Robin Hood and the Estate Tax
In 2009, only 1 in 500 American estates paid taxes. But thanks to the obstructionism of Senate Republicans led by Arizona's Jon Kyl, the estate tax temporarily lapsed for 2010, a hiatus that could portend massive windfalls this year for the heirs of the largest fortunes in the United States. Now as Congress moves to close that gap and prevent a return to the pre-Bush tax cut levels, Kyl and Arkansas Democrat Blanche Lincoln are pushing a "compromise" package that would deliver billions in breaks to America's rich and famous. And due to the new pay-as-you-go rules in the Senate, these reverse Robin Hoods will have to get that $80 billion from the rest of us.
Barring new legislation in Congress, in 2011 the estate tax rate will jump back up to its pre-2001 level of 55%, starting at $2 million per couple. In December, the House voted 225-200 to maintain 2009's rate of 45% beginning at $3.5 million per person or $7 million per couple. But as 2009, Jon Kyl led the successful GOP effort to block the bill, ensuring the temporary expiration of the estate tax on January 1st:
"It's a problem that doesn't have to exist if they'll just leave the existing law alone and let the rate go to zero, which is where everyone wants it to be."
Well, not everyone. But as ThinkProgress documented, even as she faces a tough reelection battle, millionaire Arkansas Democrat Blanche Lincoln is in Jon Kyl's corner fighting to reduce the estate rate to 35% beginning at $5 million per person:
Key Senate negotiators are making significant progress toward resolving the tangled legislative mess known as the estate tax. Notably, Finance Committee members Jon Kyl, R-Ariz., and Blanche Lincoln, D-Ark., are finding revenue-raising offsets within the estate tax code to cover the costs of the more generous rate and exemption they want...If they can use estate tax offsets to bridge the estimated $60 billion to $80 billion gap between their proposal and the House-passed bill (HR 4154), Kyl and Lincoln could shield themselves from some class-based arguments about tax fairness.
But thanks to the new "Pay-Go" budgeting rules every Senate Republican voted against in January, that $60 billion to $80 billion hole must be filled by spending cuts or other tax increases.
Under the 2009 rate, 99.8% of estates owe no estate tax at all. And as the Center on Budget and Policy Priorities (CBPP) showed, over 62% of estate tax revenue comes from the "extreme wealthy" with fortunes greater than $20 million. "Only three percent of taxes owed" are paid by estates under $5 million. But as the Washington Post explained in April 2009, those are precisely the pockets Lincoln and Kyl want to line:
The estate tax is scheduled to disappear in 2010, only to be resurrected the following year at its 2001 level, when it applied only to estates worth over $2 million per couple at a rate of 55 percent. In fact, no one expects it to return to that level -- although letting it do so would be a far more rational response to the current crisis than the Lincoln-Kyl approach. Rather, President Obama has proposed holding the tax at this year's level: an exemption of $7 million per couple, with a 45 percent rate for amounts beyond that; this would cost $484 billion over 10 years. Senate Finance Committee Chairman Max Baucus (D-Mont.) has endorsed this solution, with indexing for inflation. This would hardly be punitive. At that level, 99.76 percent of estates would incur no tax whatsoever. Those who owe would pay, on average, $2.25 million less than they would have paid at the 2001 exemption level. Why in the world should these folks get more of a tax cut?
The Republican scam over the so-called "death tax" is as bogus now as it was when President Bush first perpetrated it nine years ago. (The House GOP budget, fittingly unveiled by Rep. Paul Ryan on April Fool's Day 2009, would eliminate the estate tax altogether. CBPP estimated that ending the estate tax would cost the United States Treasury $1 trillion over 10 years.) While Nevada Senator John Ensign griped, "It destroys a lot of small businesses and a lot of family farms and ranches in America," House Minority Leader John Boehner (R-OH) groused:
"People who aren't wealthy, who may have built up value in land over generations and many family farms find themselves in situations where they've got to sell the farm in order the pay the taxes."
As it turns out, of course, not so much.
While CBPP estimated that only 1 in 500 estates is impacted by the current law, the Tax Policy Center quantified last year just how few family farms or small businesses are actually impacted by the estate tax proposals under consideration:
We estimate that under the Obama proposal, 100 family farms and businesses would owe tax. (We define such estates as those where farm or business assets are valued at under $5 million and comprise the majority of estate assets.) The Lincoln-Kyl proposal would cut the number to 40. Even under current law, fewer than 2,700 family farms and businesses would owe tax.
This week, supposed centrist Republican Chuck Grassley (R-IA) signed onto the Kyl-Lincoln reverse Robin Hood plan. As it turns out, Grassley's worth is estimated at between $2.1 million and $5.2 million. So if Grassley succeeds in exempting himself from paying the estate tax, who will make up the shortfall for the U.S. Treasury?
The answer is in your mirror.
we need to ALL get informed, know the truth, get up and go to the window, open it and yell "I'M MAD AS HELL AND I'M NOT GOING TO TAKE THIS ANYMORE" (line stolen from the movie NETWORK)
then get about 2 million strong (more would be better) and march on Washington DC.
that is the ONLY WAY these lobbyists and bureaucrats will shut up and take notice of the errors of THEIR WAYS!!!!!!!!