Income inequality in the U.S. is currently the highest its been since the 1920s, with the 400 richest Americans (who are all billionaires) having as much wealth as the bottom 50 percent of Americans combined. And as it turns out, just one wealthy family has managed to amass a fortune equal to that of the combined net worth of the bottom 30 percent of Americans — the Waltons, heirs to the Walmart fortune, as Sylvia Allegretto, a labor economist at the Center on Wage and Employment Dynamics, found:

The triennial Survey of Consumer Finances (SCF) is one of the best sources for data on wealth in the U.S. And, of course the Forbes 400 estimates the worth of the wealthiest amongst us—all 400 wouldn’t be captured in the SCF. If we look at both the SCF and the Forbes 400 we can glean some interesting insights.

In 2007 (the most recent SCF) the cumulative wealth of the Forbes 400 was $1.54 trillion or roughly the same amount of wealth held by the entire bottom fifty percent of American families. This is a stunning statistic to be sure.

Upon closer inspection, the Forbes list reveals that six Waltons—all children (one daughter-in-law) of Sam or James “Bud” Walton the founders of Wal-Mart—were on the list. The combined worth of the Walton six was $69.7 billion in 2007—which equated to the total wealth of the entire bottom thirty percent!

Not only have the Waltons gathered a fortune equal to that of the bottom third of the country, but they spend it lobbying to cut their own taxes. For years, the Waltons have been supporting efforts to cut the estate tax, the tax levied on inheritance. Conservatives intent on cutting this tax — which they’ve brilliantly dubbed the “death tax” — led to President Obama agreeing to a “compromise” last year that lowered the rate and increased the tax-free exemption, giving a senseless tax break to extremely wealthy families.

According to the Congressional Budget Office, “for the 1 percent of the population with the highest income, average real after-tax household income grew by 275 percent between 1979 and 2007,” while it grew by just 18 percent for the bottom 20 percent of the income scale. In a given year, the richest ten percent of the country takes home about one quarter of total income. But Congress still saw fit last year to give a tax break to the very richest families, who have collected fortunes that dwarf anything the rest of the country will ever see. (HT: Huffington Post)

Tomorrow, 2012 GOP presidential hopeful Mitt Romney is slated to give a “major spending policy speech” at Americans For Prosperity’s Defending the American Dream Summit. Both the conference and AFP itself are funded by money from the billionaire Koch Brothers.

Romney has, of late, been trying to claim the economic plan he put forth is meant to aid the middle-class, not those in the Koch brothers’ tax bracket. “I want to focus on where the people are hurting the most, and that’s the middle class. I’m not worried about rich people. They are doing just fine,” Romney said at a GOP debate last month. Yesterday, he even tried to claim “I’m proposing no tax cuts for the rich.”

Leaving aside that Romney intends to extend the Bush tax cuts for the wealthy, he has proposed a huge giveaway to the very rich by suggesting the complete elimination of the estate tax. Only the very richest households in the country ever have to pay the estate tax, since, right now, an estate must be worth more than $5 million (or $10 million for a couple) to pay any estate tax at all.

Currently, more than half of the estate tax is paid by the richest 0.1 percent of households. And according to a quick back-of-the-envelope calculation, the Koch brothers heirs’ would save a combined $17.4 billion in estate taxes thanks to Romney’s plan.

Each of the Koch brothers — Charles and David — is worth about $25 billion. They are each married, so they would receive an exemption on the first $10 million that they pass down, and then theirs heirs would pay a 35 percent tax, or $8.7 billion, on the rest of their vast fortunes.

Now, this is an exceedingly rough calculation, as it’s almost certain that the Koch’s have engaged in extensive estate planning and would pay nowhere near that amount. But 35 percent is the rate on the books, and Romney’s plan to eliminate the estate tax entirely would undeniably save the Kochs a boatload of money.

David Koch actually hosted one of the first fundraisers of Romney’s current bid for the White House, and according to the Romney campaign, the Kochs are the “financial engines of the Tea Party.” Though Romney claims to be “not worried” about the rich, the actual policies he’s proposed would do a lot to ensure that the Kochs’ never have to pay their fair share.

