Don't Mourn - Organize
The sellout of a tax deal has been signed into law. Despite all our best efforts, all the efforts of thousands of groups, hundreds of thousands of individuals, and a few stand-up politicians, we appear helpless to resist the onslaught of the “starve the beast” strategy (except for war, policing & corporate giveaways).
The utter failure of the Obama Administration to stand up to the rightwing assault on lower and middle-income workers, families, and communities has left many angry and feeling powerless.
It is truly dispiriting.
I believe, however, that there is a silver lining. For the first time in a long time, there appears to be a groundswell of recognition that what has happened is in large part due to the lack of a progressive social movement to counterbalance the power of the oligarchy and its Tea Party ground troops. Union leaders, community-based organizing coalitions, progressive beltway think tanks, and many others who have traditionally put most of their strategic eggs in the basket of support for the liberal wing of the Democratic Party, are calling for strategies that will build an independent movement.
And many voices have been raising the need for a unifying, values-based narrative to counter the ultra-conservative blame the victim, blame big government, blame unions, blame Muslims, blame immigrants story amplified by Fox News and mainstream media echo chamber.
More and more progressives are recognizing the importance of organizing, not just mobilizing, and perhaps most important of all, the need for unity across issues and constituencies. As George Lakoff explained:
“Those of us outside of government have to organize that unified movement, and not be limited by specific issue areas. The movement is about progressivism, not just about environmentalism, or social justice, or labor, or education, or health, or peace. The general principles govern them all.”
There is an opportunity here to put aside our notions of turf and any “we’ve got the key facts or the correct analysis or the pipeline to people in power” mentalities. We may need to let go of our egos and keep our eyes on the prize and get some agreement about those general principles.
To my colleagues:
I am proud to be part of the extraordinary work you do day in and day out, and am amazed at how, even with our resource constraints, you still manage to ramp up the intensity when needed. We are suffering defeats but our efforts are not for naught.
Seeds may stay dormant for years before springing to life. I am grateful for the work you do in the garden.
Statement on the Passage of the Obama-GOP Tax Deal
The $900 billion tax bill that was passed by Congress this week provides massive tax breaks for the wealthy. These tax breaks will not create jobs or improve the economy. They add to the deficit and will worsen economic inequality in the United States.
The worst part of the bill is the gutting of the estate tax, which only affects multi-million dollar estates, to its weakest form in 80 years.
Progressive organizations and progressive representatives in the House fought long and hard to establish a stronger estate tax. The sole positive aspect of the estate tax provision is that the cut lasts for only two years.
It’s clear the estate tax will continue to be at the center of future battles for tax justice.
Senate Republicans held relief for unemployed Americans hostage in the middle of the worst employment crisis in decades. Tax breaks for the wealthy were the ransom they demanded.
This bill makes clear the hypocrisy of deficit hawks in both parties. Now that it has been passed, the same deficit hypocrites are already saying their next goal is to shrink public spending on programs that benefit the working and middle classes.
President Obama says that he wants these tax cuts for the wealthy to be temporary. UFE will fight to make sure they are.
The President also says that he plans to focus on overall tax reform. UFE will fight for a stronger estate tax, for taxes that ensure the wealthy pay their fair share, and for taxes that reduce economic inequality.
We face several important choices between now and 2012. Our country will have to seriously consider this question: Do we want an economy that works for everyone, or one that excessively rewards the wealthy?
In the coming years, we at UFE will redouble our efforts to build a movement for tax fairness and a more just and inclusive economy.
|
See how your Representative voted on both the estate tax amendment and the overall tax bill. |
Les inégalités sont-elles responsables de la crise?
Les inégalités sont-elles responsables de la crise?
By Laura Raim for L'Expansion (French business journal)
Les Etats-Unis sont-ils condamnés à plonger dans une nouvelle crise? Le compromis fiscal conclu entre Obama et ses adversaires républicains a été approuvé jeudi par le Congrès américain. Il s'agit du dernier avatar de l'échec du gouvernement à résorber des inégalités sociales qui ne cessent de se creuser depuis des décennies. Inégalités qui seraient pourtant à l'origine aussi bien de la crise de 1929 que de celle de 2007.
