The House’s rejection last week of a bill that would further protect family farms and small businesses from the estate tax in favor of a proposal that most often favors the very rich, was a disappointing display of fiscal imprudence. Maine Reps. John Baldacci and Tom Allen were right to vote no on the estate-tax measure, and President Clinton should follow through on a promised veto.

Fewer than 2 percent of Americans are affected by federal estate taxes, which currently do not begin until an estate is worth $675,000, a figure that will increase to $1 million by 2006. Nevertheless, the thought of losing long-held family businesses and farms because of taxes is troublesome, and Congress was right to try to eliminate this problem. The failed proposal supported by Reps. Baldacci and Allen, for instance, would have lifted the tax exemption for these family investments to $4 million. A strong case could be made for raising that number substantially to protect these assets.

But while talking about cherished family businesses, it is clear that many members of Congress had something else in mind. Rather than the narrow exemption, they approved a phase-out of what members referred to as the death tax, which will eventually remove $50 billion a year from the treasury. The estates in 1998 contributing by far the most through the tax were those with assets of more than $5 million, some no doubt based on small businesses, others through success in the stock market.

For the last several years, Congress has looked for a tax cut to wave around during campaign season, but the public has regularly suggested that it would prefer to see programs such as Medicare put in strong financial shape or the national debt paid off before major tax breaks begin. That remains the proper order of congressional business.