Democrats' war on home business

American Thinker ^ | December 07, 2009 | Bruce Walker

[neverdem]

The House of Representatives on December 3^rd passed House Resolution 4154, which is deceptively called the "Permanent Estate Tax Relief Act."  This bill is part of the general war by the Democratic Party on self-employed Americans, family farms, and home businesses.  Does this sound extreme?  Consider the vote on the message:  225 Democrats in the House voted for HR 4154 and 26 Democrats voted against it; not a single Republican voted for HR 4154.  No RINOs could be persuaded to support Congressman Pomeroy's attempt to freeze the estate tax emption level at $3.5 Million and then tax all estate assets above that level at the almost confiscatory rate of 45%.  How did House Democrats vote?  Ninety percent of the Democrats voting on the message supported it, including many Blue Dog Democrats.   As Republicans begin the process of drawing clear yellow lines between their party and the Democrat Party, HR 4154 is a perfect case study of those real philosophical differences.

The federal estate tax rate of 45% on estates in excess of $3.5 Million is almost confiscatory.  The consequence of federal estate taxes in this range is that modestly successful small family businesses, when death claims the owner of the firm, are forced out of business or forced to go public by issuing stock, which in the limp condition of today's stock market and the small size of these businesses, means taking a huge real economic loss.  It also means that more and more of the traditional family farms, whose nominal value is inflated by an explosion of federal expenditures,  will be pushed into the punitive tax rate and so, probably on the death of an owner, will be  forced to sell.

As President Obama concluded a "Jobs Summit" in Washington, which included gaggles of  academics, union leaders, and heads of a few gigantic corporations, the real job creation engine -- small business -- is finding a cold shoulder in the Democratic Party and its leader.  As economic conditions improve, these small family-owned businesses are often the very first to offer other Americans decent paying jobs.  Moreover, the types of jobs that these employees of small businesses do often embraces much more responsibility and learning than simply being another cog in some machine, whether that is a federal, state, or local bureaucracy, or a narrowly focused job in a huge corporation. 

These employees not only learn more at their job, but they actually produce goods and services that people want.  As Americans, rightly, worry about the loss of productive economic activity in America  and the transfer of this economic activity across our borders, small family businesses offer the very best way to keep this work here.  Small, family businesses have many of the inherent efficiencies which allow them to successfully compete with production facilities overseas.  Because these businesses are small, they can be  flexible and nimble in responding to market conditions; these businesses have very little  managerial overhead.  They are the very sorts of businesses which can allow America to be competitive globally again.

Beyond these arguments, lowering the tax rate and raising the exemption has been estimated to be a revenue producer (which is the consequence whenever a tax rate moves beyond the "revenue maximization" point on the Laffer Curve.)   How much tax revenue would the federal government gain from lowering the top tax rate to 35% and raising the exemption on estate taxes to $5 Million?  According to a recent study by the Institute for the Research on the Economics of Taxation, making these reductions in tax rates and increases in exemption would bring in about $23 Billion more in tax revenue. 

What are the arguments against taking some a clearly beneficial change in tax rates?  Bill Creighton of United for a Fair Democracy, in a recent Business Week article, observes that the federal estate tax:  "has helped reduce the concentration of wealth that weakens our democracy."  In short, the only arguments against ending this tax are to help advance socialism, even at the cost of destroying wealth.

The irony of this, of course, is that small family businesses, family farms, and related enterprises are the best defense against vast concentrations of wealth. Tax-exempt institutions like enormous and insulated universities or corrupt organizations like ACORN really do cheat the taxman and undercut democracy in our nation.  The hard-working wheat farmer, the small scale entrepreneur, and the retail outlet not yet gobbled up by the few vast retail corporations offer the best defense against concentrations of wealth, not the greatest danger of concentration of wealth.

If Democrats are serious about reducing the deficit, if they care about real job creation, if they want to make American business competitive in the world (which would also boost the dollar), and if Democrats want to prevent centralization of power in huge corporations and government agencies, then they will cut the federal estate tax rate on small businesses to $5 Million and lower the maximum rate to 35%.  Doing this would really be standing up the little guy.  But the House vote today suggested that maybe this is not what the Democratic Party is really about.

Bruce Walker is the author of two books: Sinisterism: Secular Religion of the Lie and The Swastika against the Cross: The Nazi War on Christianity.

[RayChuang88]

They keep this up and we may see the largest “flip” in Congress since 1994—maybe even more so because the Presidency and Congress is trying to drive the US economy to literal extinction.

[Nachum]

This may well be conservatives’ best chance to crush tax and spend liberalism forever.

[jessduntno]

“They keep this up and we may see the largest “flip” in Congress since 1994—maybe even more so because the Presidency and Congress is trying to drive the US economy to literal extinction.”

That, of course, would be the good news...the bad news is we really may not recover from too much more of this...as my firefighter buddy might say “we should be able to save the cellar...”

[MaxMax]

Or at least 25-30 years. That seems to be the cycle.

[Outlaw Woman]

Will we make it to Nov 2010? What will the country look like in a year?

[nathanbedford]

Tax-exempt institutions like enormous and insulated universities or corrupt organizations like ACORN really do cheat the taxman and undercut democracy in our nation.

One of the shibboleths of liberalism is that disparity of wealth is undesirable. Believing that, they work ceaselessly to homogenize everyone's 1040. Obama himself said in no less a formal setting than a debate that, even though he was forced to acknowledge that increased taxes not bring in more revenue, he nevertheless asserted that taxes are a desirable way of redistributing wealth.

Obviously liberals do not want to redistribute all wealth only wealth in the hands of those who offend them. Harvard has its billions and that is wonderful but Oral Roberts University must lose its tax exemption. Liberals always favor the collective which they can control over the individual who might be a freebooter. That is why the term "cowboy" is anathema among intellectuals in Europe and America.

In the end, it is not about taxes, or even wealth, but about liberty.

[ripley]

“The federal tax rate of 45% on estates over 3.5 million dollars is almost confiscatory.”

Leave off the word ‘almost’ and you have a true statement.

It is not the government that is taking the money but entrenched, elected, class warfarists who are speaking about ‘fair share of taxes’ while they take what doesn’t belong to them; all of that backed by a duly indoctrinated electorate that speaks of ‘greed’, ‘big oil’, and big business yet doesn’t notice the greed of an electorate voting for the confiscation of private property without due process.

Amazing.

IMHO

[Disambiguator]

cut the federal estate tax rate on small businesses to $5 Million and lower the maximum rate to 35%

Cut? This abomination should be abolished. It needs a stake driven through its heart. If the Estate Tax and Capital Gains taxes (a.k.a. inflation taxes) were utterly removed, our economy would recover so fast it would make your head spin.

[Mr. Jeeves]

If the Estate Tax and Capital Gains taxes (a.k.a. inflation taxes) were utterly removed, our economy would recover so fast it would make your head spin.

Well, yeah, but that would also push back the formal adoption of Socialism in America by at least another two decades...so who in the Administration wants that? :)