Several GOP 2012 presidential hopefuls have released tax plans that clearly deliver the lion’s share of their benefits to the very richest Americans. Both former pizza magnate Herman Cain and Texas Gov. Rick Perry, through their embrace of flat income taxes and their elimination of all investment taxes, would deliver huge tax breaks worth millions of dollars to those at the top of the income scale.

Former Massachusetts Gov. Mitt Romney, meanwhile, is trying to claim the mantle of defender of the middle class, saying during a GOP debate that “if I’m going to use precious dollars to reduce taxes, I want to focus on where the people are hurting the most, and that’s the middle class. I’m not worried about rich people. They are doing just fine.” During an interview yesterday with WTVT in Tampa, Romney even claimed “I’m proposing no tax cuts for the rich”:

You’re buying into President Obama’s line and the Democratic Party line that my party is the party of tax cuts for the rich. That just doesn’t happen to be the case. The policies I’ve put forward are tax cuts for the middle-class . I’m proposing no tax cuts for the rich.

Watch it:

Romney’s claim is simply absurd on its face. His tax plan consists of $6.6 trillion in tax cuts, the vast majority of which goes to the wealthy and corporations. In fact, Romney dedicates an entire section of his economic plan to discussing elimination of the estate tax, which only the very richest households in the country ever have to pay (since, right now, an estate must be worth more than $5 million to pay any estate tax at all). Currently, more than half of the estate tax is paid by the richest 0.1 percent of households.

Meanwhile, Romney’s claim that his tax plan cuts taxes for the middle-class has little basis in reality. A ThinkProgress analysis found that the vast majority of middle-class households would get no benefit from Romney’s tax plan, since its based on a capital gains tax cut when most middle-class families have no capital gains.

Romney’s tax plan, while not as generous to the rich as those of his competitors, still delivers its benefits to the top while ignoring those in the middle who haven’t seen their income rise in years. He might try to deny it, but the proposals that he’s put on paper make it very clear where his priorities lie.

Deficit reduction is currently the topic du jour on Capitol Hill, with negotiations ongoing between Senate Democrats and House Republicans regarding just how much spending for fiscal 2011 will be cut in order to avert a government shutdown. But at the same time, a bipartisan group of representatives has introduced a bill to “permanently and fully” repeal the estate tax — the tax on inheritance that is paid by only the richest one quarter of one percent of households in the country.

Full repeal of the estate tax would cost nearly $1.3 trillion over ten years, inclusive of “$1 trillion of lost revenues and $277 billion of higher interest payments on the national debt.” But the same five lawmakers attempting to repeal the estate tax have been recently griping about the deficit, calling it “dangerous” and leading to “an ocean of debt”:

REP. KEVIN BRADY (R-TX): “Our deficits and debt are so dangerous, we have to keep cutting every day…We have to make tough choices now.”

REP. MIKE ROSS (D-AR): “The debate about our nation’s budget deficits and debt is one that deserves the national spotlight and the attention of everyone in Congress. There is no doubt our deficits have reached dangerous levels and the deficit spending must stop.”

REP. KRISTI NOEM (R-SD): “For far too long the rule has been spend, spend, spend – with no regard for balancing our budget. Years of out-of-control spending have led us to record breaking deficits and an ocean of debt.”

REP. DEVIN NUNES (R-CA): “[The deficit is one of a] series of storm clouds that are approaching and will overtake us in the next few years.”

REP. DAN BOREN (D-OK): “Every day this (debt) is moving in the wrong direction. Too much money is paid for the debt.”

The bill these five introduced includes no offset for the huge amount of money repealing the estate tax would cost, marking them as deficit peacocks of the highest order. Lawmakers actually interested in deficit reduction could endorse the estate tax plan put forth by Sen. Bernie Sanders (I-VT), which would create a more progressive estate tax, with higher marginal rates at $10 million and $50 million and a “billionaires surtax.”