Les inégalités sont-elles à l'origine des crises ?C'est la thèse des économistes Michael Kumhof et Romain Rancière. Dans un article publié fin novembre pour le FMI, ils rapprochent la montée des inégalités de celle de l'endettement des ménages. Pour eux, c'est le point commun entre les décennies précédant la crise économique actuelle et celles d'avant la Grande dépression de 1929. Entre 1910 et 1929 comme entre 1989 et 2008, la part des revenus de la fraction de 1% des ménages les plus riches est en effet passée de 15% à 25%.
"On a étudié comment les agents réagissaient à cette tendance, explique Romain Rancière, professeur associé à la Paris School of Economics. On a constaté que malgré l'érosion de leurs salaires, les Américains 'd'en bas' cherchaient à maintenir un certain standard de vie, comparable à celui des Américains 'd'en haut'. L'expression anglaise 'keeping up with the Joneses' est symptomatique de cette culture où les gens se comparent constamment les uns aux autres et veulent avoir la même maison ou la même voiture que le voisin". Les ménages pauvres ont donc abondamment emprunté pour compenser la stagnation de leurs revenus.
Mais pour emprunter, il faut qu'il y ait des prêteurs. Et justement, les ménages aisés étaient à la recherche de rendements élevés pour placer leur surplus d'épargne. La soif d'endettement des ménages pauvres leur a permis d'investir dans des produits financiers adossés sur ces crédits.
A noter que cette volonté d'emprunter des uns et d'épargner des autres a augmenté les besoins en services financiers et donc gonflé le secteur, dont la taille a doublé entre 1981 et 2007 pour atteindre 9% du PIB.
Le gouvernement a quant à lui encouragé ce processus dans les années 90 en dérégulant le marché bancaire et en poussant Fannie Mae et Freddie Mac à accorder des prêts immobiliers aux ménages les plus modestes. De fait, il est plus facile de masquer les inégalités en encourageant le crédit facile plutôt que de s'y attaquer à travers des politiques de redistribution.
"Le problème, c'est que cet endettement excessif des classes pauvres et moyennes a fragilisé le système financier : quand les prix de l'immobilier ont arrêté de progresser, des emprunteurs ont fait défaut en masse, et cela a déclencé la crise en 2007, poursuit l'économiste. La réduction des inégalités n'est donc pas seulement une question de justice sociale. C'est aussi une nécessité pour empêcher l'éclatement de nouvelles crises financières".
La politique fiscale explique-t-elle le creusement des inégalités ?La croissance des inégalités s'explique surtout par la montée spectaculaire des très hauts revenus. En ce qui concerne la période récente, les raisons pour cette tendance sont multiples : baisse du pouvoir des syndicats susceptibles de négocier des augmentations collectives, augmentation de la part de la rémunération variable...
Mais la politique fiscale mise en place depuis la présidence de Reagan, et accentuée par celle de Bush, a amplifié cet accroissement des inégalités. D'une part, la baisse des taux marginaux supérieurs d'imposition sur le revenu favorise l'accumulation patrimoniale dans le haut de la distribution. D'autre part, "le capital est bien moins taxé que le travail : l'impôt sur les investissements est de seulement 15%, ce qui profite surtout aux riches car ce sont principalement eux qui ont des investissements, explique Lee Farris, spécialiste de politique fiscale chez United for a Fair Economy, un groupe de pression qui lutte contre les inégalités. C'est pourquoi le taux d'imposition effectif des riches est bien plus bas que celui des classes moyennes".
Pour Paul Volcker, ancien président de la banque centrale et conseiller économique d'Obama, les avantages fiscaux concédés par Bush en 2001 et 2003 ont en effet donné lieu à la plus grande redistribution de revenus de l'histoire américaine "depuis la famille américaine moyenne vers un petit groupe de riches".
