Transcript #147

More Lies Than Ever Before: The Right-Wing Renews Its Assault On The Estate Tax


Partially hyperlinked to sources.  For all sources, see the data resources page.



Your sources today include: the New York Times,,,,,, Public Citizen,, and the Wall Street Journal.


Earlier this month, headlines blared that the unemployment rate was at a 25-year high, and nearly one in ten people in our country were receiving food stamps.


What did the right-wingers in Congress do?  They decided that reducing the taxes on the children of the richest Americans was just what America needed.


They proposed, and got passed by the Senate -- with some Democratic support, more on those economic right-wing Democrats later -- they got passed by the Senate a measure to reduce the estate tax rate, as well as to increase the amount of an estate that is exempt from the tax.


President Obama's budget would keep the estate tax at its current level: it kicks in at $3.5 million dollars for an individual, $7 million dollars for a couple.  And the rate is 45%.


The right-wing measure would increase the exemption to $5 million and $10 million, and cut the top rate to 35%.


Let me go through for you and rebut, several of the right-wing talking points about the estate tax.


You're probably going to be on the receiving end of them from your friendly local right-winger.


First would be, the estate tax's very name.  The right has successfully in many people's minds, renamed it the death tax.


What's wrong with that, you may wonder?


Just this:


100% of everyone dies, correct?


So a death tax would, you would assume, be paid by everyone.


But the estate tax does not apply to estates under $3.5 million dollars for an individual, $7 million for a couple.


How many Americans die leaving over $3.5 million dollars individually, $7 million for couples?


That would be, less than 1%, in fact only the top 1/5 of one percent of Americans.


In other words, 99.8 percent of Americans will not pay a penny of estate tax.


So as you see, this is a tax that is extremely progressive, only hitting the heirs of the ultra rich, the very, very wealthiest Americans.


If you take nothing else away today, let it be this:


99.8 percent of Americans will not pay a penny of estate tax.


By mislabeling the estate tax the death tax, the right gets many decidedly non-wealthy people to think that the small nest egg they've accumulated and intend to pass on to their children, that it will be taxed by the government.  Not so.


Only multi, multi millionaires and billionaires incur the estate tax.


You need to ask any right-winger you're speaking with, why are they so concerned about the children of millionaires and billionaires.



Another right-wing talking point is to scream about "double taxation."


This argument goes, you were taxed when you earned the money, and now you're being taxed again on it when you die.


This line of reasoning fails on two counts.


First, much of the wealth subject to the estate tax has never been taxed before.  Why?  Because it's not from wages, where income tax would have been paid.  Instead, much wealth in an estate is from the increased value of assets like stocks, bonds, real estate etc.  That increased value in the form of capital gains isn't taxed until the item is sold at a profit. 


And obviously, if an asset, something is still in someone's estate, they never sold it, so that profit was never taxed.


In the year 2004, two-thirds of the wealth in estates valued at over $20 million was in the form of real estate, stocks and other business investments.  All the capital gains contained in those estates was never taxed.  When an estate tax is applied, it will be.


The other problem with the "double taxation" complaint, is that it makes no sense.


We repeatedly tax money not only a second time, but a third time, in fact an infinite number of times, as it passes from hand to hand.  As one business professor put it:


All income is taxed many times as it streams through the economy and in and out of families.

For example: your boss pays you, and your money is taxed coming in.  You use that money to pay for some clothing, and your money is taxed again going out in the form of a sales tax.  Your money is being taxed twice!


Yes, that's how it works in our system.


Up next, the right-wing anti-estate tax talking point you're most likely to hear.  And it's a real easy one for you to shoot down.






Here's another right-wing talking point against the estate tax: it devastates small businesses.


This is currently getting a lot of play on places like Fox News.


The right would have you believe that all across the nation, countless family farms and small businesses have to be sold, against the desires of the grieving family of the deceased, in order to raise funds to pay the evil death tax.


Here's excerpts from a recent Fox News show, Special Report with Bret Baier.  You'll hear the voices of Republican Senator John Ensign of  Nevada and House GOP leader John Boehner of Ohio:


audio: April 1 edition of Fox News' Special Report with Bret Baier:

BAIER: The death tax is being resurrected by the Obama administration. Correspondent Molly Henneberg reports that one of the most despised of all taxes was supposed to be dead and buried, at least for next year.


HENNEBERG:  Republicans say this tax does not just hit the rich.

ENSIGN: It destroys a lot of small businesses and a lot of family farms and ranches in America.

BOEHNER: Many family farms find themselves in a situation where they've got to sell the family farm in order to pay the taxes. This is inherently un-American.


HENNEBERG: Senator Ensign says he wants a zero percent death tax, but since Republicans are in the minority, they're offering a counterproposal: zero percent death tax if your wealth is under $5 million; over 5 million, it's between 15 and 35 percent.

In the current economic climate, this supposed destruction of small businesses is being tied by the right to massive future job losses, since small businesses create such a large percentage of jobs in this country.


I guess the NY Times editorial writer got a little annoyed at this argument, when he or she used an uncharacteristically sharp term:


The implication is that upon the death of an owner, estate taxes typically devastate small businesses and the jobs they provide. That is swill.



