From msnbc.com's Tom Curry: House Democrats unhappy with the tax cut deal negotiated by President Obama managed to tie up the lower chamber with a procedural roadblock for most of the day Thursday but were unable to stop final passage of the bill that will be signed into law Friday afternoon. So what was all the fuss about?
In a last gasp of rhetoric over tax policy, Democratic opponents of the deal were battling over just about one percent of federal revenue in 2011. That's the money that would have been raised from allowing the estate tax to revert to its pre-2001 level.
The 2001 tax law repealed the estate tax for 2010. If Congress hadn't have acted by the end of the year, the tax would have been reinstated with an exemption of $1 million and a maximum marginal rate of 55 percent.
The money raised by the estate tax (and the related gift tax) is small, compared to total federal revenue and compared to the size of the deficit.
According the Congressional Budget Office, since 1945 estate and gift tax receipts have been "near or below 2 percent of federal revenues. In recent years, they have been less than 1.5 percent of federal tax revenues."
But the tax has a large symbolic value for both political parties.
The accord that Republican leaders reached last week with President Obama, and that will soon be law, exempts estates above $5 million for individuals ($10 million for married couples) and sets a top rate of 35 percent. Those provisions will last for two years, ending on Dec. 31, 2102.
According to the Joint Committee on Taxation, the estate tax provisions in the Obama-GOP accord would mean a loss of about $32 billion in revenue over the next two years, compared to what would have been raised if the pre-2001 estate tax came were reinstated.
How large is $32 billion? Less than four days worth of federal spending.
Many House Democrats were pushing Thursday for a higher alternative: a 45 percent top tax rate on estates valued over $3.5 million ($7 million for a married couples).
But Democrats Thursday focused not on the relatively small revenues at stake, but on what they saw as an undeserved windfall for the rich.
"Some $25 billion will be lavished on 6,600 of the wealthiest estates in this country," complained Rep. George Miller, D- Calif., during Thursday's debate in the House. "These are estates that have used all of the tax laws to minimize the size of that estate to their advantage before they pay the estate tax."
"I'll paraphrase Winston Churchill who said: 'it has been some time since so many were asked to do so much for so few' -- and with no legitimate reason, I might add," said Rep. Stephen Lynch, D- Mass. "There's a big difference between compromise and surrender. What this bill represents is a complete surrender of Democratic principles and standing up for working people."
But Rep. Louie Gohmert, R-Texas spoke for many Republicans when he denounced the estate tax Wednesday arguing, "Morally, it is not right what we do in taking people's property, in prying their wallet from the dead carcass of someone because we can, because we have that power."
The arguments over fairness have changed little in the years since Congress created the estate tax in 1916 to help raise money for expanding the U.S. military.
With war in Europe threatening to embroil the United States, President Woodrow Wilson pushed Congress to enact a massive military preparedness program and a tax bill to pay for it. That bill created the estate tax, as well as raising income taxes.
As tax historian Joseph Thorndike shows in his look at the creation of the estate tax, Democrats in 1916 saw it as the fair way of getting wealthy people to help pay for the military buildup. "Many of the enormous fortunes of this country far exceed any service the recipients of these swollen fortunes have ever rendered society," said Rep. Clement Dickinson, D- Mo.
At first the estate tax was small: in 1918 it generated only 1.3 percent of federal revenue. By 1940 the tax had been increased and was raising about five percent of federal revenue.
It's highly unlikely that Congress and the president will return to that level. Long before last week's accord with the GOP, Obama had called for significantly cutting the estate tax from its pre-2001 level. According to the nonpartisan Tax Policy Center, Obama's 2009 proposal would have cut the number of taxable estates from 44,000 to about 6,000 in 2011, reducing estate tax revenue by $16 billion.