I just received this e-mail from the Campaign for America’s Future, lamenting that ten Democrats would vote with Republicans to scale back the reach of the federal inheritance tax — known to conservatives as the “death tax.”

This month, every Republican senator joined strangely by 10 Democrats ­pushed for yet another tax break for super-wealthy Americans with fortunes worth more than $7 million. Republicans are apparently distressed that the children of the very wealthy won’t be able to afford a second yacht.

The ignorance and populism is just overwhelming. Far from merely preventing people from buying ”second yachts,” the death tax routinely forces small to medium-sized private businesses with a few million dollars in assets to be liquidated, simply in order to pay the tax. Such businesses usually have to be sold to large corporations at distressed prices. Two famous examples are the once-family-owned Buffalo News and Dairy Queen – both snapped up by Warren Buffett’s Berkshire Hathaway.

Moreover, the death tax is an effective $12 billion annual subsidy to the life insurance industry, according to Dick Patten of the American Family Business Institute. As the purveyors of the financial product of choice for avoiding the tax, the industry has lobbied heavily to keep it in place. (It should come as little surprise that Buffett, who also made a fortune in life insurance, is a big supporter of the tax.)

The loser from the death tax is not some billionaire swimming in his pool of cash. The real losers include:

  1. the small businessman or entrepreneur who invests in his business and hopes to leave something behind for his kids.
  2. the people he might hire if he didn’t have to pay enormous monthly life insurance premiums, in expectation of otherwise losing millions to the death tax.
  3. in some places, citizens who once enjoyed reading their local newspapers, before they were all bought up by large corporations.

There is another problem, too. A business-owner pays income taxes at the top rate for years and years, and immediately upon his death the government can come right back for the rest of it, seizing at the margin 55 percent of every dollar in assets he leaves behind. How is that just?