I always tell you, you'll be correct far more often than not -- maybe even all the time -- if you assume that whatever a right-winger says, the exact opposite is true.


That's certainly the case here.


The Tax Policy Center did a study on this issue. 


Now you already heard earlier that overall, the estate tax winds up being owed by only 1/5 of 1% of Americans.


Think that's a small number? Wait until you hear how many small businesses and farms will owe any estate tax in a given year.


The way the right carries on about this, you get the impression there must be millions.


Not millions.


Ok, certainly hundreds of thousands.


Nope.  Not even close.


Well, definitely there would have to be tens of thousands of small businesses, minimal, affected, for there to be negative consequences to the national economy.


But there aren't tens of thousands.


How about thousands?


Not even thousands.


Not even hundreds


The Tax Policy Center estimated that under the 2009 law, the one Obama plans on continuing, less than eighty small farm and business estates will owe any estate tax.  Eighty in the entire United States of America.


8-0.  Eighty.


And the Congressional Budget Office says virtually none of them would have to sell any business assets to pay the tax.


So much for any damaging effect nationally on small businesses, and the jobs they provide.


Interestingly, many years ago, the right was called on this very question.  Supporters of the estate tax challenged the American Farm Bureau to identify a single farm that was lost, that had to be sold, because of the estate tax.  The American Farm Bureau didn't produce a single one, not even one.



Let me briefly dispose of a final right-wing claim: that the 45% rate is confiscatory.


That 45% only applies to the portion of the estate that exceeds $3.5 or $7 million, as the case may be.  Even for mega-estates worth more than $20 million, the effective tax rate, the rate the heirs wind up actually  paying, is only about 20 percent.


Ok, in a moment, you'll hear more about the estate tax to prepare you for those spirited conversations with your rightward-leaning friends and family members.  Why was an estate tax ever enacted in the first place?  And who are the 18 families? 


Stick around.






The right has been trying to get rid of the estate tax forever.  At the present time, they're only trying to cut it back, not repeal it, because they admit they don't have the votes for repeal.


Just back in 2006, they fell only a few votes short of overcoming a Democratic filibuster against outright repeal. 


Then Senate majority leader Bill Frist pledged to keep at it, explaining


Getting rid of the death tax is just too important an issue to give up so easily.

Even if they can't repeal it, the right can still sabotage it.  Way back in podcast 54 I told you how the Bush administration was planning to slash by nearly half the number of IRS lawyers who audit the gift and estate tax returns of the wealthiest Americans.


This wasn't something the Bushians announced.  No, the Bushians were doing this in their typical stealth mode.  The IRS only confirmed this auditor cutback after IRS employees who oppose these cuts gave the New York Times internal agency documents.



You might find a little bit of historical context useful here.


Maybe the earliest proponent of an estate tax was Thomas Paine, much invoked of late by Glenn Beck.


Paine is most well known for his pamphlet Common Sense, which galvanized public sentiment in favor of pursuing independence from the British Crown.


What's less well known is that in two other works, The Rights of Man and Agrarian Justice, Paine advocated some decidedly progressive measures, such as an estate tax, plus progressive taxation, and a social security-type system.


Skipping ahead to the 20th century, you wouldn't know it from listening to right-wingers, but the estate tax was actually instituted in 1916 to pay for war preparations.  World War I was looming, and Congress believed "that the most privileged members of society should help pay for the nation's military effort."


At the time, the estate tax had wide public approval.


Indeed, an estate tax had been earlier advocated by such diverse figures as Theodore Roosevelt, William Howard Taft and Andrew Carnegie.   Teddy Roosevelt said


The man of great wealth owes a peculiar obligation to the state.

That would apply especially in times of war.  But right-wingers apparently believe the opposite.


Listen to what Tom DeLay said in 2003, and I'm not making this up:


Nothing is more important in the face of a war than cutting taxes.

"Nothing is more important in the face of a war than cutting taxes."


Paul Krugman appropriately refines the DeLay principle:


[A] more precise statement of the DeLay Principle would be that nothing is more important in the face of a war than cutting taxes for very, very wealthy people, like the tiny minority of Americans who are heirs to really big estates.

We can apply this to today: right-wingers feel that in the face of a massive financial crisis, and gargantuan government expenditures to climb out of our deep, deep economic hole, nothing is more important than giving the children of multi-millionaires and billionaires even more humungous inheritances than they'll already be getting.



Can you guess who's behind a massive lobbying effort to repeal the estate tax?  Some of the wealthiest families in America.


A little while back, the groups Public Citizen, and United for a Fair Economy, issued a report that found that 18 of America's wealthiest families, including those paragons of good wages, the Walton family of Wal-Mart, 18 of America's wealthiest families have been spending millions of dollars, aggressively lobbying their right-wing political allies -- is puppets the better word? -- for repeal of the estate tax.  They're the ones pushing this insanity.


In a recent 8 year period, these families reported almost a half-billion dollars -- $490 million -- nearly half a billion dollars in lobbying expenditures for all their pet causes.


How much exactly of that went to efforts to repeal the estate tax, can't be determined.  But "the total would almost certainly come to tens of millions of dollars."


