Lame-Duck Congress Faces the Estate Tax Issue Soon

After their Tuesday election victory, Republican House leaders promised a move toward less economic uncertainty and more fiscal discipline. With the lame-duck Congress facing the issue of the estate tax soon, they have the chance to work toward both these goals almost immediately.

What should Congress do? Legislating a permanent set of rules would be the best way to end the uncertainty. Economics professor Richard Thaler believes that a higher exemption amount coupled with a higher rate is more desirable than a lower exemption amount coupled with a lower rate. This approach would tax fewer people while raising the same amount of revenue. “Dealing with the estate tax is a major nuisance, so it should apply to as few people as possible.”

Richard H. Thaler, Estate Tax Issue Offers Quick Test for Congress, N.Y. Times, Nov. 6, 2010.

Special thanks to Joel Dobris (Professor of Law, UC Davis School of Law) and Matthew Bogin (attorney, Rockville, MD) for bringing this to my attention.