Kyl's estate-tax push benefits only superrich
azcentral.com
Jun. 8, 2006 12:00 AM
As Arizona's business community has come to be dominated by faraway national franchises with little stake in doing more than consuming the state as a market, the same has happened with our senators.
Thus it's no surprise that Sen. Jon Kyl, who rarely does anything to make Arizona competitive, is the national leader of the move to repeal the estate tax. He's no Carl Hayden and proudly so, apparently.
In an opinion column in USA Today, Kyl said the estate tax "means the government will take nearly half of everything you have worked for and saved, over an exemption of $2 million, even after you have paid taxes throughout your life."
This is part of the Republican strategy to convince working Americans that their economic interests are the same as the richest even though evidence fails to support this.
Factoring in loopholes means this year the tax would affect only 12,600 taxable estates out of a country of almost 300 million people. And this wealthy elite has enjoyed a lifetime of the best advice on tax dodges that money can buy. The idea of the estate tax stealing the family farm is a well-told yarn.
But it has been enough to give Republicans cover to already reduce this tax on the elite. But it would stop falling in 2010, and with GOP prospects looking iffy in the fall, now seems the time to push for a permanent repeal.
Beyond "unfairness" to the wealthy, the repeal camp claims that reducing taxes of all kinds puts more capital into private hands. Deployed in markets, this money is more efficiently used than if the government spent it.
Unfortunately, market efficiency also means investing it in India and China as well as financial plays on Wall Street. Partly as a result, the old connection between tax cuts and job growth seen in the Reagan years has broken down.
But a less pleasant aspect of the 1980s is back: huge deficits. Repeal of the estate tax would cost an estimated $1 trillion over the first 10 years.
That's one reason why some of the superrich oppose repeal or reduction, among them Warren Buffett and Bill Gates Sr. But that's not the only reason.
The estate tax has roots both in the long-standing American belief in meritocracy instead of a hereditary moneyed elite and in the depredations of the robber barons of 100 years ago.
The estate tax was part of a broader social contract of the 20th century, which established the fairest, most economically mobile society in history. This achievement was not just an accomplishment of the market nor a nation where policy so favored the rich and powerful.
Somehow the compact, estate tax included, allowed families such as the Bushes and Frists to amass and pass on plenty.
Yet the estate tax is under attack, along with pensions, job security, health benefits and federal funding for Medicare, Medicaid and education. The kinds of critical investments in research and infrastructure that helped make America a superpower are now either being slashed or ignored.
It's no surprise that income inequality has reached levels not seen since the 1920s.
In other words, repeal or further reduction of the estate tax is radical. Brookings Institution scholar Diane Lim Rogers calls it a "birth tax" on every baby born in America.
They will have to pay for this giveaway to the superrich. |