Le compromis fiscal d'Obama aggrave-t-il ces inégalités ?Pour le moment oui. Pour commencer, Obama n'a pas réussi, comme il le souhaitait initialement, à augmenter à 20% l'impôt sur les investissements pour les 2% des contribuables les plus aisés. Il a également échoué à supprimer les allègements consentis aux ménages gagnant plus de 250.000 dollars par an. Mais ce qui choque le plus les démocrates, c'est qu'il accepté d'accorder des exonérations sur l'impôt sur la succession pour tout patrimoine inférieur à 5 millions de dollars. Soit un paquet fiscal encore plus généreux que celui de Bush ! "L'impôt sur les successions aurait pourtant été l'un des plus juste et facile à augmenter, puisque par définition il est acquitté par un mort qui n'a plus besoin de son argent ! s'indigne Lee Farris. C'est même le républicain Teddy Roosevelt qui l'avait instauré."
"D'autres facteurs non fiscaux devraient malgré tout contrebalancer légèrement cette tendance, relativise Romain Rancière. La réforme du système de santé d'Obama par exemple représente un certain transfert de richesse qui doit permettre aux ménages plus pauvres de moins s'endetter".
Pass the Pomeroy Amendment to Strengthen the Estate Tax!
The House leadership heard our message loud and clear! But, we still have work to do. TODAY, the House will hold a vote on an amendment to the tax package for a stronger estate tax at the 2009 level.
Our best hope for a stronger estate tax is passing this amendment in the House. Let your representative know what you want right now!
MAKE THREE CALLS using our toll-free number to the Congressional switchboard at 800-830-5738:
|
If the House fixes the bill to include a stronger estate tax, there’s still time for the Senate to pass the bill.
While we at UFE do not consider the 2009 estate tax to be ideal – with a $3.5 million exemption per spouse and a 45% rate on amounts above that – it is far better than the estate tax in the Senate bill ($5 million exemption per spouse and 35% rate).
Please forward a link to this alert to friends, family and colleagues. Call and urge them to take action. And, help spread the word further by blogging about this important issue, and sharing this alert on your social networks.
Here are a few news updates on this debate that may be helpful in getting you up-to-speed:
- This is a great estate tax editorial by USA Today. We hope this helps to inspire you and others in your network to take action.
- On December 15, the Senate passed, with an 81-19 vote, the Obama-GOP tax deal with a severely weakened estate tax and extension of the Bush tax cuts for the wealthy. See how your Senators voted here.
- Unfortunately, the Sanders amendment to fix the whole bill by ending the Bush tax cuts for the wealthy, setting the estate tax at the 2009 level, and replacing the payroll tax holiday with a one-year extension of the Make Work Pay Credit, failed 43-57.
Race, Class, and the Obama-GOP Tax Deal
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."
Ezra Klein: An estate tax primer
An estate tax primer
The
estate tax is going to dominate the final arguments over the tax deal,
so it's worth quickly running through what it is and how much the
various plans will cost us.
The basic insight behind the estate tax is that wealth concentration is a problem. That was true in 1916, when the tax was enacted, and it's true today, when it's being neutered. As Ray Madoff explains, the going theory came from Louis Brandeis, who said, “We can have concentrated wealth in the hands of a few or we can have democracy, but we can’t have both.” Andrew Carnegie himself testified in favor the estate tax's creation.
The way it works is simple enough. There's an exemption level beneath which estates are not taxed, and a tax rate that applies to every dollar the estate is worth above the exemption. In 2001, we had a $675,000 exemption and a 55 percent tax rate. So an estate worth $700,000 would take a 55 percent tax on that final $25,000. The estate tax's levels, however, have been changing because the Bush tax cuts -- as you can see in the table on the right -- have been phasing it out. In 2002, it was $1 million, and 50 percent. By 2009, the exemption was up to $3.5 million, and the rate down to 45 percent. And in 2010, the estate tax was repealed.
