Repeal of the tax will benefit a few

By STEPHEN S. WAMHOFF
CITIZENS FOR TAX JUSTICE
Suppose our government somehow found an extra trillion dollars in the coming decade. What would you recommend we do with it? Pay down our huge national debt? Provide universal health insurance? Give every taxpayer in the country $5,000? Or send the whole trillion dollars to a handful of the nation's wealthiest families?
For President Bush and his allies in Washington, this is a no-brainer -- literally. Even though it's clear our government won't have a spare trillion, they want to borrow that gigantic sum and send every penny of it to the rich. In doing so, our leaders have decided to side with 18 super-rich families who are using their influence and wealth to convince politicians that the wealth tax on very large estates should be repealed.
Inevitably, the 99 percent of us who will never be affected by the estate tax will pay the trillion-dollar price tag -- either with higher taxes or reduced government services. Or perhaps our tribunes of the rich will settle for a "compromise" that will cost us a mere 84 percent of that amount.
The estate tax was enacted 90 years ago to curb the most extreme inequalities of wealth and to help fund public programs that all Americans, including the wealthy, enjoy. The tax applies to only the largest estates.
Only those bigger than $2 million, or $4 million for married couples, pay any tax at all. In addition, family farms and businesses get special, favorable treatment. As a result, of the 2.5 million people expected to die this year, only one in 300 will leave a taxable estate.
Nonetheless, 18 of America's richest families have funded a slick public relations and lobbying campaign to repeal the estate tax. As chronicled in a recent report from Public Citizen and United for a Fair Economy, these wealthy families have set up front groups, enlisted business trade associations and corporate lobbyists, and spent millions of dollars on advertising and campaign contributions to push their inaccurate and misleading arguments. None of the arguments stand up to scrutiny.
Income taxes
For example, estate-tax repealers insist that it's only fair to give all this money to the wealthy, because they've already paid income taxes on it during their lifetimes. But that's not true. Very few estates face the tax, and even those that do consist mostly of capital gains that have never been taxed before.
Estate-tax repealers also contend that the estate tax causes the break-up of lots of small businesses and family farms. That's false, too. In fact, those who make this claim are hard-pressed to come up with a single example of a farm or business that has been forced to be sold to pay estate taxes.
Besides the enormous cost of estate tax repeal, we should also worry about the link between growing income and wealth inequality in the United States and our democracy's ability to function and serve the people. Right now, 57 percent of the wealth is now owned by the richest 5 percent of citizens and only 2.5 percent of wealth is owned by the poorer 50 percent of citizens.
This concentration of wealth at the top seems to have created a tiny class of people able to bend public policy to its will. The estate tax is one of the few tools we have to prevent even greater concentration of wealth and power -- and those calling for its repeal understand this all too well.
Under the Bush administration's odd-ball tax policies, the estate tax is being phased out, and it's supposed to be totally repealed in 2010. But in 2011, the estate tax is slated to be fully resurrected.
Stephen S. Wamhoff is a policy analyst with Citizens for Tax Justice, Washington, D.C. Distributed by Knight Ridder/Tribune Information Services