Last week, ThinkProgress documented conservative efforts in twelve states to shift the tax burden onto the middle class even while cutting taxes for corporations and the wealthy. In three states, conservatives are going even further, proposing massive estate tax cuts for millionaires even as income inequality is at its worse since the 1920s. Here are the details:

MAINE: Tea Party Gov. Paul LePage’s (I) tax reform package would raise the state’s estate tax exemption from $1 million to $2 million — allowing four hundred of the state’s wealthiest estates to escape taxation. At the same time, the tax plan would raise property taxes on middle class Mainers while freezing healthcare funding for working parents, cutting money for schools, and raising the retirement age for public workers. Republican legislators want to go even further, and are currently considering eliminating the estate tax altogether.

OHIO: In January, House Speaker William Batchelder (R) called Gov. John Kasich’s (R) proposal to completely eliminate the estate tax one of the Republican-controlled legislature’s “top priorities.” But already the bill has garnered strong opposition from local governments, who depend on estate tax revenue and are already concerned state spending cuts. Even while finding room for estate tax reductions, Kasich’s proposed budget cuts 25 percent of funding for local schools, $427 million for nursing homes, $1 million for food banks, $12 million from children’s hospitals, and $15.9 million from an adoption program for children with special needs.

NEW JERSEY: In his 2011 budget proposal, Gov. Chris Christie called for raising the state’s estate tax exemption from $675,000 to $1 million even while proposing cuts to the state’s Earned Income Tax Credit and homestead rebates for working poor families. And last year Christie vetoed a bill passed by the Legislature that would have raised taxes on the state’s millionaires to help fund property tax relief for Main Street.

Last December, the federal government set the precedent for estate tax cuts when the bi-partisan tax deal signed by President Obama cut the estate tax rate to its second lowest level since 1931.

– Kevin Donohoe

Our guest blogger is Seth Hanlon, Director of Fiscal Reform for the Center for American Progress Action Fund’s Doing What Works project.

One of the enduring myths of American politics is that the estate tax falls hardest on small businesses and family farms, forcing them to sell their farms and businesses to pay the tax. It’s not true, and has never been true. Nonetheless, newspaper reporters have scoured the land for many years, searching in vain for families forced to sell small businesses or family farms due to the estate tax.

Now that Congress seems poised to eviscerate the estate tax, the task of finding these mythical estate tax victims is going to be even harder. The tax cut compromise moving through Congress would exempt all estates with assets valued at under $5 million and $10 million for couples. With the exemption raised to these levels, only the largest 3,600 estates in the country will pay any estate tax; the other 99.86 percent of estates will be entirely exempt.

Yet it appears that no matter how much Congress slashes the estate tax, the Wall Street Journal will continue to send its reporters in search of the “small businesses” that are going to be devastated by the tax. A Journal story today carries the headline, “For Family-Run Small Businesses, Estate-Tax Uncertainty Adds Cost.”

Has the Journal actually found a small business that will suffer under the weight of the estate tax? Not quite. The story profiles a wealthy Arkansas man who owns a lumber business, forest land, and five mills that are currently valued “between $30 million and $50 million apiece.” This is the Journal’s only example of the “small businesses” faced with uncertainty under the new estate tax regime.

Does a business with 600 employees that is worth more than $150 million fit within the definition of “small business”? Only if you’re the Wall Street Journal publishing a story about who pays the estate tax, and you need a sympathy-inducing headline.

Estimates by the Tax Policy Center show that only fifty small farm and business owners in the entire country will pay any estate tax next year under the new framework, and they would pay an average rate of just 7.4 percent. If they actually exist, these fifty farms and businesses can probably avoid the tax altogether with only a little bit of estate planning — and so can many estates well in excess of $5 million.

According to the Journal, the $5 million exemption “won’t apply” to the lumber mill owner “because the value of the mills is so high.” Actually, the $5 million or $10 million exemption applies to all estates, and only the value above that level will be taxed.

With the tax legislation nearing passage in Congress, the estate tax is all but dead. It appears, however, that on the pages of the Wall Street Journal the small business myth is as alive as ever.

The most odious part of the tax deal agreed to by the Senate yesterday is that it would cut the estate tax beyond the 2009 level, giving the wealthiest 0.25 percent of households in the country billions in tax breaks that will do nothing to spur job creation. But it was reportedly the estate tax cut that ultimately got Republicans to sign onto the agreement with President Obama (making quite plain where their priorities lie).

