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Sometimes you can't declare victory until the other side concedes defeat. That's what happened Monday in the decade-long struggle over the future of the federal estate tax, our nation's only levy on inherited wealth.
The coalition of corporate lobbyists and wealthy families, including the U.S Chamber of Commerce and the National Federation of Independent Businesses, dropped their long standing call for complete abolition of the tax, shifting their lobby resources into weakening the law.
A Bit of History on the Tax
Wealthy families, including 18 dynastic families such as heirs to the Mars candy family fortune, had spent millions in lobbying funds to save billions in future taxes.
For over a decade, opponents of the estate tax attempted to confuse the public about who really paid the tax. They called it a "death tax" on everyone, when it applied to only a small sliver of multi-millionaires and billionaires, less than two percent of taxpayers
In the late 1990s, they ran advertisements and a media campaign claiming the estate tax was the death of the family farm. In 2001, Pulitzer Prize winning journalist, David Cay Johnston, exposed this as a sham. His investigative reporting found not a single case of a farm having been lost because of the estate tax.
Proponents of repeal found a friend in President Bush, who included a phase out of the estate tax in his 2001 tax plan. Over the ensuing decade, the amount of wealth exempted by the tax rose from $1 million to $3.5 million ($7 million for a couple) and the rate was cut from 55 percent to 45 percent. At this current level, only one in 200 taxpayers will owe any estate tax.
Advocates for retaining the estate tax have pointed out that it raises significant revenue (a $1 trillion over the next 15 years) from those most able to pay. It provides an incentive for the wealthy to give to charity and places a brake on the concentration of wealth and power --which corrodes democracy.
Bill Gates Sr., the father of the founder of Microsoft, called the estate tax "a fair tax" and a "mechanism for wealthy people to pay back the society that created the fertile ground for wealth creation." Warren Buffett testified before Congress that "dynastic wealth, the enemy of meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."
If Congress takes no action this year (an unlikely scenario) the estate tax will expire next year, 2010, but only for one year. The entire 2001 tax law sunsets on January 1, 2011, with the estate tax reverting to a $1 million exemption and 55 percent rate. This gives advocates of keeping the tax enormous leverage in holding the line against gutting the law.
Celebrate and Get Back to Work
The anti-estate tax lobby is now shifting its considerable resources toward raising the wealth exemption to $10 million and reducing the rate to 35 percent. This additional tax break for multi-millionaires would cost over $100 billion over the next ten years.
President Obama has signaled his support for retaining the estate tax at its current $3.5 million level, while indexing it for inflation. Congress will likely act this fall to continue the existing law for one year, taking up permanent estate tax reform in 2010.
There is a real risk, however, that anti-tax forces will rapidly coalesce around a proposal to permanently raise the wealth exemption and gut the law. The same wobbly Democrats who axed the public option out of health care reform -- Sens. Max Baucus, D-MT, Blanche Lincoln, D-AR and Ben Nelson, D-FL -- are all likely votes for a bad estate tax bill.
Progressives are pressing to ensure the House of Representatives holds the line to a reasonable reform of the estate tax. Some members, like Rep. Jim McDermott, D-WA, have introduced legislation to lower the wealth exemption to $2 million and establish a graduated rate structure, with higher rates on inheritances over $10 million.
In 2003, anti-tax activist Grover Norquist confidently predicted the demise of the estate tax. He characterized the movement to retain the law a "dead fish." "They're embarrassing," he told the Washington Post. "They're flipping around like that stupid fish in the boat." Yesterday he told Bloomberg News that his coalition, Americans for Tax Reform, was working to get the best possible deal because "this Congress is not going to abolish the death tax."
The dead fish swims again.
