Index: wp-admin/edit-tag-form.php
===================================================================
--- wp-admin/edit-tag-form.php	(revision 15513)
+++ wp-admin/edit-tag-form.php	(working copy)
@@ -48,7 +48,7 @@
 		<tr class="form-field">
 			<th scope="row" valign="top"><label for="parent"><?php _ex('Parent', 'Taxonomy Parent'); ?></label></th>
 			<td>
-				<?php wp_dropdown_categories(array('hide_empty' => 0, 'hide_if_empty' => false, 'name' => 'parent', 'orderby' => 'name', 'taxonomy' => $taxonomy, 'selected' => $tag->parent, 'exclude' => $tag->term_id, 'hierarchical' => true, 'show_option_none' => __('None'))); ?><br />
+				<?php wp_dropdown_categories(array('hide_empty' => 0, 'hide_if_empty' => false, 'name' => 'parent', 'orderby' => 'name', 'taxonomy' => $taxonomy, 'selected' => $tag->parent, 'exclude_tree' => $tag->term_id, 'hierarchical' => true, 'show_option_none' => __('None'))); ?><br />
 				<?php if ( 'category' == $taxonomy ) : ?>
 				<span class="description"><?php _e('Categories, unlike tags, can have a hierarchy. You might have a Jazz category, and under that have children categories for Bebop and Big Band. Totally optional.'); ?></span>
 				<?php endif; ?>