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Budgeting for Growth and Prosperity

Budgeting for Growth and Prosperity

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Michael Ettlinger, Michael Linden, and Seth Hanlon present a plan for long-term deficit reduction that builds a strong American economy.
Michael Ettlinger, Michael Linden, and Seth Hanlon present a plan for long-term deficit reduction that builds a strong American economy.

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Published by: Center for American Progress on May 25, 2011
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01/03/2012

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58 center for American progress | Budgeting for Growth and prosperity

Estate tax

As a temporary measure in our plan to reach primary balance in 2015, our plan
adopts President Obama’s proposal to return the estate tax to its 2009 parameters
starting in 2012.

In 2017, at the same time that our comprehensive income tax reform plan would
go into efect, our plan roughly reinstates the estate tax as it existed before the
presidency of George W. Bush, but with higher exemption levels. Te exemption
was $1.35 million per couple in 2000 and 2001. Under our plan it is indexed for
infation from a baseline of $2 million in 2001 so that in 2017, the frst year our
plan takes efect, it will be about $2.8 million per couple. Tus, under our plan, a
married couple would be able to pass on $2.8 million to their heirs tax free. Tis
would exempt close to 99 percent of all estates from the estate tax altogether.72

Te small fraction of estates larger than $2.8 million would pay estate tax on the
value of the estate that exceeds that amount according to a progressive rate sched-
ule ranging from 18 percent to 55 percent. Te top 55 percent is the same or lower
than it was for nearly seven decades from 1934 through 2001.73

Special provisions

that make compliance easier for the very few small businesses and farms that are
subject to the tax would be continued. We are not opposed to other responsible
changes to the tax that are revenue neutral relative to our proposal.

CAP Social Security plan

Our plan relies on two revenue proposals to ensure the 75-year solvency of Social
Security. As described in CAP’s report “Building It Up, Not Tearing It Down,” we
propose that:

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