WSJ.com - House Approves Permanent Estate-Tax Repeal

WSJ.com - House Approves Permanent Estate-Tax Repeal

It is almost hard to believe that there is a real chance that the "death tax" will be eliminated. Perhaps the better chance is that it will be reduced to 15% on all over $10 Million. Since these assets have already been taxed a time or two or three before death even a 15% tax is harmful to the economy and unfair to the payers but not a bad compromise; getting former tax and spend politicians to go along with such a significant reduction will indeed be an accomplishment. The democrats need a politician to emerge with a John Kennedy business philosophy to get back in the political game. Believe it or not, Hillary is moving so hard to the right that she may be the one who can shift the party away from the extreme left.

If the "death tax" compromise rate is too high, the long term drag may be the "locking-in" of assets. The current system of giving heirs a "stepped up basis" allows the heirs to sell the inherited assets without incurring additional taxes. A 15% rate, matching the rate on dividends and capital gains should not cause a big "locking-in" problem.

George Bush is changing the world for the good. The US is in its wealthiest position ever as is China and many other developing countries. Political and economic freedom is gaining ground around the globe. Ironically, Bush is standing on the shoulders of Ronald Reagan and Bill Clinton. It is going to be a real story to tell if hundreds of thousands of welfare recipients of the 1990's have hundreds of thousands of dollars invested in private accounts by the time they retire. The story of political freedom in Eastern Europe and the Middle East is still unfolding. What a story? What a privilege to be an American witness to the good that can come from a willingness to provide help and support to others.

A close friend of mine said six months ago that private accounts funded from current payroll taxes will never happen. So far, his statement is looking like a winner. However, I wonder what his attitude would have been concerning a compromise on the "death tax". The republican move to further restrict the filibuster looks like a lost cause. The move some years ago from 75 votes to 60 was a rational decision but Americans clearly want the minority party to have this tool in their arsenal. The filibuster serves to frustrate those who want government to move quickly. It serves to force compromises which can be nasty. Pork is passed because compromise is necessary. Americans can and must afford a little pork spending along the way to insure our checks and balances remain in place.

President Bush, on balance, is moving the country in the right directions nationally and internationally. Progress is actually at reasonable speeds. I do not expect Social Security reform to pass before the May recess but I still believe that private accounts will be passed this year. "Horse trading" will be a big part of the process but folks are gradually learning not to bet against George. The "death tax" appears to be dead!