The best estate tax policy, in terms of both fairness and fiscal responsibility, would prevent the estate tax from disappearing in 2010 and set the estate tax parameters as close as possible to pre-Bush law. The worst estate tax policy would be to shrink (or repeal) the estate tax to make it even less significant than it is under the rules in effect for 2009.
On December 3, the House of Representatives approved a bill (H.R. 4154) that would make permanent the estate tax rules in effect in 2009. On the spectrum of “good policy” to “bad policy,” this proposal falls somewhere in the middle. On one hand, it would be a tax cut of hundreds of billions of dollars for families who pass millions of dollars on through consecutive generations. On the other hand, it would prevent the estate tax from disappearing in 2010 and could make lawmakers less tempted to make permanent a repeal of the estate tax or to cut it more than it has been cut as of 2009.