Dear Common Dreams reader, The U.S. is on a fast track to authoritarianism like nothing I've ever seen. Meanwhile, corporate news outlets are utterly capitulating to Trump, twisting their coverage to avoid drawing his ire while lining up to stuff cash in his pockets. That's why I believe that Common Dreams is doing the best and most consequential reporting that we've ever done. Our small but mighty team is a progressive reporting powerhouse, covering the news every day that the corporate media never will. Our mission has always been simple: To inform. To inspire. And to ignite change for the common good. Now here's the key piece that I want all our readers to understand: None of this would be possible without your financial support. That's not just some fundraising cliche. It's the absolute and literal truth. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. Will you donate now to help power the nonprofit, independent reporting of Common Dreams? Thank you for being a vital member of our community. Together, we can keep independent journalism alive when it’s needed most. - Craig Brown, Co-founder |
Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org. His near future novel "Altar to An Erupting Sun” explores one community’s response to climate disruption. He is author of numerous books and reports on inequality and the racial wealth divide, including “The Wealth Hoarders: How Billionaires Spend Millions to Hide Trillions,” “Born on Third Base,” and, with Bill Gates Sr., of “Wealth and Our Commonwealth: Why American Should Tax Accumulated Fortunes.” See more of his writing at www.chuckcollinswrites.com
Sometimes you can't declare victory until the other side concedes defeat. That's what happened Monday in the decade-long struggle over the future of the federal estate tax, our nation's only levy on inherited wealth.
The coalition of corporate lobbyists and wealthy families, including the U.S Chamber of Commerce and the National Federation of Independent Businesses, dropped their long standing call for complete abolition of the tax, shifting their lobby resources into weakening the law.
A Bit of History on the Tax
Wealthy families, including 18 dynastic families such as heirs to the Mars candy family fortune, had spent millions in lobbying funds to save billions in future taxes.
For over a decade, opponents of the estate tax attempted to confuse the public about who really paid the tax. They called it a "death tax" on everyone, when it applied to only a small sliver of multi-millionaires and billionaires, less than two percent of taxpayers
In the late 1990s, they ran advertisements and a media campaign claiming the estate tax was the death of the family farm. In 2001, Pulitzer Prize winning journalist, David Cay Johnston, exposed this as a sham. His investigative reporting found not a single case of a farm having been lost because of the estate tax.
Proponents of repeal found a friend in President Bush, who included a phase out of the estate tax in his 2001 tax plan. Over the ensuing decade, the amount of wealth exempted by the tax rose from $1 million to $3.5 million ($7 million for a couple) and the rate was cut from 55 percent to 45 percent. At this current level, only one in 200 taxpayers will owe any estate tax.
Advocates for retaining the estate tax have pointed out that it raises significant revenue (a $1 trillion over the next 15 years) from those most able to pay. It provides an incentive for the wealthy to give to charity and places a brake on the concentration of wealth and power --which corrodes democracy.
Bill Gates Sr., the father of the founder of Microsoft, called the estate tax "a fair tax" and a "mechanism for wealthy people to pay back the society that created the fertile ground for wealth creation." Warren Buffett testified before Congress that "dynastic wealth, the enemy of meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."
If Congress takes no action this year (an unlikely scenario) the estate tax will expire next year, 2010, but only for one year. The entire 2001 tax law sunsets on January 1, 2011, with the estate tax reverting to a $1 million exemption and 55 percent rate. This gives advocates of keeping the tax enormous leverage in holding the line against gutting the law.
Celebrate and Get Back to Work
The anti-estate tax lobby is now shifting its considerable resources toward raising the wealth exemption to $10 million and reducing the rate to 35 percent. This additional tax break for multi-millionaires would cost over $100 billion over the next ten years.
President Obama has signaled his support for retaining the estate tax at its current $3.5 million level, while indexing it for inflation. Congress will likely act this fall to continue the existing law for one year, taking up permanent estate tax reform in 2010.
There is a real risk, however, that anti-tax forces will rapidly coalesce around a proposal to permanently raise the wealth exemption and gut the law. The same wobbly Democrats who axed the public option out of health care reform -- Sens. Max Baucus, D-MT, Blanche Lincoln, D-AR and Ben Nelson, D-FL -- are all likely votes for a bad estate tax bill.
Progressives are pressing to ensure the House of Representatives holds the line to a reasonable reform of the estate tax. Some members, like Rep. Jim McDermott, D-WA, have introduced legislation to lower the wealth exemption to $2 million and establish a graduated rate structure, with higher rates on inheritances over $10 million.
In 2003, anti-tax activist Grover Norquist confidently predicted the demise of the estate tax. He characterized the movement to retain the law a "dead fish." "They're embarrassing," he told the Washington Post. "They're flipping around like that stupid fish in the boat." Yesterday he told Bloomberg News that his coalition, Americans for Tax Reform, was working to get the best possible deal because "this Congress is not going to abolish the death tax."
