Give credit to Republicans in Congress.
They’ve discovered, belatedly, that income inequality is a problem, and they’re no longer proposing to give tax breaks to the wealthiest 2 percent of Americans. Now they are proposing to give tax breaks to the wealthiest two-tenths of 1 percent of Americans.
On Tuesday afternoon, the House Rules Committee took up H.R. 1105, the “Death Tax Repeal Act of 2015.” It is an extraordinarily candid expression of the majority’s priorities: A tax cut costing the treasury $269 billion over a decade that would exclusively benefit individuals with wealth of more than $5.4 million and couples with wealth of more than $10.9 million.
That’s a tax break for only the 5,500 wealthiest households in the country each year, according to the Joint Committee on Taxation. Of those, the 318 wealthiest estates each year – those worth $50 million or more – would see an average windfall of $20 million each, according to the Center on Budget and Policy Priorities.
This is the ultimate perversion of the tea party movement, which began as a populist revolt in 2009 but has since been hijacked by wealthy and corporate interests. The estate tax has been part of American law in some form since 1797, according to the advocacy group Americans for Tax Fairness, as a shield against the sort of permanent aristocracy our founders fought to rid themselves of.
It had long been a conservative ideal, and the essence of the American Dream, to believe that everybody should have an equal shot at success. But in their current bid to end the estate tax, Republicans could create a permanent elite of trust-fund babies.
As the son of a schoolteacher and a cabinetmaker, I’d like to see the estate tax exemptions lowered – so that taxes encourage enterprise and entrepreneurship while keeping to a minimum the number of Americans born who will never have to work a day in their lives.
Republicans offer all sorts of bogus justifications for giving away $269 billion to a few thousand of the wealthiest Americans.
House Ways and Means Committee Chairman Paul Ryan, R-Wis., appearing late Tuesday before the Rules Committee, claimed that the estate tax is “absolutely devastating” to family farms, and further he claimed the repeal would remove “an additional layer of taxation” from assets that had already been taxed.
Double taxation? Americans for Tax Fairness, citing Federal Reserve data, notes that 55 percent of the value of estates worth more than $100 million comprises unrealized capital gains that have never been taxed.
Hurting family farmers and small businesses? In the entire country, only 120 small businesses and farms (100 of them large farms) were hit by the estate tax in 2013. And for that tiny number affected, there are all sorts of provisions already in place to soften the blow: low valuation rules, delayed tax payments and other breaks and discounts.
GOP leaders such as Senate Majority Leader Mitch McConnell of Kentucky and House Speaker John Boehner of Ohio have begun to recognize that the vast gap between rich and poor is detrimental – and to blame the problem on President Obama.
“It sounds to me like there’s a lot of wealth envy in this country,” Rep. Virginia Foxx, R-N.C., complained while serving as chairwoman of the Rules Committee debate Tuesday. The bill abolishing the estate tax, she said, “will draw a line in the sand.”
Yes, it will: between the wealthiest two-tenths of 1 percent – and everybody else.
Follow Milbank on Twitter, @Milbank.