to pay it. During last year's presidential campaign, both Barack Obama and John McCain advocated keeping the estate tax in some form.
The latest evidence of an emerging consensus to retain the tax is a major shift among business groups that have been staunch backers of repeal. Just this week, 46 groups, including the U.S. Chamber of Commerce and the National Federation of Independent Business, announced that they want not repeal, but a permanent 35% tax on estates worth more than $10 million. That's a bit rich (this year's exemption is a generous $3.5 million), but it's a sign that compromise might be attainable in this long-running policy war.
With Congress focused on health reform, it seems likely that leaders will push passage of a one-year "patch" that would extend the 2009 estate tax limits through 2010, undoing the plan to let the estate tax expire next year.
That's a good idea for two reasons. One is that the Treasury would continue to collect modest but much-needed revenue. The tax will raise about $15 billion this year. The other is that old or ailing members of certain wealthy families will have a lot less to worry about next year.