Sunday, June 25, 2006

Estate tax, part whatever

Anyone who knows me or has read this blog knows I am a rabid defender of the estate tax. It prevents capital from accumulating in the hands of the very few, and any economist not on a Republican think-tank payroll knows that is a good thing.

The New Republic just published a great article on Democratic Senator Blanche Lincoln (a Republican in sheep's clothing) who has lobbied to abolish this tax. The article points out first of all the distorted rhetoric surrounding the estate tax, and also points out the inconsistencies that arise when the tax is opposed.

Any sentient person could tell you that the populist arguments against the estate tax are hokum. Under current law, every individual will soon be able to pass on $3.5 million to his heirs tax-free. That's $7 million per couple before a single dollar of taxes kicks in. And this assumes zero estate planning; any competent lawyer can shelter a whole lot more than that. Even among the tiny percentage of estates that pay inheritance tax, the effective rate is under 20 percent.
Lincoln and other estate tax opponents, who are trying to abolish the levy even on the super-rich, like to repeat sob stories about families that have to sell their small business or farm to pay Uncle Sam. In fact, those families can spread out the pain in installments over 14 years, which is plenty of time to come up with the money.
But critics never talk about the handful of massively wealthy families who have bankrolled the anti-estate tax campaign. Those families stand to save billions, and they have found the small-business owners and family farmers to be useful mascots for their enterprise. One such family is the Waltons, who own Wal-Mart. They live in Lincoln's home state of Arkansas. I'm sure any connection between that fact and Lincoln's support for repeal is purely coincidental.
So Lincoln doesn't want rich heirs to pay any inheritance tax on their windfall. She wants middle- and lower-income workers to pay lower taxes as well. And she doesn't want to slash the federal budget. So, who does she want to pay more in taxes? This is the question estate tax foes who aren't rabid conservatives never answer: Name the group of people who you want to pay higher taxes so that the heirs of the very rich can pay less. They don't answer because their vision of government is incoherent.

Read the entire article here (though you may need to register).

1 comment:

Anonymous said...

My views tend to align more with conservative than liberal, although I would never label myself as either. But, I do agree that the estate tax is a good thing. There appears to be an effective PR campaign convincing the middle and lower class that estate taxes are a threat to their families. I am in favor of tax reduction, but this is not a good place for it, since the bulk of estate taxes are paid by the wealthy.