Should the GSTT grandfather exemption be eliminated?

Should the grandfather exemption for the generation-skipping transfer tax be eliminated?  (Wealth transfers that skip generations are exempt from GST tax if made from trusts that  on September 25, 1985 were both (1) in existence and (2) irrevocable.)

Edward A. Zelinsky (The Morris and Annie Trachman Professor of Law, Benjamin N. Cardozo School of Law of Yeshiva University) says “yes” in his Oxford University Press blog posting entitled Tax “Old” Wealth By Abolishing the GST Grandfather Exemption (Feb. 2009).

Here is an excerpt from his discussion:

This exemption creates for federal tax purposes an unfair and unconvincing distinction between new wealth (think Michael Bloomberg) and old wealth (think the Kennedys and the Rockefellers). Because of the federal GST, families inheriting new wealth now pay a federal estate tax or its equivalent at least once every generation. However, families inheriting old wealth live estate-tax free by virtue of the grandfathered status of tax-avoiding trusts established by such families’ patriarchs and matriarchs on or before September 25, 1985.

There are respectable arguments for and against federal estate taxation. However, if there is to be an estate tax, there is no convincing reason to treat differently old wealth from new wealth.

If, as the President Obama and the current Congress apparently believe, federal estate taxation represents sound social and tax policy, there is no warrant for continuing to exempt from such taxation some families simply because they had the good luck to make their fortunes before 1985. * * * For federal tax purposes, all inherited wealth should be taxed the same, whether it is “old” wealth or “new” wealth. The GST grandfather exemption should be abolished.