I'd never really thought about the estate tax, often referred to as the death tax, in generational terms, which is why Clayton Leverett's piece in the Austin American-Statesman was so compelling.

A 5th generation rancher, Leverett recounts how his family has been forced to take out loans to pay the estate tax over and over again on his family's ranch every time the patriarch of the family has died.

Leverett's piece offers a backdrop to the renewed debate that's going on over the estate tax. Based on legislation passed in 2001, the estate tax is set to be repealed altogether in 2010 before snapping back in 2011 to Clinton-era rates of a 55% tax on any estate over $1 million.

President Obama has proposed freezing the estate tax at its current 2009 level which provides a $3.5 million exemption and a taxable rate of 45%. Democratic budget proposals current under consideration in Congress mirror the President's proposal, though according to this analysis there are changes in valuation discounts that would in fact raise tax liabilities on farmers and ranchers just like Leverett.

However, Republican Senator Charles Grassley said this week he thinks the current situation favors those who want to see further decreases in the death tax:

"If Republicans stick together, we can do better than $3.5 million and a 45% tax rate," Grassley told reporters after his speech. "Maybe not a whole lot better, but we ought to be able to do a little bit better."

He said Republicans could press for an exemption closer to $5 million or $6 million, and a tax rate closer to 35%.

Grassley said Democrats will be eager to avoid having the tax go to zero on Jan. 1, 2010, only to have to reverse that by reinstituting it through legislation later. Republicans should be able to exploit that urgency to press for better terms, he said.

"This is where Republicans have got some leverage, it seems to me," said Grassley.

Another point worth making is that the people with truly vast fortunes probably don't pay anywhere near 45% on their estates. They employ high paid accountants and lawyers to make sure their assets are sheltered using every available legal gimmick or loophole.

Those who feel the full brunt of the estate tax are the people, probably like Leverett, who are business owners who have assets in equipment or property that reaches above the exemption but don't possess the liquidity of the super wealthy.