What will happen to the estate tax?

Fate of Death Tax Imperils Obama’s Ambitions is the overwrought headline in NYTimes.com. Apparently, with a 45% estate tax rate and a $3.5 million exemption, we can afford universal health care, but with a 35% rate and a $5 million exemption we can't. What facile nonense.

Senator Harry Reid is bitter that 10 Democrats joined Senate Republicans in voting for the modest increase in the exempt amount. Here's what he said:

“This isn’t for the wealthy, this is for the super-wealthy,” complained Senator Harry Reid, the Nevada Democrat and majority leader, as the Senate took up the estate tax issue during its budget deliberations. “Even in the best of times, there is no question that we could find a better use for an extra $100 billion.”

There's no question that Harry Reid already believes other people's wealth is his own, and that they can keep it for themselves only if he doesn't have another use for it. What arrogance!

The Times tries once again to justify the estate tax with the allegedly low number of affected estates. Supposedly only 100 farms or small business would be hit by the estate tax under the Obama plan. Going uncounted are the thousands of businesses and farms that are sold by the owners before death because the cost of keeping such assets in the family is just too high.

The Times generally favors the idea of smaller scale, local agriculture. But the fact is that the giant agribusinesses love the estate tax, because it gives them the opportunity to scoop up farmland at distress prices. It's part of what helped to make them huge. The Times once again prefers to ignore the reality of the effect of death taxes.

A few years ago a Seattle newspaper owner testified before Congress that the expenses of planning for and funding death taxes was killing jobs and driving family-owned newspapers out of business, into the arms of a few national chains. I think he's out of business now.