The President likes to talk about how 9/11 changed everything. So do congressional Republicans.
But it hasn't changed their thinking.
Republicans have continued to cut taxes for the wealthy, despite the new challenges we are facing as a nation since 9/11. As a result, we have record-breaking budget deficits. And the Republicans sound like a broken
record... playing the same old tune: "More Tax Cuts".
The resulting massive debt will be passed on to our children... and their children.
Now they're trying to do it again. The Senate is about to vote on a permanent repeal of the estate tax, a tax that only applies to the wealthiest 2% of Americans. And nearly half of that tax is paid by the wealthiest 0.1% .
Elimination of the estate tax will reduce federal revenues by $982 billion over the next 20 years.
Cutting taxes on the inheritance of great wealth will deepen an existing inheritence of debt shouldered by us all. That's not only fiscally irresponsible, it's morally reprehensible.
The nonpartisan Congressional Budget Office has "found that the estate tax encourages wealthy individuals to donate considerably more to charity, since estate tax liability is reduced through donations made both during life and at death." If there were no estate tax in 2000, for example, "charitable donations would have been
between $13 billion to $25 billion lower than they actually were."
We're in a deep hole, and we've got to tell our senators to stop digging. Send an email to your senators (or give them a call) to let them know that this is not the time to be handing out another round of tax cuts to the wealthy. You can find their contact info at: http://tinyurl.com/b1lm
Republicans talk tough about defense and national security. It's about time that they put their money where their mouths are.
Myths & Facts about the Estate Tax (Courtesy of FairEconomy.org)
Myth: The estate tax is a "death tax."
Fact: The estate tax is not a tax on death. It's a tax on the transfer of large amounts of money. Ninety-eight percent of Americans who die pass their estate on to their heirs completely tax-free -- in fact, they get a valuable tax break on capital gains. Zero estate tax is charged on assets left to a spouse or to charity.
Myth: The estate tax must be repealed because it forces family businesses to close.
Fact: This issue has been wildly exaggerated. Only 3 of every 10,000 people who die leave a taxable estate in which a family business forms the majority of the estate. A recent Federal Reserve study found that the average small business is worth $702,566, well below the level at which estate taxes kick in. Virtually all small family businesses can be protected by simply raising estate tax exemption levels.
Myth: The estate tax must be repealed because it forces family farms to sell.
Fact: As with family businesses, this issue has been distorted. Only 3 of every 10,000 people who die leave a taxable estate in which a farm forms the majority of the estate. On April 8, 2001, the New York Times reported that the pro-repeal American Farm Bureau Federation could not cite a single case of a family farm lost due to the estate tax. Like businesses, family farms can be protected by raising exemption levels.
Myth: The estate tax is "double taxation."
Fact: The phrase "double taxation" is a rhetorical device meant to confuse the issue. Money is taxed any number of times as it cycles through the economy, generally during transactions. Workers, for example, pay income, payroll, and sales taxes on their wages. What's more, the bulk of the largest estates, which consist of unrealized capital gains, would never have been taxed were it not for the estate tax.
Myth: The estate tax "confiscates" over half the value of all estates.
Fact: For 98% of Americans, the estate tax takes away nothing. For the other 2%, the average effective tax rate is 19%.
Myth: The estate tax discourages work and inhibits capital formation.
Fact: There is no hard evidence that U.S. capital accumulation has been held back by the estate tax. There is evidence, however, that large inheritances do reduce work effort and saving among recipients.
Myth: The estate tax raises little revenue, so repealing it will have no effect.
Fact: Permanent repeal of the estate tax will cost nearly $1 trillion over the next two decades. This will deprive the Treasury of resources that could be used to address pressing needs such as safeguarding Social Security and Medicare, improving education, or extending health insurance coverage.
Myth: The wealthiest Americans use tax shelters to completely avoid paying estate taxes.
Fact: Most estate tax revenue comes from the top 0.14% of Americans - the few thousand people each year with estates larger than $5 million. In 2001, an even smaller and wealthier group, the 1,337 people with estates greater than $10 million, paid over a third of all estate taxes collected that year - for an average tax of $6 million per estate.
Myth: The estate tax doesn't raise enough revenue to cover the cost of collecting it.
Fact: This staple of talk-radio shows is based on an imprecise guess made by a researcher back in 1987. It was based on faulty assumptions, and is easy to disprove. While the estate tax raised over $20 billion in 2003, the budget for the entire Internal Revenue Service amounted to only $9.8 billion in that year.
Myth: The estate tax is unfair.
Fact: Unfair compared to what? Should revenue come from a tax on wages? Should it come from sales tax? Or should it also come from the estates of multi-millionaires? The estate tax is eminently fair. It is collected from those most able to pay, and it encourages the recycling of wealth through the non-profit sector. It limits the size of family dynasties that would otherwise distort our democracy and shrink economic opportunity for succeeding generations.
Estate Tax Talking Points: (Courtesy of FairEstateTax.org & FairEconomy.org)
The Estate Tax is the fairest way to raise revenue, from those most able to pay.
The estate tax is the most progressive way available to raise revenue our nation desperately needs to meet its commitments. Any other way we raise revenue will place a higher burden on lower and middle income families. The estate tax is one way wealthy people pay back to society, after they die, for the benefits of the economic, judicial, educational, and transportation systems that helped make them rich. Paying the estate tax enables our society to invest in the next generation, who will build our future economy.
You don't cut taxes during wartime
Cutting taxes for multi-millionaires and billionaires during a time of war is un-American and has never been done in U.S. history. Some people are holding bake sales to buy Kevlar vest for their kids in Iraq, but the US House is working to ensure that heiress Paris Hilton gets every dime of her inheritance.
A Fair Estate Tax is Reflective of Core American Values
A fair estate tax supports the underlying values of the American dream; that hard work, ingenuity, and persistence will be rewarded with success rather than what family you were born into. Repeal of the estate tax would benefit a very few heirs of inherited wealth who were lucky enough to be born into the right family, not hardworking, everyday Americans working one or more jobs to earn a paycheck. Repeal would continue a troubling trend in America away from valuing workers and towards rewarding the wealthy super-elite.
Repeal or Bad Reform Would Cripple Many Charities
Repeal or bad reform of the estate tax would have a damaging effect on the nation's charities. The Congressional Budget Office has estimated full repeal would cost charities and nonprofits $20 billion per year in charitable donations if the tax had been repealed in 2000. Other studies have shown that the most significant incentive for charitable contributions from estates is the top tax rate. When the top estate tax rate was reduced in 2003 from 55% to 49%, the IRS found an 18.2% decline in charitable bequests compared to the previous year. This makes proposals from Senator Kyl even more dangerous.
Family Farm Rhetoric Overblown: Hardly any family farms impacted by estate tax
According to a new report from the nonpartisan Congressional Budget Office, an incredibly tiny number of family farms are actually impacted by the estate tax. The report found that if the current exemption level of $1.5 million per individual ($3 million for a couple) were in effect in 2000, then only 300 family farms would have had to pay any estate taxes. The report further estimates the number of family farms impacted would have dropped to a mere 65 farms nationwide with an exemption of $3.5 million ($7 million per couple), the level the exemption will be in 2009. (Yes, the first $3.5 million of an estate - double it if married - is tax free.) This is yet another piece of evidence that the rhetoric concerning the impact of the estate tax on family farms is just a myth.