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Friday, 26 June 2015 06:16

Billionaire Families Lobby to Repeal Estate Tax and Further Entrench US Oligarchy


aaaataxbillion34Billionaires and millionaires should pay their fair share in estate taxes. (Photo: Robin Davies)

The consumer advocacy organization Public Citizen just issued a study that analyzes the efforts of billionaire families to - once again - try to repeal the estate tax. According to a June 25 news release by the organization,

Just nine families could dodge $25.7 billion in taxes, and perhaps as much as $54.7 billion, if the estate tax were repealed. Half of these families have spent more than a million dollars apiece lobbying Congress to repeal the tax between 2012 and the first quarter of 2015....

The families behind the eight companies pushing to repeal the tax include the Mars, Wegman, Cox, Taylor, Van Andel, DeVos, Bass, Schwab and Hall families. The Mars and Wegman families alone, who have a combined net worth of more than $63 billion, spent more than $3.5 million to lobby solely for the repeal of the estate tax during the time period studied. 

The avaricious effort is being undertaken even though the minimum tax exemption for the estate tax has risen over the years. It is now over $5 million for an individual. For a couple, the estate tax does not kick in for an inheritance of less than $10.5 million. Most of the wealthiest people in the US do not pay a tax when their wealth is distributed to heirs. According to the Public Citizen study, "Only an estimated 0.2 percent of American estates are subject to the federal estate tax."

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Public Citizen refutes in detail the myth that the estate tax hurts small farmers, a public relations rallying cry used by those who want to repeal the levy. Small farms are not being destroyed by the estate tax. They are being decimated by the juggernaut of large corporate agriculture. As Public Citizen notes in the introduction to its report,

In 2001, Pulitzer Prize winning journalist David Cay Johnston set out to investigate the popular claim and was unable to find one example of a family farm being lost due to the estate tax. Johnston stuck by his 2001 finding in a recent article for Aljazeera America.

In an article that dispels ten myths propagated by the wealthiest families in the US, the Center on Budget and Policy Priorities notes that "large loopholes enable many estates to avoid taxes." This fact bolsters the argument for tightening the estate tax collection provisions, rather than further enriching the wealthiest people in the US by eliminating the tax.

One of the most cogent points made by The Center is that "the largest estates consist mostly of 'unrealized' capital gains that have never been taxed." In these cases, the estate tax is essentially a way for the federal treasury to recover dollars that are owed to the public purse under the tax code. The Center on Budget and Policy Priorities explains:

Much of the money that wealthy heirs inherit would never face any taxation were it not for the estate tax. In fact, that's one reason why policymakers created the estate tax in 1916: to serve as a backstop to the income tax, taxing the income of wealthy taxpayers that would otherwise go completely untaxed.

Under the current tax system, capital gains tax is due on the appreciation of assets, such as real estate, stock, or an art collection, only when the owner "realizes" the gain (usually by selling the asset). Therefore, the increase in the value of an asset is never subject to income tax if the owner holds on to the asset until death.

In fact, the estate tax minimum payment threshold has been rising over the past few years. The Atlantic magazine argues, "It will cost us $375 billion over the next decade if we keep the estate tax from going back to its Clinton-era levels."

In contrast to those who would further consolidate the nation's wealth in the hands of a few, Sen. Bernie Sanders (I-Vermont) has just introduced legislation that would raise the estate tax. According to an article in US News & World Report,

Presidential candidate Bernie Sanders introduced a bill Thursday to exempt all but the wealthiest of wealthy Americans from paying estate taxes, saying it would address economic inequality in America.

"If we do not make the necessary changes to reduce skyrocketing wealth and income inequality, this country is well on its way towards becoming an oligarchy—a nation owned and controlled by a handful of extraordinarily wealthy and powerful people," said Sanders, an Independent senator from Vermont, at a news conference....

"This legislation would exempt 99.7 percent of Americans from paying any estate tax while ensuring that the wealthiest Americans in our country pay their fair share," Sanders said.

The challenge, when it comes to tax fairness, is that the richest people in the US have millions of dollars to spend on lobbying to decrease their taxes. Those who face difficulty paying taxes due to low incomes have no spare money to spend on lobbying to ensure that billionaires and multi-millionaires pony up their fair share.

The estate tax is another battle between an entrenched plutocracy with unlimited funds and those who support a vibrant democracy that cannot be bought.

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