Congress should reinforce the inheritance tax, not scrap it.
By
Real wages have
stagnated for decades. Homeownership rates are down. College debt is weighing
down young people entering the workforce. Millions of low-wage workers eke by
on a minimum wage of $7.25 an hour.
As the American Dream
slips away for millions of people in this country, one faction of Congress is
doing its best to aid a select group of folks that least needs a helping hand:
trust fund babies.
More than 222 House
members — nearly all of them Republicans — have co-sponsored legislation to
abolish America’s inheritance tax, a levy that only applies to the
estates of multi-millionaires and billionaires.
Technically called the
estate tax, and derided by its opponents as the “death tax,” this part of the
tax code affects only one out of every
500 Americans.
The lawmakers
determined to kill the inheritance tax go out of their way to hide the facts
and pose as populists.
Take Representative
Kevin Brady, a Texas Republican and lead sponsor of repeal legislation. He
circulates advertisements with two young farm kids next to a pickup trick with
the caption, “The Death Tax crushes family farms, ranches and businesses.”
And a Kentucky PAC
spent $1.8 million airing a TV ad featuring a farmer who bemoans the burden of
the inheritance tax and praises Senate Minority Leader Mitch McConnell (The
farmer, John Mahan of Lexington, did not complain about the $405,692 in
federal farm subsidies he
received between 1995 and 2012).
The inheritance tax “continues
to be the number one reason family-owned
farms and businesses aren’t
passed down to the next generation,” Brady recently (and wrongly) claimed.
It’s hard to fathom how
a tax that 99.8 percent of households don’t pay could be a bigger threat to farmers
than volatile farm prices and competition from corporate agribusiness. But
don’t bank on opponents of the inheritance tax letting the facts muddle their
political agenda.
As a strong supporter
of the inheritance tax, I’ve seen this playbook before. Between 1996 and 2004,
America’s plutocrats, including the Walton and Mars families, invested millions
in a propaganda campaign designed to save themselves billions.
They plastered the
media with images of farm families, alleging that the inheritance tax would be
the “death of the family farm.” The only problem was, when pressed by Pulitzer
Prize winning reporter David Cay
Johnston, foes of the estate tax couldn’t produce a single example
of an actual farm lost because of the inheritance tax. It was a complete myth.
Congress wound up
weakening the tax in 2001, when opponents failed to abolish it. Now this tired
debate is back, with those phony farm images and fake populism.
Here’s what really
matters: Couples with less than $10.6 million in wealth are exempt from the
inheritance tax. So are individuals with wealth under $5.3 million.
The inheritance tax is
important because the very richest Americans already benefit from enormous
loopholes that enable them to pay taxes at rates lower than average workers.
The inheritance tax levels the playing field.
And the huge family
fortunes now being passed onto the next generation are creating a new wave of
American aristocrats.
Who are the real faces
of the inheritance tax? Try the sons and daughters of the billionaires who make
the Forbes 400 list, standing next to their family limousines.
There is a real problem
with the inheritance tax: Billionaires are paying expensive lawyers to weasel
out of paying it. Casino mogul Sheldon Adelson,
for example, used a system of trusts to funnel $8 billion in wealth to his
heirs. This maneuver let his family dodge about $2.8 billion in estate taxes
that would be due after his death.
Instead of abolishing
the inheritance tax, lawmakers should focus on closing the loopholes that
empower the richest Americans to legally dodge it.
Chuck Collins is a
senior scholar at the Institute for Policy Studies and co-editor of
www.inequality.org. He is co-author, with Bill Gates Sr., of Wealth and
Our Commonwealth: Why America Should Tax Accumulated Fortunes.
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