Anybody following state politics recently knows that budget shortfalls are among the first issues that will have to be addressed when most state legislative sessions begin this January. In many cases, state policymakers have appeared heavily biased in favor of slashing services to remedy these gaps, usually based on the absurd assumption that raising taxes would somehow be more painful than stripping needed services from the nation's most vulnerable lower- and middle-income families. But Governor Jim Doyle of Wisconsin has recently set an intriguing example for other struggling states to follow by agreeing to consider an early revival of the state's temporarily suspended estate tax.
The estate tax is an incredibly progressive tax that only affects a few very wealthy families -- hardly the folks struggling most in our current economic crisis. As a recent CTJ report showed, less than 300 families paid any federal estate tax whatsoever in Wisconsin in 2007. This amounted to only 0.6% of Wisconsin estates. Nonetheless, even this relatively minor tax could result in enormous gains if the money is put back into the state's economy, such as by filling some of the 3,500 state jobs the governor has ordered be left vacant.