The debate about the estate tax is...

The debate about the estate tax is basically over. The House voted Wednesday to repeal it permanently. The Senate may balk. But because even the opponents of repeal want to exempt your first $7 million (only $3.5 million if you’re not married when you die), you can probably scratch the estate tax off your worry list.

The debate is over in a larger sense as well. Apparently most Americans agree with the GOP congressman who said Wednesday that elimination of the estate tax is “a matter of basic fairness.” Fairness to folks with more than $7 million is a fairly arcane egalitarian concern, but polls consistently show that it is widely shared. The conventional explanation for this is that even Americans who don’t have $7 million to keep body and soul together nevertheless cherish the hope that they will have more than that by the time body and soul go their separate ways.

President Bush, in congratulating the House on Wednesday, said that the “death tax” causes “double taxation.” He means that you pay income tax on your investment profits and then estate tax on whatever is left when you die. But in fact, investment profits commonly are not taxed at all.

First, investment profits are exempt from the Social Security tax. Second, when you die, the income tax on “unrealized” profits (for example, the increase in value of stocks that you still own) dies with you. If your heirs sell the property, they only pay taxes on the increase in value since they inherited. This may sound “arcane,” as a Washington Post editorial described it Wednesday, but it allows half of all investment gains to escape income tax. And third, of course, there’s the $4 million you currently get to keep (if you’re married) before the estate tax starts to bite.

Bush’s 2001 tax bill actually closes this loophole partway (by forcing those who inherit a large estate to carry over an investment’s initial cost basis). But Bush will undoubtedly support the inevitable efforts to repeal this quid pro quo once the estate tax is dead and buried.

Closing the loophole would increase complexity in some ways and decrease it in others. You would have to know what Grandpa paid for that ancient Chinese vase. But you would not have to know what the vase was worth when he died.

The first number might be lost, the second might be unknowable. Which would be more of a burden? Hard to say. But people can be surprisingly tolerant of complexity if it reduces their taxes, and lose their enthusiasm for simplicity if it increases them.

More and more of the cost of government is being covered by the Social Security tax on working income, and much of the rest is being borrowed. At such a moment, the notion that “basic fairness” calls for cutting taxes yet again on the fortunes of very affluent people seems so far from reality that we despair of attempting to argue about it. Septumillionaires, enjoy your tax cut.