The government requires tax revenue to function, and the estate tax is one of the most fair and reasonable ways to tax citizens. But Republicans want to eliminate the estate tax as part of their plan to give massive tax cuts to the wealthiest among us. Here are some of the myths Republican politicians claim about the estate tax.
Myth: The estate tax is double taxation.
The truth is that a large percentage of the wealth subject to the estate tax has never been previously taxed. If the estate tax were repealed, unrealized capital gains in an estate would pass to heirs free of tax. According to the Federal Reserve Board, in the largest estates, those over $100 million, 55 percent of the value of the estate is unrealized – and therefore untaxed – capital gains.
Myth: The tax bill is a middle-class tax cut.
Currently, estate taxes are paid only on taxable estates greater than $11 million for couples and $5.5 million for individuals. This is not middle-class wealth. According to the Joint Committee on Taxation, for every thousand estates, only two of the wealthiest will be required to pay estate tax in 2017.
Myth: The estate tax forces heirs to sell small family farms and businesses to pay the tax.
The facts are, according to the Tax Policy Center, in the entire country only 80 small family farms and businesses will pay estate tax. Those few that do can extend tax payments over 15 years to maintain family ownership.
Myth: Estate tax repeal will boost the economy and help the middle class.
The truth is that letting untaxed money stay in the hands of wealthy families is only good for the heirs and those who believe in the discredited trickle down economic theory. Even Republican trickle-down economics champion Arthur Laffer said elimination of the estate tax will add to the national debt and do little to juice the economy.
The estate tax is the most progressive of our taxes. America’s taxation system is designed to be fair, so the wealthy pay a larger percentage of their income than the middle class. Repeal of the estate tax would allow the very wealthy to pass untaxed wealth from generation to generation.
Since the end of the great recession, the income of the wealthy has soared, while the middle class is still recovering. The wealthy are doing fine…they don’t need deficit financed tax cuts our children and grandchildren will have to pay for.
Television is filled with ads that exaggerate the tax bill benefits to the middle class. Do you know who is paying tens of millions of dollars for these misleading ads? They are funded by billionaire Republican donors such as Sheldon Adelson, the Koch brothers and Todd Ricketts. Organizations such as the 45 Committee, Americans for Prosperity and Freedom Partners Chamber of Commerce are the billionaires’ fronts for these ads. They are championing this tax bill with its elimination of the estate tax because the bill is a gift to them from congressional Republicans whose re-elections they largely fund. They are paying Republicans to cut their taxes.
To reinforce the message that billionaires should campaign for the bill, Vice President Mike Pence recently spoke to a meeting of wealthy Republican donors hosted by the Koch brothers. The vice president said: “To get this tax cut across the line, to give the American people the tax relief that they need, we need every ounce of your energy and enthusiasm.” If you substitute “billionaires” for “the American people,” and “advertising dollars” for “energy and enthusiasm,” you will understand Pence’s true message.
The phased repeal of the estate tax will result in a revenue loss over 10 years of $172 billion, according to The Wall Street Journal. This money would be better used to reduce the tax bill’s increase to the debt.
In a bad tax bill that adds at least $1.5 trillion to the federal debt and is a gift to wealthy Republican supporters, repeal of the estate tax is the most egregious of the political pay offs. Estate tax repeal is a dog that won’t hunt.
The writer is a retired U.S. Navy officer. He lives and writes in Savannah. His email address is EdConant420@gmail.com.