But not for long. If no action is taken, it returns in 2011 with an exemption of $1 million and a rate of 55 percent. If that seems like weird tax policy -- a single year in which death carried a huge tax break -- it is. But it was never about tax policy. It was a political strategy: Republicans wagered that Democrats wouldn't be able to bring the estate tax back after it had expired. Public opinion would be against them, and it would be backed by a massive amount of money from the nation's richest residents.
So far, it looks like they were right.
The dominant alternative to the estate tax's return -- which had support from both Republicans and, sadly, Democrats -- was the Lincoln-Kyl bill: A $5 million exemption with a 35 percent rate. This is the language that has been included in the tax deal.
So how much does this cost? With a $1 million exemption and a 55 percent rate -- in other words, what will happen if we do nothing -- the estate tax would raise about $700 billion over the next 10 years. The Lincoln-Kyl version would raise less than $300 billion. And the compromise most Democrats have coalesced around -- which was the 2009 level, with a $3.5 million exemption and a 45 percent rate -- would've brought in a bit less than $400 billion.
It's important to keep in mind the cramped space of this debate: If the tax goes back to its scheduled levels, it'll tax 2 percent of estates, If the Lincoln-Kyl levels are put in place, it'll tax 0.25 percent of estates. But the difference between the hundreds of billions the tax could raise and the miniscule number of estates it would affect explains the immense energy Republicans and some Democrats (notably Blanche Lincoln, who has traditionally raked in campaign money from the Walton family) give to the issue. In a report called "Spending Millions to Save Billions," Public Citizen and United for a Fair Economy estimated that a handful of the country's richest families had spent more than $400 million lobbying for the tax's repeal -- and of they were successful, they stood to save more than $70 billion. [emphasis added]
For the rich, fighting the estate tax is simple [sic] a good investment. And it looks like it's paying off.
Update: It's worth clarifying that the tax gets levied on the estate, not the heir. Technically, the heir pays nothing, and the tax needs to be dealt with before the estate is transferred.
Numbers and table credit: The Center on Budget and Policy Priorities.
Tax Deal Fight Now Focuses on House Challenge on Estate Tax
Sanders Filibuster Halted By Senate
Tax Deal Fight Now Focuses on House Challenge to Estate-Tax Exemption
By John Nichols
Posted on TheNation.com, December 14, 2010
In a display of how Washington insiders practice bipartisanship, most Senate Democrats voted with most Senate Republicans to deliver for the wealthiest Americans.
Senators from both parties, self-identified liberals and conservatives, united to end a filibuster by Vermont independent Bernie Sanders [1], who has led the fight to block an Obama administration deal with Congressional Republicans that extends tax breaks for billionaires and establishes estate-tax exemptions for millionaires.
Sanders conducted an eight-and-a-half-hour filibuster Friday, in which he outlined arguments against the agreement to trade a two-year extension of tax cuts for the wealthiest Americans, along with sweeping estate-tax exemptions, for a one-year extension of benefits for unemployed workers.
On Monday, Senate majority leader Harry Reid, D-Nevada, serving as floor manager for the deal cobbled together by the Obama administration and Senate minority leader Mitch McConnell, R-Kentucky, sought a cloture vote to end the filibuster and open debate on the plan.
Sixty votes were needed to end the filibuster. Reid secured an overwhelming eighty-three.
Most of the fifteen votes to support Sanders's filibuster came from Democrats. Senators Jeff Bingaman of New Mexico, Sherrod Brown of Ohio, Russ Feingold of Wisconsin, Kirsten Gillibrand of New York, Kay Hagan of North Carolina, Frank Lautenberg of New Jersey, Pat Leahy of Vermont, Carl Levin of Michigan and Mark Udall of Colorado voted with Sanders.
They were joined by five Republicans: Oklahoma's Tom Coburn, South Carolina's Jim DeMint, Alabama's Jeff Sessions, Nevada's John Ensign and Ohio's George Voinovich.
