The U.S. House of Representatives yesterday passed a reinstatement of the current estate tax rates. The tax only affects estates values at more than $3.5 million per person ($7 million for a couple) and is set at the rate of 45 percent. The estate tax was slated to expire next year, and then in 2011 return to the 2001 rates, which only excluded estates valued at $1 million and taxed the others at a 55 percent rate.

Obviously, the current arrangement needed to be changed or we would have a whole lot of nervous rich grandmothers next year. And it is a shame that the House did not go back to the earlier, higher rate although it was correct to raise the exclusion limit. As is, the federal treasury will forego $234 billion in revenue over the next ten years by adopting the lower, current rate. That figure represents one-quarter of the cost of the health care reform over that same decade.

The estate tax has been unhappily, but effectively, dubbed the “death tax” by Republicans. The GOP pulled off a similarly effective, and misleading, label for the public option in the health care debate, calling it “government-run health care.” The Democrats are simply not as good as their counterparts at finding catchy ways to describe their legislative proposals. We have cited previously an instance of this in the health care debate. If the public option had been structured as a buy-in to the health plan offered to federal employees, Democrats could sell it with the mantra “You should be able to get the same health care your congressman gets.”

Here is another suggestion. As the new year ends, and Wall Street firms, recently bailed out by Main Street taxpayers, plan their lavish bonuses, the Democrats should propose a surtax on the income of financial firms. The revenue would go into an insurance fund that would function like FDIC does for banks. In the future, if a Wall Street firm is heading towards bankruptcy, the fund could be used to provide future bailouts instead of turning to the taxpayers again. The tag line: “Because Wall Street can’t fool Main Street twice.” The added level of insurance would provide stability to the entire system and, politically, it would take some of the sting off the fact that Wall Street is recovering quickly from last year’s meltdown while Main Street is still struggling with 10 percent unemployment.

The estate tax, let’s call it the level playing field tax, represents a core American value. In America, it should matter more who you are than who your grandparents were. There are libertarian objections to an estate tax, of course, but in the Catholic social tradition, goods, even private goods, are always held in public trust. The estate tax reminds us of this core principle of our tradition. Yes, America is still the land of Horatio Alger mythology, but there is nothing in that myth about Horatio’s grandchildren.

I invite our friends at The New Yorker to re-run one of my all-time favorite political cartoons. It ran in 1964 and it showed then-presidential candidate and Sen. Barry Goldwater walking past a hobo, as homeless people were then called. The Senator, known for embodying the rugged individualism of the West (but living in Phoenix, a city only made possible because of federal water projects), looks at the man and mutters, “If he had any gumption, he would inherit a department store chain like the rest of us.” As the GOP tries to make hay with the estate tax, it is good to be reminded that most wealth in America is inherited wealth and that the merits do not always follow the money from one generation to the next.