The dead fish swims again.
Chuck Collins is a senior scholar at the Institute for Policy Studies where he co-edits Inequality.org. His near future novel "Altar to An Erupting Sun” explores one community’s response to climate disruption. He is author of numerous books and reports on inequality and the racial wealth divide, including “The Wealth Hoarders: How Billionaires Spend Millions to Hide Trillions,” “Born on Third Base,” and, with Bill Gates Sr., of “Wealth and Our Commonwealth: Why American Should Tax Accumulated Fortunes.” See more of his writing at www.chuckcollinswrites.com
Sometimes you can't declare victory until the other side concedes defeat. That's what happened Monday in the decade-long struggle over the future of the federal estate tax, our nation's only levy on inherited wealth.
The coalition of corporate lobbyists and wealthy families, including the U.S Chamber of Commerce and the National Federation of Independent Businesses, dropped their long standing call for complete abolition of the tax, shifting their lobby resources into weakening the law.
A Bit of History on the Tax
Wealthy families, including 18 dynastic families such as heirs to the Mars candy family fortune, had spent millions in lobbying funds to save billions in future taxes.
For over a decade, opponents of the estate tax attempted to confuse the public about who really paid the tax. They called it a "death tax" on everyone, when it applied to only a small sliver of multi-millionaires and billionaires, less than two percent of taxpayers
In the late 1990s, they ran advertisements and a media campaign claiming the estate tax was the death of the family farm. In 2001, Pulitzer Prize winning journalist, David Cay Johnston, exposed this as a sham. His investigative reporting found not a single case of a farm having been lost because of the estate tax.
Proponents of repeal found a friend in President Bush, who included a phase out of the estate tax in his 2001 tax plan. Over the ensuing decade, the amount of wealth exempted by the tax rose from $1 million to $3.5 million ($7 million for a couple) and the rate was cut from 55 percent to 45 percent. At this current level, only one in 200 taxpayers will owe any estate tax.
Advocates for retaining the estate tax have pointed out that it raises significant revenue (a $1 trillion over the next 15 years) from those most able to pay. It provides an incentive for the wealthy to give to charity and places a brake on the concentration of wealth and power --which corrodes democracy.
Bill Gates Sr., the father of the founder of Microsoft, called the estate tax "a fair tax" and a "mechanism for wealthy people to pay back the society that created the fertile ground for wealth creation." Warren Buffett testified before Congress that "dynastic wealth, the enemy of meritocracy, is on the rise. Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy."
If Congress takes no action this year (an unlikely scenario) the estate tax will expire next year, 2010, but only for one year. The entire 2001 tax law sunsets on January 1, 2011, with the estate tax reverting to a $1 million exemption and 55 percent rate. This gives advocates of keeping the tax enormous leverage in holding the line against gutting the law.
Celebrate and Get Back to Work
The anti-estate tax lobby is now shifting its considerable resources toward raising the wealth exemption to $10 million and reducing the rate to 35 percent. This additional tax break for multi-millionaires would cost over $100 billion over the next ten years.
President Obama has signaled his support for retaining the estate tax at its current $3.5 million level, while indexing it for inflation. Congress will likely act this fall to continue the existing law for one year, taking up permanent estate tax reform in 2010.
There is a real risk, however, that anti-tax forces will rapidly coalesce around a proposal to permanently raise the wealth exemption and gut the law. The same wobbly Democrats who axed the public option out of health care reform -- Sens. Max Baucus, D-MT, Blanche Lincoln, D-AR and Ben Nelson, D-FL -- are all likely votes for a bad estate tax bill.
Progressives are pressing to ensure the House of Representatives holds the line to a reasonable reform of the estate tax. Some members, like Rep. Jim McDermott, D-WA, have introduced legislation to lower the wealth exemption to $2 million and establish a graduated rate structure, with higher rates on inheritances over $10 million.
In 2003, anti-tax activist Grover Norquist confidently predicted the demise of the estate tax. He characterized the movement to retain the law a "dead fish." "They're embarrassing," he told the Washington Post. "They're flipping around like that stupid fish in the boat." Yesterday he told Bloomberg News that his coalition, Americans for Tax Reform, was working to get the best possible deal because "this Congress is not going to abolish the death tax."
The dead fish swims again.