Scott McClellan Isn't Exposing Bush's Economic Big Lies

By Sam Pizzigati, Too Much: A Commentary on Excess and Inequality. Posted June 12, 2008.

The Bush White House, a former Bush press secretary charged last week, deceived America into war in Iraq. That charge dominated the nation's headlines all week long. Meanwhile, an exposé of another Bush administration deception, also just released, went almost totally unnoticed.

This second exposé appeared in, of all places, an obscure official government publication. The topic: the estate tax, the only federal levy on the fortunes of America's most financially fortunate.

The Bush White House has been waging, against the estate tax, a campaign of disinformation every bit as devious as the walk-up to the war in Iraq. But the two disinformation campaigns -- the one on Iraq, the other on estate taxation -- do differ in one basic respect. Most Americans have caught on to the obfuscations on Iraq. On the estate tax, many still haven't.

Millions of average Americans today believe they face a "death tax" that will snatch away that nest-egg they've labored to leave for their loved ones. They believe that because a handful of super-wealthy American families started bankrolling, about 20 years ago, a highly sophisticated offensive to demonize the federal tax that has been infuriating America's ultra-rich ever since 1916.

George W. Bush signed on to this offensive early on. His new administration, in 2001, would make estate tax repeal a top priority -- and score a smashing triumph. As part of the 2001 tax cut, President Bush signed into law a year-by-year drop in the estate tax rate that led to a full repeal in 2010.

But to get this legislation through Congress, the White House had to agree to a catch. The entire 2001 tax cut would expire after 2010, and the tax code, after that date, would revert back to the pre-George W. Bush status quo -- unless, of course, Congress took action before then to make the cuts permanent.

The White House and the estate tax repeal gang have been fighting for that permanence ever since, railing at what they call the "death tax" at every opportunity, dubbing the estate tax public enemy number one of the family farm and the neighborhood small business.

Late last month, the IRS quietly "exposed" the disinformation behind this anti-estate tax effort. Actually, the IRS has been exposing this disinformation for some time now, in a series of dry, statistics-laden analyses of estate tax operations that have appeared in an IRS research journal, the Statistics of Income Bulletin.

The latest offering in this series details estate tax filings in 2004. In that year, over 2.3 million Americans died. Of that total, only 42,239 -- 1.8 percent -- left behind an estate large enough to have to file an estate tax return.

But the estate tax law allows for various deductions and credits. Funeral expenses can be deducted, for instance, as can attorney fees, charitable contributions, and, most commonly, transfers to surviving spouses. "Decedents" can transfer unlimited amounts to their spouses.

In 2004, if you left behind over $1.5 million -- that year's level at which an estate tax return had to be filed -- but your estate claimed deductions and credits that brought your taxable estate down below $1.5 million, your estate would have faced no estate tax whatsoever.

In 2004, over 54 percent of estates worth over $1.5 million fell in this no-tax category. In the end, only 0.8 percent of all the Americans who died in 2004 left behind an estate that actually paid a dime of estate tax. So much for the estate tax as a threat to the hard-earned nest-eggs of average Americans.

See more stories tagged with: bush, economy, estate tax, wealth inequity

Sam Pizzigati is the editor of the online weekly Too Much, and an associate fellow at the Institute for Policy Studies.

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