The lopsided vote provided an indication that the Senate is likely to approve the agreement.
Sanders remained defiant, however, signaling that approval will not come easily—or quietly. "It makes no sense to me to provide huge tax breaks for millionaires and billionaires while we drive up the national debt that our children and grandchildren will have to pay," the Vermonter said. "I further object strenuously to the lowering of rates on the estate tax, which only benefits the top 0.3 percent, the very, very wealthiest people in this country. I also am concerned about a significant precedent which diverts $112 billion in payroll taxes away from the Social Security trust fund. Our goal now must be to strengthen Social Security, not weaken it. Of course we must extend unemployment benefits and the tax breaks that the middle class desperately needs, but in my view we could have and should have negotiated a much stronger agreement."
The Senate vote may not come until Wednesday, and significant debate is expected before it comes.
While Sanders will be expressing broad opposition, there will also be attempts to amend the legislation. As of now, it is unclear whether amendments will be allowed. The White House is opposed at this point. However, Democratic and Republican senators have proposed amendments, with the most significant being a proposal by a group of Democratic senators to limit the extension of Bush-era tax breaks only to Americans earning less than $1 million a year.
One the Senate votes, action will move to the House, where the number-two Democrat, majority leader Steny Hoyer of Maryland, says "significant" amendments might yet be made.
"There certainly seems to me to be some room for a change which may or may not be perceived by some to be significant," said Hoyer.
Hoyer suggested Monday that House Democrats may push to limit exemptions for estates. As the agreement now stands, there's a a 35 percent estate tax with exemptions for the first $5 million for individual estates and the first $10 million for couples.
House Democrats have been advocating for a 45 percent tax exempting only the first $3.5 million of inherited estates.
United for a Fair Economy , which has noisily objected to the estate-tax deal, held out hope for the House to do the right thing.
"The Senate’s decision to approve the ill-conceived tax package negotiated between Obama and GOP leaders is shameful," said UFE executive director Brian Miller. "Fortunately, the buck does not stop in the Senate. We are calling on the House to fight back and win a better deal for the sake of middle- and working-class Americans—those who will be saddled with massive new debt to pay for wasteful tax breaks for millionaires and billionaires." (emphasis added)
If the two chambers pass different versions of the legislation, they will have to be reconciled in a House-Senate Conference Committee. Such a session would provide a last opportunity to alter the agreement between Obama and the Republicans.
Sanctimonious Commander-in-Brief
Sanctimonious Commander-in-Brief
By Jim Worth
Posted on The Huffington Post, December 12, 2010
The Tax Reform compromise may be President Obama's Swan Song.
The release of the compromised tax bill, negotiated between the Administration and Republicans, has resulted in acrimony between Obama and the congressional members of his party.
His uncharacteristic display of anger over his tax deal was misdirected at Democrats who feel the agreement struck between the President and the GOP is bad on several levels. His anger should have been leveled at the Republicans who shamelessly held crucial parts of the tax bill hostage.
He insists that this compromise is "a good deal for the American people."
Is it such a good deal; the only deal he could obtain?
It adds nearly a trillion dollars to the deficit over the next two years.
The President referred to Progressive Democrat's dissent as sanctimonious for not embracing the compromise. Sanctimony is defined as 'a show of being morally superior to other people.' But, when has doing the right thing for the American people become sanctimonious?
The President's "sanctimonious" admonition of Democrats who had expected more, should have been directed at the obstruction of the Republicans.
Freshly stung in the last election by unacceptable compromises from positions of strength, one would think that the President would have learned a lesson. His continued acquiescence, ie; giving up on the public option, not taking on the big banks, settling on a lesser amount for the needed stimulus, etc., played right into the Republican's hands and cost the Democrats greatly in both the House and the Senate.
Asking Democrats to concede their position of strength, is asking those still in Congress to put themselves in an intractable position for the 2012 elections.
There are compelling reasons to reject this compromised fiasco.
