News & Politics

Repeal of Estate Tax Benefits Wealthy

Disproving the many myths Bush would have you believe about the estate tax.
When it comes to debating the century-old check against concentrated wealth and power -- the estate tax -- ideological opponents start singing canards. Canard 1: The ''death tax'' has led to many middle-class Americans losing their estate because of the taxes owed.

Reality: According to United for a Fair Economy (UFE), the rise in the estate tax exemption level from $1.5 million per person to $2 million ($4 million per couple) means that less than one third of one percent of all U.S. estates (0.27 percent) will be affected by the federal estate tax in 2006. The other 99.73 percent of estates can pass on 100 percent of their assets to heirs tax-free. Out of an estimated 2.3 million deaths in 2006, an estimated 6,343 estates will pay the tax. The share of estates taxed will fall to 0.16 percent in 2009, when the exemption rises to $3.5 million.

This would indicate that those who call for the permanent repeal of the estate tax are really arguing for tax breaks for the richest of the rich while trying to pass the polemic off as populism. Canard 2: The ''death tax'' is an unfair double tax because the estate-holder already paid income taxes and property taxes.

Reality: Obviously, the estate tax is NOT a tax on the deceased. It's a tax on the heirs, whose inheritance is a product of genetic luck; an unearned gift. Or, in the words of one reader able to see through the double-speak, ''I work for a company that pays a tax on their income, then pays my wages from what's left. I buy something with what I have left of my wages and pay sales tax, gasoline tax, property tax, etc. The businesses where I spend my money pay tax on that income again. Why should the heirs of a few millionaires complain because they are part of this same cycle?''

Canard 3: The estate tax is an anti-American socialist policy. Reality: It was the jurist Blackstone, who argued that inheritance is not a natural, but a civil, right. ''For, naturally speaking, the instant a man ceases to be, he ceases to have any dominion; else if he had a right to dispose of his acquisitions one moment beyond his life, he would also have a right to direct their disposal for a million of ages after him; which would be highly absurd and inconvenient.''

Thomas Paine advocated for ''death taxes'' because of what he regarded as the corrupting influences of inheritances on representative government. In ''The Rights of Man,'' Paine argued for tax rates that rise to ''the point of prohibition (100 percent)'' on the largest estates. In 1898 the U.S. Supreme Court put it in these blunt terms: ''The right to take property by devise or descent is the creature of the law, and not a natural right.''

Mr. Rugged Individualist himself, Teddy Roosevelt, told Congress in 1907: ''The government has the absolute right to decide as to the terms upon which a man shall receive a bequest or devise from another.'' Professor Mark Ascher, in his detailed legal analysis of the estate tax called ''Curtailing Inherited Wealth,'' finds estate tax opponents ''puzzling'' because ''substantial limitations on inheritance would contribute meaningfully to the equality of opportunity,'' which just about everyone claims to support, including privileged taxpayers.

If you're interested to know who's behind the canards regurgitated as ''talking points'' by ideologues, check out the new report published by Public Citizen and UFE on the multimillion dollar lobbying effort to repeal the estate tax. According to the report, the repeal campaign ''has been aggressively led by 18 super-wealthy families…worth a total of $185.5 billion.''

Their 10-year effort, if Bush and his Congressional cronies are successful, would collectively net a windfall of $71.6 billion. The report profiles the families and their businesses, which includes the ''small family business owners'' of Wal-Mart, Gallo wine, Campbell's soup, and Mars Inc.

Why is this important? It's legally and morally right. And to lose a trillion dollars in tax revenue over the next decade in the face of record deficits is an unconscionable burden to put on future generations.
Sean Gonsalves is a Cape Cod Times staff reporter and a syndicated columnist.
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