On November 6, 2010, the New York Times published Estate Tax Issue Offers Quick Test for Congress, by Richard H. Thaler. The article appears in the Business section under “Economic View.” The article is Thaler’s view on the estate tax. Thaler is comfortable taxing the wealthy and giving tax breaks to the middle class:
Right now, no one has any idea what rules will be in place in January — or even how to interpret some particulars of the current rules, as we shall see. (And if Congress does nothing, rich relatives might want to watch their backs on New Year’s Eve.) . . .
If Congress had simply indexed the 2009 limit to adjust automatically for inflation, and left the tax rate at 45 percent, we would have a reasonable law in place and would have avoided a decade of uncertainty. . . .
What should Congress do? The most important step would be to end the uncertainty by legislating a permanent set of rules. If Congress doesn’t act, even middle-class households might soon be facing an estate tax. And of all the taxes in our system, the estate tax probably requires the most advance thought. (It is called “estate tax planning,” after all.) To avoid future showdowns in Congress, the exemption should be indexed for inflation if the estate tax remains. . . .
We could lower the rate if we also lowered the exemption, but that would be a mistake. Dealing with the estate tax is a major nuisance, so it should apply to as few people as possible. . .
So let’s be serious. There are lots of ways to spend $250 billion. Trim the deficit, improve education, support the troops, or make sure heiresses like Paris Hilton have the proper attire for trips to St.-Tropez. At this time in our history, which of them seem prudent?