Opponents of the estate tax face a worthy adversary in their fight to extend Bush-era policies that favor a few rich families. Members of United for A Fair Economy--a group that includes the father of the Microsoft founder and one of the richest men in the U.S., Bill Gates Sr.; Vanguard Fund founder John Bogle; the great-grandson of John D. Rockefeller, Richard Rockefeller; along with SEIU's Anna Burger--are calling on the Senate to act to extend the current estate tax before the holiday recess.
If the Senate does not act to either pass a one-year extension or a permanent estate tax before January 1, 2010, it will mean that the folks who inherit huge fortunes - $3.5 million and above - no longer have to pay taxes on their gains.
The indisputable fact is that only multimillionaires and billionaires are subject to any estate tax, which is less than 1 percent of the richest households in the U.S.
Consider a wealthy family with two children. Each child could inherit $3.5 million, tax free. Each silver-spooned child would receive more, tax free, than the average worker would earn in two lifetimes. And the worker would be paying taxes on their earnings. "Each of these children would receive more, tax-free, than 240 minimum wage workers would receive in a year," said Anna Burger.
A Salon article from several years ago says this about the tax:
There is, of course, nothing wrong with parents giving their children a good start in life. On the contrary, it is admirable when people devote their earnings to a comfortable home and a good education for their children, and when they give their children ample opportunities to find satisfying work.
But all this can be done without, in addition, passing on an estate worth so much that the children need never contribute to society at all.
Estate taxes can easily look cruel or unfair if one calls them "death taxes." They are, however, the fairest of taxes, and our nation's only levy on accumulated wealth. The estate tax was something this country's founding fathers (like Thomas Jefferson) thought was essential to maintaining a Democratic society. And Adam Smith, the father of modern capitalism, agreed. Today, Warren Buffet warns that without a Federal Estate Tax, the U.S. could become an "aristocracy of wealth."
Opposition: Not surprisingly, business groups such as the U.S. Chamber of Commerce and the National Federation of Independent Businesses have lobbied Congress for a lower estate tax.
"The uncertain nature of the estate-tax regime over the next two years is a major concern for businesses, many of which are struggling in the current economic downturn," said the Chamber's top lobbyist Bruce Josten in a letter to lawmakers Dec. 2.
Bill Gates Sr. says the supremely wealthy should pay the estate tax, to pay back the society that created a fertile ground for prosperity. Their riches, he says, would not be possible without a strong society supporting capitalism. "Most of the things that have generated the enormous advances in our economy are things that started on some campus or in some laboratory," Gates told USA Today in an interview in 2003. "And most of those are because the government financed it."
The bottom line: the richest 1 percent of Americans hold more of the total wealth in this country than the bottom 90 percent, creating an enormous disparity between the haves and have-nots. Not having an estate tax increases the disparity of wealth. It's been proven through numerous studies that large disparities in wealth contribute to political and economic instability--and the last time we had such a great disparity of wealth was right before the Great Depression.
Having such a large disparity of wealth is not good for anybody. Yet here we are, considering how we can continue to extend Bush-era policies that favor a few rich families, while millions of Americans struggle to keep a roof over their head and put food on the table. United for a Fair Economy has documented that 18 families stand to gain $70 billion if the estate tax is repealed. If we vote to continue this and other Bush-era tax cuts, we are letting George Bush continue to call the shots for our country.
