Posted on 06/14/2002 12:16:37 PM PDT by Jean S
It’s no exaggeration to say that only one man stands between America and the elimination of the death tax: Senate Democratic Leader Tom Daschle of South Dakota.
A death tax repeal vote was defeated in the Senate by the Daschle-led Democrats on June 12. Republicans hope to resurrect the issue later this year, but Daschle has committed to erecting every parliamentary barrier he can to prevent passage this year of this popular measure.
As most readers know, last year’s death tax repeal bill, didn’t truly end this tax. The Bush tax plan abolishes the tax in 2010, but thanks to a quirk in the law, the death tax rises from the dead again in 2011. So unless the heir dies in 2010 the death tax will still rob grandma’s grave of more than half her assets.
Republicans want to fix this grotesque injustice in the law and only Daschle’s interference is preventing action on a bill that has majority support in the Senate, has already passed the House, and is sure to be signed into law by the President.
Daschle’s knee-jerk ideological opposition to ending the death tax is especially inexcusable given that just two years ago South Dakota’s voters approved by a three-to-one margin a ballot initiative to abolish the state inheritance tax. Daschle, even though he is close to being the last man in the entire state of South Dakota against death tax repeal, even got the state’s other Democratic senator, Tom Johnson, who is in a tough re-election battle this fall, to go along with him.
Why has the majority leader thrown his body in front of this train? Why has he insisted that his fellow Democrats must not defect on this key vote—even though he may be putting several senators – including Tim Johnson (D.-S.D.) and Jean Carnahan (D.-Mo.)– from his own party at risk of defeat at the polls?
The answer is that the death tax is the left’s ultimate class warfare weapon. The Daschle Democrats oppose death tax elimination not on the grounds of economic efficiency or fiscal responsibility. They are motivated by a deeply seated greed-and-envy political philosophy that loathes any tax break that may benefit anyone who is successful in America.
The left has genuflected to the confiscatory creed of the death tax for nearly a century and a half, since as far back as Karl Marx’s publication of the Communist Manifesto, when a steeply progressive inheritance tax was first seriously proposed as a wealth equalizer.
What infuriates the Daschle Democrats is that John Q Public rejects the essence of the class warfare argument against death tax repeal. Americans of almost all stripes and income groups despise the death tax and want to see it dead and buried. One of the largest black American business groups has railed against the racist nature of the confiscatory death tax, because it prevents successful black entrepreneurs and CEOs from transmitting their businesses to their children.
Over the past 10 years polls have found that somewhere between 65% to 85% of Americans despise the death tax, even though the tax currently applies only to the richest 2% of Americans. (Last year a McLaughlin poll found that 83% of Americans view the tax as "unfair.") The vast majority of Americans who oppose the tax will never pay a dime of it.
These political realities have the left hyperventilating with rage as they fear they are about to see the crown jewel of their wealth redistributing legislative agenda stolen from under their noses. The Wall Street Journal’s Alan Murray, for example, recently snidely declared the issue of death tax repeal "Marie Antoinette economics" because it would say to poor people: "Let them eat cake." "Why give a tax cut to the richest 1% of Americans—the people who need tax relief the least?" fumed an indignant commentator on National Public Radio. Answer: Because they earned it!
The latest tactic by the greed-and-envy crowd has been to enlist the guilt-ridden super rich into a group called Responsible Wealth. Responsible Wealth is nothing more than a group therapy lesson for rich Americans who feel liberal guilt for their own success—in most cases derived from the free market capitalist system that they now attack. This group includes such luminaries as Bill Gates, Sr. and Warren Buffet.
They say they want a high death tax to avoid a large class of Americans with inherited wealth. Yet most of these "responsible wealth" participants have themselves engaged in careful and expensive estate-tax planning to prevent paying enormous death taxes themselves. Ted Kennedy and Jay Rockefeller both voted against death-tax repeal, yet you can be sure that neither of their billionaire families has paid more than a few peanuts in inheritance taxes over the past 50 years.
What is wonderful here is that most Americans understand the basic inequities and inefficiencies of this grave-robber tax far better than most American intellectuals and the guilt-ridden super rich do. Americans fundamentally oppose the death tax because they correctly believe that the tax unfairly taxes income twice. Money is taxed when it earned. And then it is taxed again when the heir dies with his fortune still intact.
