Sometime soon the Senate will vote again on the fate of the estate tax. In 2001 the tax cut package provided for phased elimination of the estate tax by 2010. This legislation would result in full resumption of the tax in 2011. Maine’s senators, like many others, have been committed to full repeal in the past. But times have changed, and require a fresh look at the issue.

When the 2001 tax revisions were approved, the Congressional Budget Office (CBO) was projecting a surplus of $5.6 trillion over the 2002-2011 period. Currently, if the 2001 and 2003 tax cuts are made permanent (as expected) and the costs of continued operations in Afghanistan and Iraq for several more years are included, the 2002-2011 projection is a deficit of $3.5 trillion to $4.5 trillion. This represents a negative shift of around $9.5 trillion.

This shift is being used to justify dramatic cuts in domestic programs for the long-term future. Does it seem reasonable or compassionate to permanently repeal the estate tax to benefit only the top 1 or 2 percent of households while substantially cutting domestic programs serving millions of the most needy of us?

Many reasons are given for repeal, but these need to be closely examined.

The first myth is that the estate tax is a tax on dying. Since 98 percent of estates are not taxed, it can hardly be considered a death tax. If there is a need to change the label, why not “inheritance taxes.”

Myth number two is that this additional tax break will generate greater investment in our economy and that benefits all. Ideally this would be true. The experience of the last four years has not supported this. By any unbiased analysis, the recent large tax cuts have greatly benefited the wealthiest 10 percent of us, but have produced the lowest job growth of any recent presidency. Tax reductions for the wealthy have not been cost-effective economic stimulants.

Another myth: One should be able to pass on to heirs the wealth they have accumulated through their hard work and ingenuity. Ninety-eight percent of all estates are able to do just this. Heirs to the remaining 2 percent of estates still receive enormous wealth. Further, the accumulation of such wealth depends on many public goods, which all of us support through our taxes.

These include government sponsored research and development, enforcement of patent laws, business assistance programs, the federal banking and judicial system, trade agreements, tariffs and our military that facilitates and protects economic opportunities in other countries. The larger the estate the more it has benefited from these public goods. As the Project for Responsible Wealth points out, “It takes a village to raise a millionaire.”

Fourth, estate taxes result in double taxation. Estates subject to the “inheritance tax” are primarily the product of the appreciated value of property, stocks and bonds. This appreciated value is not taxed until the asset is sold or when, in a small number of instances, the “inheritance tax” is paid.

Finally, repeal of the estate tax is necessary to save family businesses and farms. In reality only a small fraction of family businesses and farms are subject to estate taxes, and no example of a farm lost to the tax has been produced. Current law includes sizable breaks for family businesses and farms. To the extent that problems may remain, they can be identified and addressed at a modest cost to the Treasury. Wholesale repeal of the estate tax is not needed for this purpose.

Basically the Senate’s options are:

. Let the current bill expire in 2010 and thus reinstate the estate tax as it was in 2001.

. Make the scheduled elimination

of the estate tax permanent – this would cost nearly $1 trillion between 2012 and 2021.

. A “compromise” position being floated by some senators raises the exemption level to $3.5 million and lowers the top rate from 45 percent to 15 percent. The federal and state governments would retain only 13 percent of the current estate tax revenues. The financial effects of this plan are similar to outright repeal.

. Retaining the tax as it will exist in 2008. This lowers the top rate from 55 percent to 45 percent and raises the exemption from $675,000 to $2 million. This strategy retains 68 percent of the revenue currently generated through inheritance taxes.

Given the current state of our economy and the size of our national debt it seems only prudent for the Senate to select the latter option as a reasonable and responsible compromise.

Whatever option you personally prefer it is important that you communicate your position to our senators.

Milt Hillery was assistant vice president of American College Testing Inc. Now retired, he lives in Orono and serves as a board member of the Maine People’s Alliance.