"Estate Tax Repeal Is So Not Hot"
Americans are barraged with news of a massive annual federal deficit of over $400 billion, declining incomes for the middle-class and rising gas prices, all of which are squeezing the incomes of middle-class Americans. What is Congress’s response to these pressing problems? Passing tax cuts for the children of billionaires through full repeal of the estate tax.
Let’s be clear about what happened this week in Washington. The House of Representatives passed full and permanent repeal of the estate tax despite the fact that our debt is now over $7.7 trillion. Despite the fact that full repeal will cost $290 billion in the next decade and $2 trillion over the next 20 years. Despite the fact that this same Congress is likely to make billions of dollars of cuts to health care for those in need through cuts to Medicaid, cuts to education, and cuts to veteran programs. Despite the fact that keeping the estate tax for estates worth over $3.5 million would make up a quarter to half of the Social Security solvency gap. That, by the way, is well below where the estate tax stood when President Bush took office and would exempt more than 99 percent of estates from the tax.
But this debate isn’t just about numbers and statistics. It’s also about whether we maintain our commitment to the fundamental American ideal of a meritocracy — that everyone in America should have an equal opportunity to get ahead. That just because of accidents of birth, one group of Americans shouldn’t have unrivaled power. That in America, we should celebrate individual achievement and the ability of individuals to make it on their own.
And that is why repealing the Paris Hilton Tax Cut, as Michael Graetz and Ian Shapiro describe the estate tax in their new book “Death by a Thousand Cuts,” is wrong. The book uncovers the successful Republican playbook that was used to kill the “death tax” and that is currently being used to privatize Social Security, though thankfully to less effect. The book shows how the right used its army of think tanks, advocacy organizations, polling operations and media outlets to make the most progressive tax in our tax code a pariah to politicians.
But most importantly, the book details how eliminating the estate tax is only one part of an effort by conservatives to shift the burden of taxes in our country from wealth to work. As Grover Norquist is quoted in the book, “People get the vibes. They understand what we’re trying to accomplish. Do you think it was an accident that the first three tax cuts moved toward expensing business expenditures, toward universal IRAs, toward getting rid of the capital gains tax, toward getting rid of the double taxation of dividend income, toward getting rid of the death tax? No. It is consistent with a vision.” That vision is to shift the nation’s tax burden away from wealth and capital income to work. That vision is responsible for the increasing burden of the tax system on the middle class over the rich. And it is that vision that progressives should fight, starting with the fight over full repeal of the estate tax.
The battle has now shifted to the Senate. Progressives should fight full repeal and permanent repeal of the Paris Hilton Tax Cut there because it is horrible fiscal policy. Progressives should fight full repeal because it violates long-held American principles about individual merit. It is simply the wrong thing to do.
– Neera Tanden