WASHINGTON – “Money to get power, and power to guard the money,” was the motto of the powerful Medici family in 16th-century Florence. It is getting to be a successful modern political strategy for some of America’s wealthiest families.
A new report by Public Citizen and United for a Fair Economy shows how 18 of these families, including the Walton family of Wal-Mart fame, spent millions of dollars to push for the repeal of the estate tax. The estate tax is paid by wealthy heirs when they receive inherited wealth. Using trade associations and influential lobbyists, these extremely rich families stand to gain an astounding $71 billion from the repeal.
In the next month or so, the White House and Republican leaders are hoping to eliminate the estate tax permanently.
About 99.7 percent of Americans are not rich enough to be affected by the estate tax. The existing exemptions allow their heirs to get whatever is left to them without paying any taxes. But that other 0.3 percent increasingly find themselves in the role of “the deciders.”
Proponents of repeal have gone to great lengths to convince people that the estate tax is a threat to small businesses and farms. The story of people having to sell the family farm to pay the tax was getting fairly good play until Pulitzer-Prize winning New York Times reporter David Cay Johnston found that there were no verifiable instances of this actually happening – despite President Bush’s insistence that “to keep farms in the family, we are going to get rid of the death tax.”
The “death tax” is the scary-sounding name that Republicans invented for the estate tax, which became widely used – it sounds ghoulish, like something out of a Stephen King novel.
Repealing the estate tax is consistent with the overall thrust of President Bush’s “ownership society,” where the rules are tilted ever more favorably toward owners, especially the big ones.
One goal seems to be to rewrite the tax code so that owners of wealth do not pay taxes on the income that their wealth generates. Lowering the tax on capital gains has primarily benefited rich people. The same is true for cutting the tax on stock dividends. Only about half of Americans hold any stocks at all, and for those who do it is generally through retirement accounts, which are unaffected by stock dividend tax-cuts.
Many people think that such changes don’t affect them if they are not rich. But since the government does not stop spending money – note the $300 billion cost of the Iraq War thus far – the overwhelming majority of Americans who get their income from labor rather than ownership will end up paying more taxes so that rich people can pay less.
Repealing the estate tax would be another big step in this “rich get richer” program, costing the Treasury about $1 trillion in the first decade.
A few months ago, the repeal of the estate tax looked like it would pass Congress. But the anger over rising gasoline prices in the face of record oil company profits has begun to hurt President Bush. Coming on the heels of a succession of scandals and a deeply unpopular war, the gasoline controversy has driven Bush’s approval rating down to a personal worst of 33 percent and has begun to weigh on the Republican Party’s prospects for the November congressional elections.
Do the Republicans really want to add another trillion dollars to our future national debt in an election year just so a handful of rich families can pass even more wealth to their children? The answer seems obvious: Only if they can do it when no one is looking.
Mark Weisbrot is co-director of the Center for Economic and Policy Research. Readers may write him at CEPR, 1621 Connecticut Avenue NW, Suite 500, Washington, D.C. 20009-1052, or e-mail him at weisbrotcepr.net; Web site: www.cepr.net. For information about CEPR’s funding, go to http://www.cepr.net/pages/Our-Funders.htm.