Thread: The 'Death Tax' Scam

The 'Death Tax' Scam

America's wealthiest families are pouring millions into slashing the estate tax - and some Democrats are siding with the super-rich


MICHAEL CROWLEY
Rolling Stone
Posted May 27, 2009


On a bright April day in Barack Obama's America, where equality is on the rise and greed is on the run, a Democratic senator from an impoverished Southern state took a brave stand — on behalf of the country's richest families.
On April 1st, Sen. Blanche Lincoln of Arkansas, a state with the nation's third-lowest median income, sponsored a budget amendment that would sharply reduce taxes on the estates of multimillionaires after they die. Estates worth up to $7 million per couple, and $3.5 million for individuals, are already exempt from taxes — meaning that 99.75 percent of all Americans die without paying a dime to Uncle Sam. But Lincoln's proposal would raise the exemption to $10 million — and slash the tax rate on even larger estates from 45 percent to 35 percent. All told, the move would let the children of Wall Street barons, dot-com millionaires and wealthy industrialists pocket more than $90 billion in tax revenues over the next decade.

Harry Reid, the Senate majority leader, was furious at Lincoln's move, calling it "so stunning, so outrageous that some would choose this hour of national crisis to push for an amendment to slash the estate tax for the superwealthy." Yet the tax cut passed with 51 votes — including 10 Democrats.

A few weeks later, during negotiations to reconcile the Senate's budget with the one passed by the House, the tax cut was undone. But the battle over the "death tax," as Republicans have shrewdly labeled it, is just beginning — and it involves one of the best-funded and most effective lobbying operations that Washington has ever seen. It is a movement that conservatives often portray as the work of a grass-roots uprising but in large measure has been propelled by a very small number of extremely rich people. "You have a group of wealthy families that are funding a very sophisticated effort," says Michael Graetz, a law professor at Yale who has studied the movement to repeal the estate tax. Over the past 20 years, those families have exerted their power in ways that can be traced, in a surprisingly direct way, to many of the Democrats who voted for Blanche Lincoln's amendment — and who are hoping for bigger victories this fall.

The families behind the estate-tax repeal — working in concert with right-wing anti-tax ideologues — are attempting to undo a century-old consensus about taxing huge inheritances, one borne of the progressive movement in the late 19th century. The Gilded Age produced such huge concentrations of wealth that even its biggest winners agreed that they should share their fortunes rather than simply pass them along from one generation to another. Among those making the case was Andrew Carnegie, whose steel fortune dominated the nation's economy at the time. "The parent who leaves his son great wealth generally deadens the talents and energies of the son, and tempts him to lead a less useful and less worthy life than he otherwise would," Carnegie wrote, adding on another occasion that he "should as soon leave to my son a curse as the almighty dollar." The estate tax also became a cause of Teddy Roosevelt, who argued that vast fortunes passed between generations cause "great and genuine detriment to the community at large." Convinced that massive inheritances offended America's egalitarian principles, Congress authorized the first estate tax in 1916.
Fast-forward to the 1990s, when the heir to a fortune begun in Carnegie's time set out undo the work of his predecessors. Frank Blethen publishes The Seattle Times, which was founded by his great-grandfather in 1896, and runs a family company that also owns newspapers in Maine and elsewhere in Washington state. The 65-year-old Blethen, who drives to work in a $93,000 Porsche and has his newspaper's logo tattooed on his leg, is obsessed with getting rid of the estate tax — a move that would enable his descendants to pocket a family fortune once estimated at $650 million, without paying a penny in taxes. In 1995, Blethen began gathering estate-tax opponents together for annual summits at which they plotted strategy for a relentless campaign to place the issue on Congress' political agenda.

At first, the prospect seemed impossible. "People thought this was out of the question," says Graetz. After all, how could the average congressman fight to save families like the Blethens more money in a single shot than most Americans make in their lifetimes? To shift the political calculus, rich families poured millions into the effort — and created front groups to do the dirty work. According to a joint report by Public Citizen and United for a Fair Economy, at least 18 families are actively working to repeal the estate tax by pumping money into campaign donations, advocacy groups that crank out slanted economic studies and political ads slamming estate-tax supporters. Eighteen members of those families are billionaires who can be found on the Forbes 400 list; by one estimate, their clans stand to save more than $70 billion from a total repeal of the tax.

Many of the families are household names. There is the Mars family, makers of M&Ms and other candy, who would avoid $10 billion in estate taxes. There is the Gallo family, whose winemaker patriarch hoped to save an estimated $500 million from abolishing the tax. There are the Nordstroms, of department-store fame; the Dorrances, makers of Campbell's soup; and the Wegmans, owners of supermarkets by the same name. And there is the Walton family, owners of Walmart, a clan whose worth may exceed $75 billion. Their personal profit from repealing the estate tax would total $30 billion — roughly the gross domestic product of Jordan.

http://www.rollingstone.com/politics/st ... h_tax_scam

Actually I support this. Think about it. Even tho my estate would be well below the current cap if I kicked the bucket today, if hyperinflation hits as many have predicted, within ten years or so we could be at a point where someones leftover food stamps could exceed 10 million dollars in value. Don't be too hasty in trashing this proposal.

Wrong, 4th. Think about this: these families hold on to their fortunes and escape taxes that we desperately need, so desperately that we are selling the entire country to the highest bidder, including our dearest friends, the communist Chinese who hold over 40 percent of Treasury obligations. The Chinese get cranky if we taxpayers don't pay them the interest we promised. Local governments are selling or leasing public infrastructure to foreign investors. (Remember the Dubai Ports World deal?) And foreign investors are taking tours of foreclosed properties, courtesy of the real estate industry which is desperate. The stimulus package is in doldrums getting out to local governments and the Treasury is printing money until they run our of ink and paper.
At this point, we need every dollar we can get while it is still worth something.