Last week, California’s Republican Senate candidate Carly Fiorina used farmers as props in her quest to cut the estate tax, falsely claiming that if the currently expired tax is reinstated, farms such as the ones she visited would be clobbered. And it appears that her northern counterpart Dino Rossi, one of Washington state’s Republican senate candidates, is taking a page out of Fiorina’s book.
Rossi yesterday toured Seattle’s GM Nameplate, which is a company that “makes face-plates and touch screens for appliances.” Rossi claimed that the company would be hammered by the estate tax, saying, “just to pay that 55 percent tax you’d have to sell to some group from out of state or out of the country, instead of passing it on to the next generation.”
Rossi referenced a 55 percent rate, which only takes effect if no legislation is passed this year. President Obama and many congressional Democrats have proposed permanently reinstating the estate tax at the 2009 level of 45 percent with a $3.5 million exemption, a move which made the GOP balk. Rossi, meanwhile, wants to completely eliminate the tax, out of supposed concern for small businesses and family farms:
“Small, family-owned businesses are the backbone of our economy, providing 64 percent of jobs in the last fifteen years, and, if Patty Murray doesn’t extend this critical tax relief, many could be swallowed up by faceless corporations so that families can pay Uncle Sam,” said Rossi. “Family farms and businesses are part of what make Washington State unique, and eliminating the death tax will keep this tradition alive for generations to come.”
Actually, reinstating the estate tax at the 2009 level will have almost no effect on the small businesses Rossi claims to care so deeply about. According to estimates by the Tax Policy Center, about 110 small businesses or family farms in the entire country would be affected by the estate tax at that level, and according to the Center on Budget and Policy Priorities “all but a handful” would have sufficient funds on hand to pay the tax.
The exceedingly few that don’t “would have other options — such as spreading their payments over a 14-year period — that would allow them to pay the tax without selling off any of the business or farm assets.” People having to sell their farms or businesses to satisfy the tax man is a convenient conservative story that isn’t based in reality.
So Rossi is essentially hiding behind small businesses and farmers to push a cut that would almost exclusively benefit multi-millionaires. Nearly two-thirds of estate tax revenue comes from estates worth more than $20 million. Repealing the estate tax would cost $784 billion over ten years, with less than one quarter of one percent of the benefits going to actual small businesses.
And, incidentally, if it’s really small businesses that Rossi is concerned about, he chose an odd venue at which to make his anti-estate tax stand. GM Nameplate is an 800 employee manufacturing firm with divisions in Singapore and Dongguan City, China, and it brags about its “seamless transfer of US-manufactured prototypes to a company-owned offshore production facility.” Even by the federal government’s overly inclusive definition of small business, this doesn’t fit.