Why is there no populist outrage over the estate tax?

Was it only last month that members of Congress tapped a vein of populist outrage to try to tax all those bonuses awarded to executives of Wall Street firms that received taxpayer bailouts? Now, a few short weeks later, the Senate has adopted an amendment that would give a tiny handful of superrich Americans a special tax break that would save them millions of dollars. Where is the outrage when you need it?

The special benefit involves the estate tax, which is money paid to the government from the assets held by an individual at the time of his or her death. This tax has been going down for years, thanks to the Bush tax cuts. In 2001, for example, estates received an exemption on only the first $675,000, with the remainder then taxed at 55 percent. Under Bush, the exemption rose each year, and it now stands at $3.5 million per individual (married couples have an even nicer $7 million exemption), taxing wealth above that amount at 45 percent.

As part of his budget for next year, President Obama proposed keeping the estate tax exemption and rate at this year's level, rather than letting the tax fall to zero, as it stood under the Bush plan. Enter Sens. Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz. They proposed a budget amendment raising the exemption to $5 million per person ($10 million for married couples) and cutting the tax rate above that to 35 percent. Amazingly, given Congress' recent outrage, 10 Democrats joined all 41 Republican senators to adopt the amendment. Sen. Max Baucus, D-Mont., who drafted the Senate bill to "clawback" bonuses from Wall Street, was among the Democrats who voted for the amendment.

Supporters of the legislation claim that the estate tax was an unfair burden on thousands of small businesses and farms. But the facts are quite different. According to the nonpartisan Urban-Brookings Tax Policy Center, the number of estates affected by the tax in 2009 will fall to just 6,200. Close to half of the tax is paid by the richest 0.1 percent of Americans.  According to the IRS, there were just 2,909 estates greater than $10 million in 2007.

And what about all those farms and small businesses? "Many have relatively low profit margins and are considered ‘wealthy' by the government only because they own expensive equipment and land," Kyl and Lincoln wrote to the Washington Post. But this is just so much manure. According to the Post, "nearly all small business and family farm estates are already shielded from having to pay estate tax." Under current rules, only 430 businesses and farms would owe any estate tax in 2011. What about sapping Americans' talent for entrepreneurship? The Post cited a 2006 study that showed that the top tax rate has "no economically significant effect" on entrepreneurship.

The Lincoln-Kyl amendment "would enrich the heirs of America's biggest fortunes," the New York Times said in an editorial. "It would not jump start job creation on Main Street." According to the left-leaning Center on Budget and Policy Priorities, adoption of the law will cost the government $250 billion in lost revenue when compared with Obama's proposals. Aren't we trying to lower the deficit?