Taxing the responsible accumulation of wealth merely discourages older-age Americans from continuing to save, invest, and build up the family fortune. In fact, the death tax rewards wealthy Americans for doing exactly the opposite. It encourages them to spend down their lifetime accumulated assets, so as to avoid being pick-pocketed by the IRS while they lie in their graves. In fact, a recent best selling book in the U.S. encouraged Americans with money not to save for the next generation, but to "die broke" to avoid high taxes.
The death tax is unjust because it rewards such vice and punishes virtue. Take the example of two hypothetical successful people—Jerry and Mary—both of whom have worked and paid taxes on their income and have now accumulated $10 million of wealth during their years of starting and growing a family business. Jerry sells the company, goes out and spends all his money capriciously, eating, drinking, gambling, lavishly entertaining lady friends, and otherwise living high on the hog. He dies broke and leaves his children not a penny after enjoying his final 15 years of life on his self-indulgent spending binge. Meanwhile, Mary lives thriftily. She continues to work to expand the business with the help of her two children and the firm’s value grows to $20 million. She wants to leave this business, her life’s legacy, to her children and grandchildren who are her most cherished assets of all.
Mary has clearly engaged in what most people would view as a more virtuous lifestyle than Jerry has, but Mary is clobbered with a hefty estate tax at death, while Jerry pays not a penny more in taxes.
Very few Americans would regard this situation as just or fair.
Note also that Mary has already been taxed on the money that is subject to the death tax. Hence, Mary paid 50% in federal, state and local income tax on her money when she earned it, then she pays up to a 60% when she goes to her grave on the 50% that was not taxed away already. Hence, for every dollar that she is able to pass to her children, the government keeps up to $4. Again, this notion of taxing the same income twice is at the heart of the unfairness of this tax.
The tax is also astonishingly inefficient. America’s wealthiest families engage in hundreds of millions of dollars of estate-tax sheltering to avoid a tax that is largely fiscally irrelevant. The National Federation of Independent Business estimated that the government and individuals collectively spend 65 cents on enforcement, compliance, and legal bills for every dollar the government eventually collects. (The only Americans who really benefit from this tax are accountants and tax lawyers.)
Throughout the past 40 years, the death tax has consistently raised only between 1% and 2% of total federal revenues. In 2000 the death tax raised roughly $22 billion in tax revenues out of just under $2 trillion in total federal tax receipts.
Even those revenue numbers are unrealistically high. Because the death tax slows economic growth through lower savings and misallocation of capital into tax shelters, it reduces other tax receipts. The actual net revenues raised by the federal government are well below 1% of total receipts. In a 1995 study on the death tax, economist Dick Wagner of George Mason University, calculated that the death tax may actually cost the federal government more money than it raises.
The United States today has the third-highest death tax in the industrialized world. Only Japan imposes a higher tax on estates. Even Socialist Sweden and former Communist Russia have lower death taxes than Americans do in the land of the free. Because the U.S. rate is 55%, the tax actually allows the government to snatch away a larger share of the estate than is left the actual heirs.
Tom Daschle is under intense lobbying pressure from the left-wing constituencies of the Democratic Party to preserve the death tax. Because of the 60-vote rule in the Senate to break a filibuster, Daschle may well succeed again in strong-arming enough loyal Democrats to stifle the death tax repeal this year.
Last week, repeal won 54 votes—just six short of the needed 60. Embattled Democratic Sen. Jean Carnahan (Mo.) who faces a close race in November against former GOP Rep. Jim Talent joined Johnson as one of the 41 Democrats who voted against repeal. Sen. Phil Gramm (R.-Tex.) said last week, "We will have a referendum on the death tax on election day." When the issue comes to the Senate floor again in October, Johnson, Carnahan and several others may well decide to change their votes.
If they don’t and if Daschle succeeds in his obstructionism, he could also succeed in costing the Democrats the elections. Defeat of death tax repeal could lead to death for the Democratic Senate majority.
The Republicans are attempting to get a win-win out of this, and they very well might. They knew Daschle would use his obstructionist position to block the legislation. This could play out as follows:
Republicans propose repeal of Death Tax.
Daschle gets Democrats to block it.
Democrats lose majority in Senate.
Republican majority in Senate easily pushes through repeal of Death Tax.
Thank God for Woody Johnson....
You've got to be nuts!
Unless you can specifically show exactly WHICH corporation(s) that paid him money are benefiting - AND THAT IS POSSIBLE GIVEN THE DNC'S aboility to demand bribes from thousands of businesses - You're just assuming tha tthe "greedy corporations" are at fault.
It's greed - but DNC greed and envy.
And increased lawyer business that increases from the death tax set-asides.
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