The Committee for Economic Development released a comprehensive tax reform proposal entitled A New Tax Framework: A Blueprint for Averting a Fiscal Crises this past Tuesday at the National Press Club in Washington, DC. The CED proposal calls for a new hybrid federal tax system featuring a phased-in 10 percent Value-Added Tax (VAT) to supplement a reformed and streamlined federal income tax.

Notably, the report recommends the retention of the estate tax at the 2009 levels under current law ($3.5 million exemption and 45 percent marginal tax rate).

Read the Report:
Press Release (.pdf)
Executive Summary (.pdf)
Full Report (.pdf)

Amid misguided and mostly rhetorical proposals for cutting other areas of the budget to pay for Katrina relief (while continuing to cut taxes further), there is a strong and growing number of media outlets, political leaders, policy experts, and regular citizens who are demanding fiscal sanity return to the nation's capital.

USA Today, the paper with the country's largest circulation, joined the ranks of those calling for a reassessment of the president's tax cuts. The paper specifically called out those lawmakers whose support of reckless tax and budget policies have caused many of the fiscal problems we have today. The paper editorialized:

The current hypocrisy is that lawmakers who participated in the spending, borrowing and tax-cutting binge that put the nation in hock are now clamoring for spending cuts to offset storm costs...Their case would also be stronger if they would be willing to revisit recent tax cuts. The first law of holes is: When you're in one, stop digging. It would be the height of irresponsibility, for instance, to cut estate taxes when natural disasters, the Iraq war and surging health care costs are exploding the deficit.

Advocates of estate tax repeal have been scrambling in the weeks following Hurricane Katrina since a vote on repeal was postponed in the Senate and the repeal agenda has been knocked off the front burner in Congress. But now it appears those forces have reached a level of desperation not yet seen in this debate.

Time.com reported over the weekend that Senator Jeff Sessions (R-AL) and other pro-repeal advocates are scouring the Gulf Coast for victims of the Hurricane they can take advantage of to further their political goals of repealing the estate tax. The article quotes Sessions as saying, "If we knew anybody that owned a business that lost life in the storm, that would be something we could push back with."

Senator Sessions - a Senator from one of the states hardest hit by Katrina - and others involved in pushing such misguided priorities of favoring a few millionaires at the expense of the public good after a natural disaster of these proportions need to re-evaluate their positions. It's even more despicable to be seeking to take advantage of someone who lost their life in such a tragedy to further political agendas. Senator Sessions should be concentrating on helping all those whose lives were ruined in Alabama after the hurricane - not just a handful of multi-millionaires.

Chairman of the Senate Finance Committee Charles Grassley (R-IA) commented today that repeal of the estate tax given current conditions -- and the number of people in obvious need -- would be "unseemly." He said in a conference call with Iowa reporters, "It's a little unseemly to be talking about doing away with or enhancing the estate tax at a time when people are suffering." He went on to say he doubts repeal of the tax will be considered in 2005.

These comments seem to be contradictory to what was posted here earlier today regarding Sen. Jon Kyl's desire to move forward with an estate tax vote. Only time will tell what the Senate will actually have to time to pursue this fall. While repeal of the estate tax would be harmful at any time, it is at least reassuring to have a Congressional GOP leader such as Grassley recognize (and verbalize) that now is simply not the time to be cutting taxes for the wealthy.

Sen. Jon Kyl (R-AZ) told reporters he is still set on moving ahead with an estate tax vote. He is hoping the vote, which was originally scheduled for September 5, will take place in October.

Some Congressional GOP leaders have come under fire as of recently for voicing their desires to move ahead with tax cuts, or votes on tax cuts, during a time when so many poor people are so obviously in need of help via a social strong safety net. Repealing the estate tax would essentially give billions of dollars back to the wealthiest in our society and gut national revenue, rather than help the poor. Even so, Kyl has said he wants to hold a vote "to determine whether or not the votes are there for permanent repeal.... That hasn't changed."

Sen. Max Baucus (D-MT), who has been the lead estate tax negotiator for the Democrats, has pulled out of compromise negotiations with Kyl. Without a compromise, Kyl has proposed tying the estate tax rate to the 15 percent rate on capital gains and dividends and raising the exemption to $8 million. Read this Center on Budget and Policy Priorities report outlining how this "compromise" would, in reality, end up being little better than full repeal.

Despite reports on Friday that the Senate would go ahead with the estate tax vote this week -- even in the wake of Hurricane Katrina -- it appears Frist has decided to postpone the vote for now.

The vote was delayed partially because of the efforts of Minority Leader Harry Reid (D-NV), who pressured Frist to call off the vote on tax cuts. In his statement, Reid said a vote on the estate tax would be "a travesty on top of a tragedy."

Bloomberg News: Estate Tax Vote Put Behind Katrina

Congress Daily reported this afternoon that despite the devastation with this week's hurricane and flooding, Majority Leader Bill Frist (R-TN) plans to go ahead with the Congressional schedule as previously planned, which means that there will be a vote on the estate tax on Tuesday.

According to Congress Daily, Frist rejected a request from Minority Leader Harry Reid (D-NV) to suspend work on the tax bill. The Senate will, therefore, move forward with their vote to repeal the estate tax. Repeal of the estate tax would gut levels of federal revenue and would hurt charities by taking away an incentive for people to give. It seems as though in a time of national devastation -- as we are experiencing right now -- it is awfully bold of Frist and Congressional leaders to move ahead with legislation that would take more money away from federal coffers (which is used to invest in national infrastructure), and instead make a move to further pad the pockets of the wealthy. Disgraceful.

Sen. Baucus (D-MT), who has been the Democrats' key negotiator on the estate tax, issued the following statement regarding the vote:

“I am supportive of working on repealing the estate tax, but now is not the appropriate time. The nation is calling out for the Senate to act to help those in need. We have passed an emergency spending bill, but the emergency has not subsided. People are still homeless. New Orleans is still buried in dark water. Our work is not finished. Instead of moving to the estate tax when the Senate is back in session, I encourage my colleagues to concentrate on the victims left in Hurricane Katrina’s wake.”