While the debate over the “fiscal cliff” has largely focused on the expiration of 2001 and 2003 income tax relief, lawmakers’ failure to take action before January 1 would also result in a massive expansion of the estate tax (a.k.a. the “death tax”).

Currently, estates valued at less than $5.12 million are exempted from paying the tax – while any estate valued above $5.12 million is taxed at 35 percent.  Those levels were set during the administration of George W. Bush – and extended two years ago as part of a bipartisan compromise.

Beginning on January 1, 2013, however, estates valued at $1 million or more will be taxed at a whopping 55 percent – which amounts to a massive $532 billion tax hike over the coming decade.  U.S. President Barack Obama – who seems eager to push the country over the fiscal cliff – isn’t offering much in the way of a compromise, either.  Under Obama’s proposal, any estate valued at $3.5 million or more would be taxed at 45 percent – a plan that has been endorsed by U.S. Speaker John Boehner.

Other liberals – including investor Warren Buffett – want a $2 million cap and escalating rates beginning at 45 percent.

None of these plans are satisfactory.

We support the repeal of the estate tax.   Whether via income, property or dividend levies, this is money that has been taxed once (sometimes twice) already.  Taxing it yet again is wrong – and represents yet another disincentive to wealth creation.

First imposed in 1797 to fund America’s Navy, the estate tax was repealed in 1802.  It reappeared during the Spanish-American and Civil War, though, with its current iteration hitting the books in 1916 as a means of subsidizing America’s involvement in World War I.

It’s time to get rid of it entirely …