The following is an editorial from the St. Louis Post-Dispatch.
A Quinnipiac University Poll reported Nov. 15 that 61 percent of Americans think the Republican tax-cut plan would mainly help wealthy people. They’re right for many reasons, and the signature one is the effort to repeal or modify the estate tax.
Estate tax change is not the costliest or most important part of either the House or Senate bill. Eliminating it would cost the Treasury about $269 billion over 10 years, but it exclusively benefits extremely wealthy people who’ve done nothing to earn their enormous inheritances. To hide that fact, GOP leaders must mislead people.
“To protect millions of small businesses and the American farmer, we are finally ending the crushing, the horrible, the unfair estate tax, or as it is often referred to, the death tax,” President Donald Trump said in September.
Said House Speaker Paul Ryan on Nov. 5: “First of all, it’s a fairness argument. Second of all, it’s a jobs argument. You actually create jobs by getting rid of this death tax. Because you know what kills one family business from passing their business on to the next generation? The estate tax.”
A Republican president, Theodore Roosevelt, spoke to the fairness argument in 1906, “The man of great wealth owes a particular obligation to the state because he derives special advantages from the mere existence of government.”
Trump’s claim about “millions” of farms and family businesses is not even close to the truth. The Tax Policy Center at the Brookings Institution found only 80 of them among the 5,500 estates subject to the tax last year. Most fortunes are amassed, like Trump’s personal fortune, in investment holdings, 55 percent of which were capital gains and never subject to tax.
The average effective rate among the 5,500 estates taxed last year was 17 percent. That’s because the first $5.49 million isn’t taxed, and careful tax planning can drastically reduce what’s owed on the rest. As Gary Cohn, the White House economic adviser, told a group of Senate Democrats this year, “Only morons pay the estate tax.”
Many wealthy people begin passing on their wealth to their heirs in the form of “charitable lead trusts” and other exotic loopholes long before their deaths. Trump himself hasn’t done that yet; if he’s worth the $3.1 billion Forbes magazine says he is, eliminating the estate tax could save his heirs $1.2 billion.
Back in 2000, Congress actually passed a bill repealing the estate tax and had a farmer on a tractor deliver it to President Bill Clinton, who vetoed it. A weirdly prescient House Minority Leader Dick Gephardt, D-St. Louis, quipped, “If Republicans were honest about the beneficiaries of their estate tax break, it would have been delivered by Donald Trump in a stretch limo, not a farmer on a tractor.”
True then. Truer now.