Yes, the President, in addition to the extension of the bottom four tax brackets, received some good things in the negotiations -- many of them necessary for the country's survival: a 13 month extension of unemployment benefits, earned income tax credit, child tax credit, and the payroll tax cut. These add to the deficit, but will do something to help the economy grow and those in need.
These are all programs the Republicans had to vote for, especially had the President backed them into a corner. They couldn't afford to let these benefits expire for the huge numbers of citizens in their states and districts who relied on them just to survive.
The other two concessions are seen as a gift to the obstructionist party. Extending the tax brackets for the wealthy and the changes to the estate tax are seen, flatly, as giveaways.
Ace Greenberg, on Squawk Box on Friday, stated, "I don't understand why my taxes didn't go up. A few percent is not going to change the way the uber-rich live."
Others have echoed the same sentiment. When the Republicans moved to eliminate the estate tax in 2003 Bill Gates Sr. and Chuck Collins adamantly opposed its elimination, advocating the wealthy giving back for the opportunities this country has afforded them.
Paul Newman, Annie Dillard, Ted Turner, and many others came forward in 2007 to oppose attempts to repeal or reduce the estate tax. One year ago, John Bogle, argued in a press call of United For a Fair Economy, for the preservation of the estate tax prior to the expiration in 2010 saying, "the wealthy owe a large part of their fortune to the country and its government," referring to the opportunities they have been given that helped them amass great wealth.
Read the full column by Jim Worth on HuffingtonPost.com
Democrats not pleased with deal on estate taxes
Democrats not pleased with deal on estate taxes
By Seth McLaughlin
Published in The Washington Times, December 12, 2010
Sen. Bernard Sanders' impassioned eight-hour speech Friday, slamming President Obama's tentative tax-cut deal with Republicans, directed some of his sharpest attacks at the plan's provisions to tax dead people's estates.
Armed with giant charts and statistics galore, the Vermont independent argued that wealthy individuals, including the heirs to the Wal-Mart fortune, are in a better position financially to shoulder more of the national debt and for that reason the estate tax should return to 2009 levels, or higher.
"99.7 percent of American families will not pay one nickel in an estate tax," he told the almost empty chamber. "This is not a tax on the rich. This is a tax on the very, very, very rich."
Though largely overshadowed by a White House press conference in which former President Bill Clinton endorsed the $858 billion deal, Mr. Sanders' oratorical marathon aired a frustration held by many Democrats who argue the level of the estate tax in the tax cut and unemployment insurance package let "the rich" off the hook.
"If someone leaves an estate of a billion dollars, under their proposal, they would gain $100 million over what the Democrats are proposing for the estate tax," Rep. Jan Schakowsky, Illinois Democrat, said on MSNBC's "The Rachel Maddow Show." "Imagine, Paris Hilton will be able to get an extra $100 million under their plan. It's obscene. It's absolutely an offense to us and to most Americans."
A levy on the transfers of big inheritances, the estate tax has become emblematic of philosophical differences that exist on Capitol Hill, where Mr. Sanders and other liberal-leaning lawmakers claim wealthy Americans simply can afford to contribute more to the national kitty and conservatives say the tax does not deliver the bang for the buck that Democrats claim and that the federal government shouldn't have a financial stake in how people pass along their personal fortunes.
Republicans repeated that message Sunday on the political talk shows.
"It's a double tax on death," said Rep. Paul D. Ryan, Wisconsin Republican and the incoming chairman of the House Budget Committee. "Economists will tell you that it's really not a tax that soaks the rich, but it's a tax on capital that deprives business investment there for job creation."
The first Bush cuts began phasing the estate tax out in 2001 from a top rate of 55 percent to 45 percent in 2009 and then to zero in 2010, with the per-person exemption also rising from $1 million to $3.5 million.
As a result, for the first time since the tax was enacted in 1916, transfers of large inheritances are currently free of paying the federal estate tax. In an odd twist of fate, that has led to stories where billionaires, including George Steinbrenner, former owner of the New York Yankees, are said to have saved their families hundreds of millions in taxes by dying this year.
