Senator Bill Frist has promised a vote to repeal the estate tax soon after Memorial Day and the spin on this issue is as egregious as it is outrageous. So let's get one thing straight: it's not a "Death Tax" and it has absolutely nothing to do with the Family Farm.
Here are the facts: the estate tax is levied only on estates worth over $2 million ($4 million for couples), which means approximately one-fourth of one percent of all estates on America will pay it in 2006. Over 99 percent of all Americans will pass their estates on to their heirs completely tax free – and there is no tax whatsoever on assets left to a spouse no matter the amount.
The anti-estate tax American Farm Bureau Federation could not find a single case of a family farm lost due to the tax. (Moreover, if there were any evidence of such problems down the road one could easily protect family farms and small businesses by raising the exemption level.)
This is simply not a tax on death. If anything, it is a tax on Paris Hilton.
And let's not fall for the argument that Paris will be the victim of "double-taxation" either. First of all, everyone pays taxes any number of times as money cycles through the economy. Workers pay income, payroll and sales tax. The truth is that more than half of the value of large estates consists of unrealized capital gains that would never be taxed without the estate tax.
What about the costs of repealing this tax? How about $1 trillion in lost revenues and increased interest payments on the national debt over the first 10 years. And the Congressional Budget Office estimates an annual loss of $13 to $25 billion in the charitable sector – where donations are encouraged through their estate tax-exempt status.
So why all of this confusion about what the estate tax really is and whom it impacts?
One reason is a 10-year, multimillion dollar lobbying and public relations campaign led by 18 families worth a total of $185.5 billion. A repeal would net them $71.6 billion, and supporters of the PR effort include the families behind Wal-Mart, Gallo wine, Campbell's Soup, and Mars Inc.; the richest family in Alabama; and the world's largest retailer.
But Americans are beginning to see through the lies and deceit. A recent national poll shows that 57 percent of American voters prefer keeping the tax or reforming it to abolishing it outright. And when respondents receive the facts about the tax, that number rises to 68 percent. Only 23 percent favor a repeal.
United for a Fair Economy and its Responsible Wealth project offer a just proposal for estate tax reform, including: indexing the $2 million individual exemption and the $4 million exemption for couples to account for inflation; simplifying and liberalizing provisions to ease the transfer of the few closely held businesses subject to the tax; and retaining the ability of businesses and farms to pay the tax over a 14 year period.
It should also be noted that while the Bush Budget looks to repeal the estate tax, it would concurrently end the $255 social security death benefit that many impoverished citizens rely on for funeral arrangements. Seriously. One can't make this stuff up – Mike Meyers could have used this material for his portrayal of Dr. Evil.
Perhaps Sheldon Cohen, former Commissioner of the IRS put it best when he said, "The estate tax has been with us for 90 years, brings in fairly large amounts of revenue at fairly low cost, and affects less than one-third of one percent of the population. Why would we change this?"
Why, indeed. Add to that the lunacy that the Bush administration has already played fast and loose with our fiscal future by cutting taxes for millionaires and billionaires at a time of war for the first time in our nation's history.
The United States is now the most unequal society in the industrialized world. Don't be bamboozled into making things worse through an estate tax repeal. Click here to let your senators know how you feel today: forget about the family farm – this is all about Paris.