The House Democrats and the Congressional Black Caucus are wise in their righteous opposition of the shameful tax compromise put forth by the Republican Caucus and the Obama Administration. Their message is clear: there will be no deal until significant improvements are made to the package. We must encourage them to hold the line on that demand.
The most inexcusable part of the Obama-GOP package is the dramatic slashing of the federal estate tax even further beyond the already weakened 2009 law. Although the estate tax impacts less than 0.25% of all estates – the wealthiest of the wealthy – it has profound implications for all Americans and communities of color in particular. By curbing the transfer of unlimited wealth from generation to generation, the estate tax is an important tool for ensuring that the inequalities of generations past, including those drawn along the lines of race, do not forever haunt our nation.
For much of U.S. history, white Americans have had greater opportunities to build wealth, often with the help of the federal government programs such as the Homestead Act and the GI Bill. African-Americans were largely denied these opportunities as the weight of overt racism, Jim Crow, bank redlining, and more prevented African-Americans from closing the gap with their white counterparts. Though many of these unjust structures and policies are now gone, the inequalities they created continue to this day thanks to the power of inheritance.
Currently, African-Americans earn 62 cents and Latinos earn 68 cents for every dollar of white income. Troubling as these numbers are, the wealth disparities are even more unsettling. African-Americans have only 10 cents and Latinos have only 12 cents of net wealth for every dollar of white net wealth. To see these appalling disparities, is to see generations of injustice carried forward as wealth, mostly in white hands, is transferred from one generation to the next.
This intergenerational transfer of wealth takes place over many years, including help in buying a first car, paying for college, or subsidizing the down payment on a first home. The apex of this transfer though is at the time of death, when the remainder of the parent’s wealth is usually transferred to the children or grandchildren.
Because the estate tax acts as a check to the concentration of wealth at the very top, it helps to even the economic playing field for each generation to follow. That is precisely why it is of critical importance not only to communities of color, but also to working class white communities
Obama’s decision to concede so much ground to Republicans on this issue is simply baffling. Further weakening of the estate tax is unacceptable. We should instead be finding ways to significantly strengthen it. It’s also clear that buckling on the estate tax, and the tax cuts for the wealthy more broadly, would be dangerous move for Democrats. Congressional Republicans will leverage the deficits created by this tax giveaway to millionaires and billionaires for massive cuts in social services and other public structures, on which all Americans depend.
In the days ahead, we must rally behind the House Democrats and the Congressional Black Caucus. Encourage them to stand strong and not back off their demands in those crucial negotiations. In the words of Frederick Douglas, "Power concedes nothing without a demand. It never did and it never will."
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