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August 17, 2005

Why Oh Why Are We Ruled by These Liars? (Estate Tax Repeal Con Game Edition)

Edmund Andrews tells his readers what they need to know about the Republican con game that is estate tax repeal:

Death Tax? Double Tax? For Most, It's No Tax - New York Times: WHEN Congress comes back from its summer recess, one of the first things Senate Republicans will try to do, again, is kill the estate tax.... As Michael J. Graetz and Ian Shapiro of Yale recount in "Death by a Thousand Cuts" (Princeton University Press), their entertaining account of the repeal movement, opponents of the estate tax have already achieved a remarkable political feat by building broad public support for abolishing a tax that currently affects only 2 percent of all estates.

But repeal would be costly - more than $70 billion a year... the populist arguments in favor of repeal are misleading. If estate or inheritance taxes were frozen at today's levels, they would have almost no impact on family farmers and most small-business owners.... [M]many of the earnings that are subject to it were never taxed in the first place.... Killing the estate tax is one of President Bush's top priorities, and the House of Representatives has already passed a repeal measure four different times. But Senate Republicans, despite attempts to cut a deal with conservative Democrats before the summer recess, have been stalled on the issue.

Unable to muster the 60 votes they need to overcome a Democratic filibuster, Senate leaders are now vowing to push for full repeal as soon as they come back in September.... "The I.R.S. hits this greatest generation with an unjust double tax, the death tax," the narrator intoned in an ad aimed at North Dakota. Viewers are urged to "tell Kent Conrad," the state's Democratic senator, to "change his vote."...

[T]he battle is over a very large amount of money held by a very small number of families.... The [Estate Tax] limit rose to $1.5 million in 2004... only 13,771 estates - fewer than 1 percent - would have been subject to the tax. All but 740 of them would have had enough in liquid assets to cover estate tax liabilities....

[I]t is misleading for opponents of the estate tax to claim that it is a double tax on earnings that have already been taxed once. In many cases, that's not true. "A lot of assets that passed through very large estates have never been taxed and never will be," said Mr. Graetz of Yale. "It's a very big issue." For thousands of single-digit millionaires, that could be a very good deal indeed...

Posted by DeLong at August 17, 2005 11:06 PM