In order to justify making tax cuts for the ultra-wealthy the price of extending middle-class tax cuts and unemployment benefits, Republicans have resurrected the conservative fiction that cutting the estate tax will somehow help small businesses. Sen. Jon Kyl (R-AZ) — one of the architects of the estate tax cut included in the deal — took to the Senate floor today to claim that the cut “is not about giveaways to the wealthy,” but rather “small business employers”:

The effect of the compromise will be to eliminate the “death tax” liability for about 90 percent of estates that would otherwise owe exorbitant sums. And according to the Institute for Research on Economics and Taxation, the “death tax” reform proposal in this bill will add more than $200 billion in annual economic growth relative to current law. So this is not about giveaways to the wealthy, as some have asserted. Most of the people helped by this measure are small business employers.

Watch it:

Kyl’s assertion has absolutely no basis in reality. According to the Tax Policy Center, at the 2009 level favored by President Obama and Congressional Democrats, just 6,460 estates in the country would be subject to the estate tax in 2011. Kyl’s plan spends $25 billion to lower this to 3,600. Of these 3,600 estates, just 50 could charitably be characterized as small businesses.

Even under Obama’s original proposal, just 110 small businesses in the country would have been subject to the estate tax, and their average effective estate tax rate would have been about 11 percent. For the exceedingly few businesses that might have trouble paying the tax, there are options in place to mitigate the pain. And while Kyl asserts that cutting the estate tax would somehow be a boon for economic growth, CAP’s Michael Ettlinger and Michael Linden characterized the estate tax cut’s impact on job creation as “negligible.”

As Eliot Spitzer pointed out, “the additional $25 billion [to cut the estate tax] is six times what we’re spending on Race to the Top and three times what was allocated in the stimulus to build high-speed rails.” And contrary to what Kyl would have us all believe, the money would almost all be spent to benefit the richest of the rich.

One facet of the tax deal negotiated between President Obama and Congressional Republicans that has earned Obama significant ire from his own party in the House is the proposed two-year cut in the estate tax.

The cut — which was crafted by Sens. Jon Kyl (R-AZ) and Blanche Lincoln (D-AR) — will bring the estate tax down to 35 percent with a $5 million exemption (meaning that the first $5 million of an estate can be passed on tax-free). At the moment, the estate tax is expired, but it is scheduled to come back in 2011 at a 55 percent rate with a $1 million exemption. Prior to striking a deal with Republicans, Obama had proposed setting the tax at 45 percent with a $3.5 million exemption.

House Speaker Nancy Pelosi (D-CA) said that the inclusion of the estate tax cut in the tax deal “add[s] insult to injury.” And if the tax deal is approved, the estate tax in 2011 and 2012 will be at its second lowest level since 1931, when it was 20 percent. The only reason that the Lincoln-Kyl cut doesn’t set an 80 year record is due to the tax’s complete expiration this year.

According to Ezra Klein, “a number of sources with direct knowledge of the negotiations have fingered the estate tax as the major player in the size of the deal.” “Republicans were extremely eager to get benefits for the top tenth of a percent of Americans,” one administration official said.

Just so we have some perspective on how few estates we’re talking about here, look at these details from the Congressional Research Service:

According to the Congressional Research Service, the Kyl- Lincoln approach would subject just 0.14 percent of U.S. estates to a tax and would generate $11.2 billion in revenue next year. By contrast, the 55 percent top rate, with a $1-million-per- person exclusion, would affect 1.76 percent of estates and would generate $34.4 billion in revenue, the CRS said. Obama had previously backed, and House Democrats in 2009 passed, a 45 percent rate and a $3.5 million tax-free allowance. If applied for 2011, those parameters would subject 0.25 percent of U.S. estates to a tax and would generate $18.1 billion in revenue next year, the CRS said.

So even at the 2001 level, which was never really on the table, fewer than two percent of estates would have conceivably been subjected to the estate tax. Obama, to his credit, said in his statement announcing the tax deal that the cut was a “more generous treatment of the estate tax than I think is wise or warranted.” That this cut is in a package ostensibly focused on boosting the economy — when it’s impact on job creation is “negligible” — is a testament to how deeply Republicans desire lower tax rates on the super-wealthy.