Amid all the end of year legislative frenzy to wrap up by Christmas, an important piece of legislation was left behind — the federal estate tax. This is a tax that most of us will never have to worry about — only 42 estates in Maine paid the tax in 2008. But it’s also a responsible and fair way to pay for important public services.

The estate tax is essentially a tax on property transferred at the time of death to heirs from the deceased. A small number of wealthy families have been pushing Congress for many years to eliminate the estate tax, claiming it harms small businesses and farms. The tax cuts enacted in 2001 under President George W. Bush gradually phased out the estate tax, eliminating it completely in 2010.

But the rules under which Congress enacted the 2001 tax cuts prohibited increasing the deficit after the first 10-year period. So virtually all of the tax cuts enacted in 2001 (and in 2003) expire at the end of this year. This means the estate tax will be reinstated at the levels that were in effect before 2001.

There is strong opposition to repealing the estate tax. Because it is paid by those who can most afford to pay it, the estate tax is a fair and responsible source of funding. Allowing this tax to be eliminated would make the deficit even worse.

President Barack Obama has proposed a responsible compromise. He would freeze the estate tax at the levels that were in place in 2009. Under 2009 law, only estates valued at $3.5 million or more for individuals and at $7 million or more for couples were subject to the tax. No tax is paid on the value of the estate below this level. And this exemption comes on top of deductions for a range of items including contributions to charities and payment of mortgages and other debts. According to the nonpartisan Center on Budget and Policy Priorities, fewer than 3 in 1,000 or 0.3 percent of estates are expected to pay the tax on estates transferred in 2009.

Some in Congress are insisting that the estate tax be made even more generous. They want to increase the exemption to $5 million per individual and $10 million per couple, and reduce the tax rate to 35 percent. They fall back on the same false argument that small businesses and farms will be hurt if these changes aren’t made. But this would cost $153 billion more than Obama’s proposal over 10 years when fully phased in.

The vast majority of small businesses and family farms are exempt under 2009 law. According to the Tax Policy Center, only 100 small business and farm estates nationally, which is about 1 out of every 4,000 estates, will pay any estate tax. Few small business or farm estates exceed these thresholds, especially given all the deductions from which they can benefit.

Despite the small number of estates, especially small businesses, that are subject to the tax, the impact on the federal budget — and thus on the nation — is important. Beyond the revenues it generates, the estate tax also prevents wealthy households from evading tax payments on part — often a significant part — of their income.

Without the estate tax, funding for the very public structures that undergird the attainment and retention of such wealth — secure and predictable transportation, legal and financial systems — is put in jeopardy.

Perhaps the most troubling aspect of the current full repeal of the estate tax is the threat it poses for small businesses. Absent the estate tax, heirs will pay a capital gains tax when they sell inherited assets. They will have to pay a tax on the difference between the price of the asset at the time they sell it and the original price paid by the deceased. This not only presents an enormous administrative challenge to any heirs — tracking down the original price paid — but is likely to increase the amount of taxes they will owe. Thus, more small businesses and farms are likely to be hit harder under the current repeal.

Congress should act now to reinstate the estate tax at the 2009 levels and make them permanent to start to address the deficit crisis facing this country and put us back on the path toward shared prosperity. Doing so will also help pay for critical public services such as health care, education and work-force development. Anything else does more harm than good to our economy.

Dan Coyne is a fiscal policy analyst with the Maine Center for Economic Policy.