The Great Tax Cut Deception

Some of the world's wealthiest people are urging Congress not to repeal taxes on estates and gifts, as George W. Bush is pushing. Bill Gates' father has circulated a petition arguing "repealing the estate tax would enrich the heirs of America's millionaires and billionaires while hurting families who struggle to make ends meet."

Bush and most corporate media have focused deceptively on income tax--the tax paid more by wealthy Americans, but does not reflect accurately overall tax burdens. This is largely because 80% of Americans pay more payroll tax than in income tax. When all federal taxes are counted, the wealthiest one percent would reap 36% of the cuts despite paying only 20 percent of taxes--almost double a proportionate share.

Repealing federal estate and gift taxes combined with reducing the top tax rate by 6%, both proposed under Bush's plan, will give the richest one percent of households $666 billion in tax cuts over the next decade. That's 42.6% of the proposed tax cut. When fully in effect, the proposal to repeal the estate tax would provide as much in tax reductions to the 4,500 largest estates as to 142 million people.

Even without the repeal, only those of the richest 2% of all inheritors--exceeding $1 million dollars in assets--will be taxed at all in 2010 under the current law. Estates smaller than that amount are completely exempt from the estate tax after the next exemption hike in 2006.

Some estate tax repeal advocates acknowledge the rich can afford the hit, but paint inheritors of small businesses and family farms--illiquid assets--as the real losers. Repeal propaganda is so full of pictures of small farmers that it could be mistaken for a 4-H club newsletter. But peel away the hard hats and blue collars and you'd find white-collared lobbyists who dressed for the event. An official memo leaked from the National Association of Manufacturers for the staged event said "If people want to participate--AND WE DO NEED BODIES--they must be DRESSED DOWN and appear to be REAL WORKER-types."

In reality, family farms and businesses were the majority of assets in only six out of every 10,000 estates in 1997 and the estate tax was reformed that year to provide them further protections.

Unfortunately, most congressional estate tax repeal backers apparently have compassion for small farmers only when they die. In the Senate, most repeal proponents also voted for the 1996 Federal Agricultural Improvement and Reform Act, benefiting corporate agribusiness and factory farms while devastating small farmers.

And how much relief will Bush's plan bring in the first year? Less than two percent. After five years, taxpayers will have received only 29%of the relief promised them. No one can predict reasonably the country's fiscal condition ten years from now, so the concept of a $1.6 trillion tax cut amounts to rhetorical fraud.

The estate tax discourages an aristocracy of wealth and encourages a meritocracy that commands the nation's resources based on merit, not heredity. Maybe the petition signers are selfish by wanting their progeny to live in a country with a flourishing civic sector and where deeds outweigh privilege.

Please use this information and more from the sources below, to correct the massive disinformation campaign being waged. Letters to editors, congress, and especially call to talk radio shows are suggested.

Data sources: Center on Budget & Policy Priorities cbpp.org Citizens for Tax Justice ctj.org and United for a Fair Economy ufe.org