Huge Holiday Gifts for America's Super-Rich

The super-rich got an early Christmas gift in the $858 billion tax package that President Obama signed into law on Friday. On top of a two-year extension of Bush-era income tax rates, the wealthiest Americans dodged an estate tax that was set to jump up from zero to 55% for individuals worth more than $1 million. Instead, under a deal Senate Republicans negotiated with the White House, individuals can exempt estates up to $5 million and pay 35% beyond that. The exemption for couples is $10 million.

Official estimates pin the two-year cost of the adjustment at $68 billion, and it will shield all but about 3,600 estates from the levy, according to a projection by the nonpartisan Tax Policy Center.

The windfall for the well-heeled wasn't delivered out of thin air. Indeed, a small band of the richest Americans have acted as their own secret Santas on this issue for years. A 2006 report by Public Citizen and United for a Fair Economy -- both nonprofits opposed to concentrated wealth -- identified 18 families financing a coordinated campaign to repeal the estate tax altogether. Among the leading names behind that push: the Gallos (E&J Gallo Winery), the Kochs (Koch Industries), the Mars' (Mars Inc.), the Waltons (Wal-Mart), and the Wegmans (Wegmans Food Markets). At the time, the report estimated the families' collected net worth to be at least $185 billion, roughly equal to the market cap of Google today.  

Several of the families organized their efforts through an association called the Policy and Taxation Group. Lobbying disclosure laws don't require the group to list its members, and as such, it hasn't disclosed any of them since 1999. But disclosures show the group itself remains active, with two hired-gun lobbying firms on its payroll this year. One of those shops, Patton Boggs, separately shills for the Mars and Wegman families on the issue.

Small estates vs. large estates

Proponents of an estate tax repeal make their argument by citing the burden of the tax on people with significantly less money -- namely small business owners and family farmers. And a wide range of trade associations organized under the banner of the Family Business Estate Tax Coalition -- a group that includes the American Farm Bureau Federation and the National Federation of Independent Business -- has stayed active lobbying to scale the tax back. They argue the levy is so onerous that small to middle-sized concerns are frequently forced to sell just to pay the piper.

Independent analysts question the veracity of those claims. The Tax Policy Center, for example, concludes there is "little hard evidence [to suggest] that the impact of estate taxes on family farms and businesses is a major concern." [...]

By Tory Newmyer for Fortune magazine, December 21, 2010

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