Sometimes Congress devises a roll call that lets people glimpse clearly their elected representatives’ real constituency, the interests that have first call on the lawmakers’ allegiance.
The vote this week in the Senate on a permanent repeal of the estate tax affords the country as near perfect a test as it is ever apt to see. It is one of those rare instances where the large public interest — a solvent nation that taxes its people fairly — clashes with the wants of a tiny group of the richest and most favored people in the land.
How tiny? The latest IRS compilation on estate tax filings for 2003 shows that far fewer than 1 percent of Americans will ever have their inheritances reduced by even a dime of estate taxes. In Arkansas that year, 27,918 people died but only 168 of them, barely over half of 1 percent, left estates rich enough to owe any inheritance tax.
But you would never know that if you follow the giant advertisements in the newspapers the past several weeks that want you to tell Sens. Blanche Lincoln and Mark Pryor to protect you by voting for permanent repeal of the estate tax or one of the “reform” proposals that achieve about the same thing as total repeal.
Neither would you know that the effective rate of the estate, or inheritance, tax, when it actually does toll, is not 50 percent, as some of the ads say and that the Wall Street Journal editorial page trumpets time after time, but averages a little under 19 percent, which is close to the income tax rate that the lowest wage earners pay.
Here’s the equation for voters: If the senators vote to repeal the tax, the cost to the country will be about $1 trillion over the first decade of repeal — $776 billion in lost revenue and $213 billion in increased interest payments on the national debt. That is the decade of baby-boomer retirement, when the budget deficits and the national debt reach the stratosphere.
Getting rid of the estate tax, which has been on the books 90 years, was President Bush’s first priority in 2001, and the Republicans rammed it through in the big tax-cutting binge for the wealthy that year. But to keep future budget projections from frightening people, they provided for the repeal to end in 2010 so that the long-range budget projections would include billions of dollars in revenue from the tax in the years afterward.
Now that no one seems to care about a mammoth debt, it is time to promise permanent relief to Paris Hilton and other rich heirs. Congress was going to do it last fall, but Hurricane Katrina intervened and Senate Budget Chairman Charles Grassley, R-Iowa, postponed the vote, explaining that it was “a little unseemly” to be giving fresh tax cuts to the very wealthy amid such widespread suffering.
They could wait until 2010 to extend the repeal, but that is when baby boomers begin retiring and the nation is confronted by deficits so staggering that no member of Congress will be voting to cut taxes. So it has to be done now while the country slumbers.
It is not clear who in the end is paying for the campaign to pressure vacillating senators like Lincoln and Pryor but you can make a good guess. Public Citizen and United for a Fair Economy reported this spring that 18 super wealthy families, including Arkansas’s Waltons and Stephenses, had spent millions of dollars over the past 10 years to change opinion and repeal the estate tax, mainly through associations such as the Club for Growth. But they have also invested heavily in key politicians. President Bush tops the list but Sen. Lincoln is fourth and Arkansas Rep. John Boozman is fifth, slightly behind former House Republican Leader Tom DeLay and Sen. Elizabeth Dole, R-N.C., chair of the Republican Senatorial Campaign Committee.
The first step was to change the label on the tax to something grimmer, and Republican pollster Frank Luntz came up with “death tax,” which would make people think every widow’s mite would be taxed away. Bush and other Republicans never use anything but “death tax.”
Next was to make the big victims of the tax not the very rich, who have few sympathizers, but family farmers.
When he took office in 2001 Bush vowed to “keep farms in the family” by ending “the death tax.” When people asked for an example of a farm being sold to pay the inheritance tax, Bob Stallman, the president of the American Farm Bureau, sent an urgent message to affiliates to find one. “It is crucial,” he said, “for us to be able to provide Congress with examples of farmers and ranchers who have lost farms” to pay the tax. The affiliates provided him not one.
Speaking in Iowa a few weeks after inauguration, Bush claimed that Iowans had told him of selling the family farm to pay the tax. The White House was asked to provide one name. Six years later, it hasn’t supplied one.
But Stallman overestimated Congress. Even one sliver of proof was not necessary. It is not family farmers, or the public interest, but the mega-rich who really count. Watch the roll call.