Victory: Taxing Wealth Dynasties Will Continue

By Chuck Collins, AlterNet. Posted October 5, 2009.

Sometimes you can’t declare victory until the other side concedes defeat. That’s what happened Monday in the decade long struggle over the future of the federal estate tax, our nation’s only levy on inherited wealth.

The coalition of corporate lobbyists and wealthy families, including the U.S Chamber of Commerce and the National Federation of Independent Businesses, dropped their long standing call for complete abolition of the tax, shifting their lobby resources into weakening the law.

Wealthy families, including 18 dynastic families such as heirs to the Mars candy family fortune, had spent millions in lobbying funds to save billions in future taxes.

For over a decade, opponents of the estate tax attempted to confuse the public about who really paid the tax. They called it a “death tax” on everyone, when it applied to only a small sliver of multi-millionaires and billionaires, less than two percent of taxpayers

In the late 1990s, they ran advertisements and a media campaign claiming the estate tax was the death of the family farm. In 2001, Pulitzer Prize winning journalist, David Cay Johnston, exposed this as a sham. His investigative reporting found not a single case of a farm having been lost because of the estate tax.

Proponents of repeal found a friend in President Bush who included a phase out of the estate tax in his 2001 tax plan. Over the ensuing decade, the amount of wealth exempted by the tax rose from $1 million to $3.5 million ($7 million for a couple) and the rate was cut from 55 percent to 45 percent. At this current level, only one in 200 taxpayers will owe any estate tax.

Advocates for retaining the estate tax have pointed out that it raises significant revenue (a $1 trillion over the next 15 years) from those most able to pay. It provides an incentive for the wealthy to give to charity and places a brake on the concentration of wealth and power --which corrodes democracy.

Bill Gates Sr., the father of the founder of Microsoft, called the estate tax "a fair tax" and a "mechanism for wealthy people to pay back the society that created the fertile ground for wealth creation." Warren Buffett testified before Congress that "dynastic wealth, the enemy of meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."

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Chuck Collins is a senior scholar at the Institute for Policy Studies and chair of the Working Group on Extreme Inequality, an emerging coalition of religious, business, labor and civic groups concerned about the wealth gap. He is coauthor with Bill Gates Sr. of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes.

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