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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, mediamatters.org, thomaspaine.org, msnbc.com, commondreams.org,
responsiblewealth.org, Public Citizen, foxnews.com, 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. BREAK 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. 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. BREAK 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. BREAK 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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