Sen. Blanche Lincoln (D-Ark.) on Thursday told The Hill that a fix for the estate tax should be aimed at helping small businesses, and not wealthier taxpayers since they have the resources to weather whatever tax rate Congress throws at them.
"The ultra-wealthy don't deal with the estate tax," she said. "The Bill Gateses of the world — those individuals don't deal with the estate tax because their estates are so large. They've already figured out how to do a foundation or they've used tax attorneys and the estate planners and accountants and everybody to figure out how they deal with the kind of wealth they have."
Lincoln argues that small businesses don't have the profit margins to survive the coming tax hike on estates if Congress fails to act before the end of the year. The levy is currently repealed, but is slated to return in January with a vengeance by socking estates worth more than $1 million with a tax that tops out at 55 percent.
"I don't think there's any American out there who believes you should work all of your life to find that when you die, 55 percent of [your estate] has got to go to the government," the senator said. "Coming up with more balanced exemptions and rates is critical."
Lincoln is working with Senate Republican Whip Jon Kyl (Ariz.) to craft an estate tax package that will go easier on small businesses. The senator did not disclose the details of the proposal.
"We're working with Sen. Kyl on that and certainly [Senate Finance Committee] Chairman [Max] Baucus [D-Mont.] to figure out when we can bring it up in committee," Lincoln said.
Sources close to the matter recently told The Hill that the lawmakers are looking to give taxpayers the option of prepaying their estate tax. The levy would be set at 35 percent for those worth more than $3.5 million; however, the exemption would ultimately increase over time to $5 million and would be indexed for inflation. Prepayment trusts would pay a lower rate.
— J. Taylor Rushing contributed to this post.