RENEE MONTAGNE, host:
There was a philosophical question in the House of Representatives yesterday: Should dead people have to pay taxes? It may sound funny, but the estate tax -or, as Republicans call it, the death tax - continues to be one of the big debates between the two parties. NPR's Andrea Seabrook reports.
ANDREA SEABROOK: So who pays the estate tax, anyway? I asked Ben Harris. His job is to pore over IRS statistics and tax tables. He says�
Mr. BEN HARRIS (Researcher, Tax Policy Center): It hits very, very, very few people.
SEABROOK: Harris is a researcher with the Tax Policy Center.
Mr. HARRIS: It hits about two out of every 1,000 estates, and these estates are the wealthiest of the wealthy. These are very high income individuals who are affected by the estate tax.
SEABROOK: The Tax Policy Center is a think tank, a joint project of the Urban Institute and the Brookings Institution. It's been tracking the inheritance tax since President Bush and the Republican Congress tried to kill it by putting the tax on a long slide into the ground. Over the past decade, the tax rate got progressively lower, while the amount of money you had to be worth to pay it got higher. And by 2010, poof: There would be no more estate tax at all.
On the House floor yesterday, Texas Republican Louie Gohmert reminded lawmakers why his party wants to kill the estate tax. It's a moral issue, Gohmert said.
Representative LOUIE GOHMERT (Republican, Texas): After someone dies, and someone comes in and steals from them, we consider that reprehensible. That's just despicable. But when the government comes in - because we have the power to pass laws and legalize theft - it's OK.
SEABROOK: But here's the catch: Back when Republicans wrote their law, to just end the estate tax would have cost too much. So they made their law temporary: 10 years of lower rates, and after that, it would snap back to 2001 levels. Their bet was that some future administration would fully repeal the tax before that happened. It was a bad bet.
The last three years have seen a historic turnaround, politically. Democrats took over Congress and the White House. And they, too, see estate taxes as a moral issue - just from the other side. Here's Democrat Jared Polis of Colorado, quoting billion Warren Buffett.
Representative JARED POLIS (Democrat, Colorado): "Without the estate tax, you, in effect, will have an aristocracy of the wealthy, which means you pass down the ability to command the resources of the nation based on heredity rather than merit," end quote. America is and should be a meritocracy.
SEABROOK: Then again, almost no one - including Democrats - wants to go back to the higher, 2001 rates. They would affect more modest estates - those worth $1 million and up - and that really could hit a lot of small farms and businesses.
So what Democrats brought to the House floor yesterday was something of a compromise: a permanent estate tax at this year's levels. That means that if a couple's estate is worth more than $7 million or an individual leaves behind more than $3.5 million, the money over that threshold is subject to a 45 percent tax.
The Tax Policy Institute estimates that will affect about 6,000 estates this year, of which about 100 are small businesses or farms.
Debate on the House floor sounded contentious. The prize for best quip goes to the Republicans who came up with no taxation without respiration. But in the end, what passed was the essence of compromise. Republicans won the lowest estate tax rates in a decade, while Democrats can count on the $500 billion it'll raise over the next decade. On to the Senate.
Andrea Seabrook, NPR News, the Capitol.
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