Don’t Let Senators Cave on Repeal of the Estate Tax

Don’t Let Senators Cave on Repeal of the Estate Tax

June 30, 2005

What’s happened to the progressive impulse in Congress? First a bipartisan coalition passed bankruptcy legislation written by and for the credit card industry. Now, the Wall St. Journal reports that a near filibuster-proof majority in the Senate is on the verge of passing a "compromise" on the estate tax that is virtually equivalent to permanent repeal. Don’t let our leaders return America to its pre-Revolutionary War status as a land of unlimited inherited wealth and aristocracy. Tell Congress to get its priorities straight and vote against the estate tax repeal.

• America has entered a new Gilded Age yet our leaders lack the fortitude to do anything about it. Income and wealth inequality in the U.S. has risen dramatically over the last 20 years. Today, the wealthiest 20 percent of Americans take in fully half of the country's income while the poorest fifth takes in just 3.5 percent. The notion of permanently repealing the estate tax in this context is plainly anti-democratic. Perhaps our leaders should take a cue from Theodore Roosevelt, who helped end the first Gilded Age. Roosevelt made the argument for taxing inheritance almost a century ago, claiming that the "really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Roosevelt also stated: “We are bound in honor to refuse to listen to those men would make us desist from the effort to do away with the inequality, which means injustice; the inequality of right, opportunity, of privilege.”
  
  
• Don’t believe the lies about small business and family farms being hurt by the estate tax. The sole claim that persuades many middle- and working-class Americans to support the estate tax repeal is that it will benefit small businesses and family farms. But virtually all family farms and small businesses are already exempt from the estate tax. As the New York Times reports, "Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes."
  
  
• So-called compromise proposals on the estate tax are nothing but a wolf in sheep’s clothing. Sen. Jon Kyl, who is leading Republicans in negotiations on the estate tax, has been pushing to not only lower the rate to 15 percent, but also increase the per couple exemption to $20 million. The Washington Post calls the plan "a Trojan horse proposal that amounts to repeal in disguise." And no wonder: Kyl's proposal would cost 94 percent as much as repeal. Even combining a 15 percent top rate with a lower $5 million per couple exemption would still cost 82 percent as much as repeal. With the top marginal rate at 15 percent, the effective tax rate—the share of an estate actually paid in taxes—would actually slump to an average of 5 to 6 percent.