C. Sawicky,
The problem with your approach is exactly the Democrats' problem - they think they can cure a capitalist tax code of capitalist values through liberal wonkery. It can't be done. The only important thing to do on tax policy is to make the statement that the rich don't deserve a tax cut just because there's a surplus. The scheme of a uniform rebate payment to taxpayers based on the actual amount of surplus makes the point that - however the money got there - the surplus is the common property of the citizens. It assures citizens that the government respects their (common) ownership of the surplus while undermining conservatives' ability to use surpluses as an excuse to dicker around with the tax code.
Other than that, the Democrats should stick to a message of fiscal responsibility since interest payments to rich bondholders don't do working people any favors either. If you want to make a wonkish statement, point out that the estate tax cut is, in fact, an extension of a tax break for wealthy people. That's because the current estate tax scheme is a compromise: it taxes estates over a certain amount in return for a tax break on unrealized capital gains for the upper middle class. I personally wouldn't care if no estates at all were taxed so long as all heirs paid capital gains taxes the same way the decedent would have if he'd lived. Of course the estate tax helps charitable institutions, but the important thing is to make sure capital gains keep getting taxed (ideally at the same rate as income after being indexed for inflation).
Making the tax code more progressive is obviously desirable in the extreme but the American people simply aren't there yet. They don't even have a common basis for understanding progressivity and regressivity, in part because the tax code is so complex and so obviously a product of purely capitalist machinations.
peace
boddi
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