The Wall Street Journal has the news this morning:

President-elect Barack Obama and congressional leaders plan to move soon to block the estate tax from disappearing in 2010, suggesting the levy might outlive the "Death Tax Repeal" movement that has tried mightily to kill it.

The Democratic stance on the estate tax contrasts with Mr. Obama’s reluctance to press forward with his campaign pledge to raise income-tax rates on top earners, which he worries could have an adverse economic impact during a recession.

But Democrats are determined to act quickly to prevent the estate tax’s scheduled repeal. Elimination of the levy on big inheritances was approved by Congress under President George W. Bush in 2001, with rollbacks phased in slowly and its full elimination slated to take effect next year.

  And…

Under the Obama plan detailed during the campaign, the estate tax would be locked in permanently at the rate and exemption levels that took effect this year. That would exempt estates of $3.5 million — $7 million for couples — from any taxation. The value of estates above that would be taxed at 45%. If the tax were returned to Clinton-era levels, it would exclude $1 million from taxation with the rest taxed at 55%.

In making their case for the restoration, Democrats contend that such a large additional tax break for the rich shouldn’t go into force halfway through Mr. Obama’s proposed economic-recovery package. They argue that the deficit is already in record territory, while their plan wouldn’t have any impact on the economy since it would merely keep the estate-tax rate at its current level. Mr. Obama and his party also say that the affluent already have benefited handsomely from the Bush tax cuts.

  A few points to remember. First, the president-elect’s plan is even more generous to the super-rich than they had in the Clinton era, keeping the level of exemption of estates at $3.5 million.

At the level proposed in the Obama policy, all but the largest estates — fewer than 2% of annual deaths — would escape taxation. Over 10 years, the Obama plan would cost the Treasury around $324 billion more than if the Clinton estate-tax levels were maintained, according to the Joint Committee on Taxation. Full repeal would cost more than $500 billion over a decade.

  Personally, I think that’s letting too many wealthy people off the hook at a huge cost to our Treasury at a time of economic national emergency.

  Second, let’s be really clear about who pays this tax. As Citizens For Tax Justice pointed out:

In 2004, 2,429,024 Americans died. But only 18,431 of these decedents left behind enough to owe any federal estate tax in 2005 (when returns were generally due). This handful of taxable estates paid $21.7 billion in federal estate taxes.

The 18,431 taxable returns represented just 0.8 percent of all the people who died in 2004.

Most of the $21.7 billion in federal estate taxes was paid by a very small number of the very largest estates. The 498 taxable estates worth over $20

million paid more than a third of the 2004 estate taxes. And the 3,600 taxable estates worth over $5 million were responsible for 72.6 percent of all federal estate taxes.

  Finally, while the Republican-led campaign to get rid of the estate tax tried to make this seem like a grass-roots campaign inspired by lots of small businesses and family-farm owners, it has, in fact, been secretly bankrolled by very rich and powerful elites.

  Let’s keep an eye on this one. The president-elect is going to need grassroots outcry to make sure elite-friendly politicians don’t try to roll us on this one.