Now with lawmakers scheduled to consider the tax compromise Monday, the estate tax is set to snap back to the pre-Bush administration levels of a 55 percent rate with a $1 million exemption for individuals at the end of the year. Under the deal brokered between Mr. Obama and Republicans, the rate is set at 35 percent with a $5 million exemption for individuals and $10 million exemption for couples.
Mr. Sanders and many Democrats are pushing for the 2009 levels or 2001 levels, while conservatives want a permanent repeal of the tax.
"We are outraged that estates are going to be taxed at 35 percent," said Bill Pascoe, president of Citizens for the Republic, a nonprofit conservative group. "This is a sucker bet for Republicans."
Mr. Pascoe warned that if Republicans vote for the plan, they will have ignored the anti-tax message from the November election, violated promises in the Pledge to America and put the White House in a win-win situation heading in to the 2012 election.
"If Congress accepts this deal, there are two likely scenarios," Mr. Pascoe said. "If the economy improves, Obama will take credit for it and campaign for re-election on it. If the economy worsens, Obama can blame the Republican tax cuts for failing to boost the economy."
Meanwhile, Americans for a Fair Estate Tax Coalition (AFET), a group of 69 organizations, including some of the nation's biggest labor unions, sent lawmakers a letter urging them to "re-establish a permanent, robust estate tax."
"In times of crisis, we pull together and share the sacrifice. While working- and middle-income people are struggling, this deal would gut the estate tax, putting billions more in the pockets of millionaires and billionaires," said Lee Farris, estate-tax policy coordinator of United for a Fair Economy and an AFET member.
Urge Speaker Pelosi to Fix the Estate Tax Now!
The Senate has enough votes to pass the weak Lincoln/Kyl estate tax as part of the overall Obama-GOP tax package. Our best hope for a stronger estate tax is in the House of Representatives. House leaders are developing their strategy now.
Let your representative and the House leadership know what you want.
MAKE THREE CALLS using our toll-free number to the Congressional switchboard at 800-830-5738:
- Call House Speaker Nancy Pelosi and urge her to organize a vote on amending the tax package to include a stronger estate tax at the 2009 level or better.
- Call House Majority Leader Steny Hoyer and demand the same of him.
- Call your own Representative and urge him/her to ask Speaker Pelosi and Rep. Hoyer to hold a vote on amending the tax package to include a stronger estate tax at the 2009 level or better.
Let’s flood their phones with calls! If the House fixes the bill to include a stronger estate tax, there’s still time for the Senate to pass the bill. (And if the switchboard is busy, here’s the direct line for Rep. Nancy Pelosi: 202-225-0100; for Rep. Steny Hoyer: 202-225-3130.)
Learn more about the federal estate tax. Also see UFE’s recent press releases and E-News stories on the estate tax.
Forward a link to this alert to friends, family and colleagues. Call and urge them to take action. And, help spread the word further by blogging about this important issue, and sharing this alert on your social networks.
Thanks for doing your part in the fight for tax justice!
Here are some encouraging quotes we've seen in the news over the past few days:
"[The estate tax cut] is rightly seen by the overwhelming majority of the Democratic caucus as egregious and unnecessary...Are Republicans really willing to hold up tax relief for millions of middle class Americans and others in order to provide a $25 billion hit to the deficit that benefits 6,600 estates at an average benefit of $1.8 million?”
- Rep. Chris Van Hollen (D-MD)
“Ninety-nine point seven percent of American families will not pay one nickel in an estate tax...This is not a tax on the rich. This is a tax on the very, very, very rich.”
- Rep. Bernie Sanders (I-VT)
"The people at the very, very top have made enormous gains...Now we're saying, you've ridden this huge wave of economic inequality and now we're going to let you pass even more of your wealth to your heirs without paying any taxes."
- Leonard E. Burman, tax policy expert at Syracuse University,
on the decades of wage stagnation for lower- and middle-income Americans.