Nancy Altman: Eliminate the estate tax? Why not use it for Social Security expansion instead?

By now, every American is aware the Senate’s massive tax overhaul passed with a handful of votes and is headed for debate in conference committee. Both the House and Senate must reach consensus between the two versions of their bill before any tax plan lands on the desk of the President.

Several key differences in the bill have to be reconciled in committee, but on one item, the House and Senate seem to be in accordance: both bills double the estate tax exemption from $5.5 million to $11 million (the House bill proposes a total repeal by 2024, while the Senate bill does not).

Politicians have hotly debated the estate tax since the early 1900s. Opponents call it the “death tax,” claiming it unfairly punishes successful Americans and their heirs, particularly in the cases of small working farms where farmland value may be high enough to trigger the tax upon the owner’s death.

In 2010, 94 years after its enactment, Congress suspended the estate tax completely only to reinstate it a year later.

Now, the 115th looks set to significantly increase–or possibly eliminate–the tax threshold for wealthy families leaving sizable inheritances to their children and heirs.

But if Congress ultimately agrees to eliminate the estate tax, forgoing the billions of dollars ($19.3 billion in 2014) in tax revenue it generates, Social Security Works President Nancy Altman suggests it could be better used as a funding source for a dwindling Trust Fund.

In this piece for The Hill, Altman makes the case for keeping the estate tax and rededicating its income to filling the coffers of Social Security and expanding retirement benefits.

In her view, using estate tax income in this way would address widening income inequality–something that estate tax supporters claim is exacerbated by increasing or eliminating the estate tax cap–and like raising the payroll cap, would affect only a tiny fraction of the wealthiest Americans.

She also notes the current payroll cap of $127,200 already exempts many of these same individuals from contributing to Social Security on much of their income. Most Americans earn far less annually and therefore contribute on 100% of their income.

At the end of the day, despite concerns a hard-working person who amassed a fortune should be able to pass the fruits of his labor to his children, Altman believes no great wealth is possible without the services, staff, and infrastructure provided to us by the government and paid for by taxpayers.

In her mind, those who have been fortunate bear a particular responsibility to support the community that supported them–and contributing the estate tax to Social Security would be a great way to do that.

Wise policy or no? What do you think?