Columns » Ernest Dumas

Cheering for the billionaires


The papers did not record whether the Wal-Mart workers who were herded onto the floor of the company's big distribution center at Bentonville to hear Vice President Dick Cheney this week applauded when they heard him denounce Sen. John Kerry for voting against repeal of the estate tax. We have to assume that even under the gaze of Wal-Mart's CEO and its executive vice president for logistics the hourly wage workers were not willing to demonstrate that they were so easily gulled. Unless one of them hits the Power Ball lottery it is a safe bet that not one of the warehouse and assembly-line workers or their children will ever owe a dime of estate tax or would have owed it if President Bush had not succeeded in repealing the tax in his 2001 tax program. Two weeks ago, Bush went over to the Omni Shoreham hotel in Washington to address 1,500 newspaper publishers and their chosen editors. The news accounts said the newspaper owners and executives sat blankly through 44 minutes of recycled sound bites until the president called for permanent repeal of the "the death tax," which brought them out of their lethargy. They applauded the only time other than at his introduction and closing. That single expression by the millionaire media explains better than words what has happened to American newspapers. But Wal-Mart employees? We must assume that Cheney did not call it the estate tax when he paid his taxpayer-financed visit to the captive workers but the "death tax," the term crafted by Frank Luntz, the Republican pollster, that changed public attitudes about the tax. People became convinced in the 1990s that their widows and children would have to pay the tax on their death. (Even vast estates willed to widows have never owed taxes.) Most Americans suddenly thought that the tax dreamed up a century ago by Teddy Roosevelt to tax off some of the vast wealth passed on by the robber barons of industry was some new levy dreamed up by liberal Democrats. Luntz, by the way, once said that if he had been advising Democrats rather than Republicans he would have suggested nicknaming it the "billionaire's tax" instead of the "death tax." In the neighborhood of 1 percent of the estates of Arkansans who die this year are so large that they will owe a dime of estate tax. Under the Bush tax cut law of 2001 the federal estate tax will go out of existence in 2010, though only for a year unless Bush and Cheney get their way and the repeal is made permanent. The same law phases out Arkansas's own estate tax next year. Cheney was right about one thing: Kerry does not want to make the repeal permanent. If it is permanent, hundreds of billions will be drained from the treasury in the 10 years afterward, exploding the deficit and forcing higher taxes on all those warehouse workers. They will almost certainly be paying higher taxes before the end of the next president's term, whoever he is. If the blue-vested Wal-Mart workers had been so flummoxed that they cheered his remarks about the estate tax, Cheney might have been emboldened to tell them what he and Bush really planned for them in 2001 but was blocked by people like John Kerry. On second thought, probably not. The original Bush tax bill included two other provisions that would have created a loophole that would have allowed megabillionaires to escape not only estate taxes but income taxes as well. It would also have repealed the federal gift tax and kept a provision of the old estate tax that let inheritors of stock and other assets sell them without incurring any tax. Together, as a prominent Republican tax lawyer named Jonathan Blattmachr figured out, the provisions would let people transfer vast amounts of appreciated stock to a friend or favorite aunt on her deathbed and then inherit it back on her death. He could then sell the appreciated stock without owing any capital gains tax. Seriously rich people could live lavishly without paying any taxes, shifting the cost of government to everyone else. The White House dismissed such concerns - mind you, all of this went virtually unreported by the media at the time, perhaps because it was too complicated - with the excuse that the chance that some billionaires might take advantage of the various provisions to escape taxes altogether ought not to mean that everyone else shouldn't be relieved of "an unfair tax that shouldn't exist." One of Bush's Senate sponsors called Blattmachr a "propeller head." But a Democratic tax lawyer for the House Ways and Means Committee asked for a fiscal analysis. It showed that the loophole would cost $250 billion over 10 years. Exposure of the loophole threatened its passage. You could hardly sell the tax cuts as a people's bill if that got much attention. The White House finally relented and quietly let the Congress put the gift tax back in. We can't be sure, but it might have been one of the "more than 300 votes" for taxes that Cheney told the Wal-Mart workers that Sen. John Kerry had cast.

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