The value of the estate tax

Now that the Senate has voted to extend the Bush-era tax cuts, the action moves to the House, where some Democrats will try to toughen the bill's generous estate tax. That's progress. A decade ago the debate was whether estates should be taxed at all.

One of the nation's great strengths is that people with industry, intelligence and luck can amass huge fortunes. But allowing the heirs of the nation's richest people to reap untaxed windfalls would accelerate the concentration of wealth and power in too few hands. And it would burden the rest of us, because somebody has to pay to pull the government out of deficits and debt.

Wealth inequality has soared in recent years. By 2007 more than a third of the nation's private wealth was owned by 1 percent of the population. That's more than the combined wealth of the bottom 90 percent. That kind of inequality gives rise to jealousy and want, which fuel instability.

An estate tax won't change that picture very much. Smart estate planners can avoid much of its sting. Even so, the modest tax the Senate passed yesterday - which would exempt $5 million and tax the rest at 35 percent - would generate $24 billion over two years. The $3.5-million exemption and 45 percent rate preferred by some in the House would raise $44 billion.

But the important battle - to tax or not to tax - has been won. hN