You want to know how much money is at stake for them?  The numbers are staggering.


Hold on to your hats.  The repeal of the estate tax would gain these 18 families $71 billion.


So spending tens of millions to achieve that is small change.


Coming back to the present situation, even just reducing the estate tax rate as recently passed by the Senate


would funnel an additional $91 billion over 10 years to the heirs of megafortunes, money that would otherwise have been paid in federal taxes or donated to charity.

Alright, in the closing segment in a moment, I'll tell you the one thing about reducing the estate tax that the right definitely, absolutely doesn't want you to think about.


Keep it right here.






What are the consequences of reducing the estate tax?


As the Responsible Wealth organization succinctly puts it:


The burden of paying for public services will shift to low and middle income taxpayers.

Marc Weisbrot of the Center for Economic Policy research elaborates:


…Many people think that such changes don’t affect them if they are not rich. But since the government does not stop spending money…the result of these changes is that people who get their income from labor rather than ownership – the overwhelming majority of Americans – will end up paying more taxes so that rich people can pay less.

But it's not just a burden shift the right wants.


It's far more deadly than that.


Denying the government the funds it needs to literally carry out its functions is a long-time right wing goal.  Reagan Budget Director David Stockman proudly spoke of "starving the beast."


Republican strategy guru Grover Norquist openly admitted that his desire regarding the government was to


reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.

The purpose is to force severe cuts in government spending.


Which would include the safety net, most expansively put in place by Franklin Delano Roosevelt.


We know what conservative honcho Rush Limbaugh thinks about the social safety net:


audio: Rush Limbaugh

Roosevelt is dead.  His policies may live on, but we're in the process of doing something about that as well.

The effect on flesh-and-blood humans is and will be devastating.


Listen to a bit of this story from a few days ago, headlined:


States Slashing Social Programs for Vulnerable

Battered by the recession and the deepest and most widespread budget deficits in several decades, a large majority of states are slicing into their social safety nets…

President Obama’s $787 billion stimulus package …will offset only 40 percent of the losses in state revenues…

[I]n Arizona…more than 1,000 frail elderly people are struggling without home-care aides to help with bathing, housekeeping and trips to the doctor. Officials acknowledge that some are apt to become sicker or fall, ending up in nursing homes at a far higher cost…

Ohio and other states face large cutbacks in child welfare investigations, which may mean more injured children and more taken into foster care.

[T]oddlers with disabilities like autism and Down syndrome are not getting therapies that can bring lifelong benefits…

Idolina Moreno, 36…has…been told that special therapies for her mentally retarded 6-year-old son may be eliminated. “I don’t know what I’ll do if that happens,” she said. “I’m really worried.”

This is what Rush and the rest of the right mean to accomplish.


The frail and disabled elderly, special needs children, children at risk of abuse -- the hell with them.


The Walton's and Paris Hilton and the like need to inherit more hundreds of millions than they already will.


These right-wingers disgust me to the core of my being.


How do you feel about it?



Ok, what are the prospects for weakening or even repeal of the estate tax?


Even though polls have findings all over the place on the estate tax, one critical piece of information is that the more people know, the more they support the estate tax.


That sounds sensible.


I've told you many times that polls show the public already feels the wealthy pay too little in taxes.  60% of Americans feel this way.


Obviously if the public understood that the estate tax is not a death tax, not a tax on everyone when they die, but a tax only on estates worth millions of dollars, the estate tax would be the last tax the public would want reduced, let alone completely eliminated.


In an instance where I actually hope they're correct, The Wall Street Journal predicts that the estate tax reduction will not be included in any final legislation.



I promised earlier to tell you about the bad Democrats, the ones who supported this measure reducing the estate tax. 


If any of them are your Senators, call their office and tell them to change their position.  The number for Congress is 202-224-3121.


The ten are:


Blanche Lincoln and Mark Pryor of Arkansas, Bill Nelson of Florida, Evan Bayh of Indiana, Mary Landrieu of Louisiana, Max Baucus and Jon Tester of Montana, Ben Nelson of Nebraska, and Maria Cantwell and Patty Murray of Washington.



Let's review some of what you heard today:


Only 1/5 of 1% of Americans will ever pay even a penny of estate tax.

99.8% of Americans will never pay any estate tax.


Less than 80 small businesses in the entire country will owe any estate tax in 2009, a year which employs the tax level Obama wants to keep.


18 of the wealthiest American families have poured multiple millions of dollars into a lobbying effort to repeal the estate tax.


Cutting federal tax revenues by reducing or eliminating the estate tax is part of the larger right-wing strategy of starving the beast, defunding the government so it has no money left for a social safety net.


Shredding the social safety net will increase human misery, suffering, pain and death.


And if you've been listening to Blast The Right for any length of time, you know that increasing human misery, suffering, pain and death is the result of virtually all right-wing policies.



I'll leave you with this, from the late noted economist, John Kenneth Galbraith.  He wrote:


The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.

What Galbraith said could not be more true than about arguments for reducing or eliminating the estate tax.


Just remember what Galbraith said, when speaking to your friendly local right-winger, about this or any other issue.




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