There is a difference between less of a bad thing and a good thing, and this is something to keep in mind going forward when you consider the impact of the changes that have been made to the estate tax parameters. As has been widely reported, the estate tax exclusion amount was raised from the $1 million that had been anticipated up to $5 million, and the rate of the tax was reduced from the 55% that had been scheduled for 2011 down to 35%.

If you are not in favor of the estate tax, this was good news on the surface, but it is important to keep the matter in the proper perspective. There was a lot of resistance to any estate tax relief at all on Capitol Hill, with certain partisans decrying “tax breaks for the rich.” So in light of this posturing, the $5 million exclusion and 35% max rate that came out of the passage of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 was a victory of sorts. But many would suggest that much more needs to be done.

The estate tax is levied on assets you acquired with your after tax income. While you are alive these assets are not taxed a second time, but for some inexplicable reason the government feels entitled to 35% of the taxable portion of these resources after you die. This is double taxation, and though 35% is much better 55%, this is an extraordinarily high rate, especially when there is no defensible argument in favor of the tax at any rate.

In addition, the exclusion that draws the line between who has to pay the tax and who doesn’t makes no sense. America can afford to allow ten estates worth $5 million to pass tax free, but one estate worth $50 million must pay $15.75 million to the IRS.

The suggestion here is to recognize the fact that the changes in the estate tax parameters represent a relatively minor shift from what we have seen in the past, and that real, substantive reform should be the ultimate goal.