An idea going around in December was to put off the budget bill until February so that it could be combined with repeal of the federal estate tax. According to inside sources, a bill to phase out the tax on wealth over a five-year period was drafted in early December by congressional staff at Bush's direction. The new Bush plan was kept under wraps so that it could be sprung at the last minute, before opponents had a chance to mount a fight. And then there are the states. Although governors and state lawmakers have yet to speak out strongly against repeal, states have a big interest in keeping the federal estate tax because they share in its revenues.
Every state gets a piece of the pie.
In New Hampshire, federal estate-tax sharing pays for about 4.5 percent of the state's total budget. In Florida, New York, and Connecticut, it pays for about 2.5 percent. Imagine, for instance, a parent who wants to sell some stock. If the stock were transferred to a child in a low tax bracket, the capital gains tax could be cut considerably. Then after the sale, the child could give the proceeds right back to the parent.