House GOP vote on estate tax repeal is obscene

I’ve mentioned, on probably too many occasions, about the tax cuts pushed by Republicans in Congress and the White House and how they disproportionately benefit the wealthy. As you know, I consider it wrong to pass massive cuts in a time of record-high deficits, especially when the overwhelming majority of the money will go to people who don’t need the help — the very wealthy — at the expense of services that benefit people who need help the most.

To be sure, when it comes to the last three tax cut plans passed by Congress and signed by Bush, the wealthy benefit a lot, the middle class benefits a little, and the poor get screwed.

Repealing the estate tax — as the House voted to do yesterday — is a different animal. This is a $162 billion tax cut that only benefits the super-wealthy. If the other tax cuts titled to help the rich were embarrassing, yesterday’s vote was obscene.

First, a little history. At the beginning of the 20th century, a permanent aristocracy was shaping an American “Gilded Age.” Wealthy families that led and owned major industries passed on their wealth to generations that hadn’t necessarily earned that money as income — they were born rich and stayed rich. An estate tax allowed these children of the wealthy to stay rich, but place a tax on their inheritance for the nation’s benefit.

In 1906, Republican President Theodore Roosevelt proposed a federal inheritance tax in a State of the Union address, saying, “The man of great wealth owes a peculiar obligation to the State because he derives special advantages from the mere existence of government.” The following year, he said, “Most great civilized countries have an income tax and an inheritance tax. In my judgment both should be part of our system of federal taxation.” Such taxation, he noted, should “be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits.” The tax became law in 1916.

For over eight decades, no one much complained about the estate tax. Even Republicans who disapproved realized cutting it would be seen as an obvious sop to the rich. That is, until 2001.

You may recall that the U.S. had a debate over the estate tax before; it was just two years ago. As part of the $1.6 trillion tax cut passed in 2001, Republicans scheduled the estate tax for temporary cancellation. To help hide the true cost of the tax cut, Republicans added a “sunset clause” to the estate tax, whereby it would disappear by 2010 but reappear at its original top rate in 2011.

During debate on the bill, House Republicans said the fact that the tax would lessen, then disappear, and then reappear is “absurd.”

Of course it’s absurd, but congressional Republicans have to no reason to complain now. This was the system that they created in 2001 to hide the cost of their tax cut. They’re basically concluding that their own shameless stunt was absurd — and on this I completely agree with them.

Yesterday’s vote, however, was to make the cut permanent. To hear Republicans talk about the estate tax — which they call the “death tax” — it is single-handedly responsible for undermining the American way of life.

“This isn’t just for rich people, this is for everybody who shares in the American dream,” said Speaker Dennis Hastert (R-Ill.). “We need to pass this piece of legislation, so we can keep this American heritage of families working, of families creating wealth, of families creating businesses.”

This is utter and complete nonsense. Literally 99 percent of estates are left untouched by the estate tax. It only applies millionaires and billionaires — the kind that Republicans love to look out for. Hastert’s claim this tax cut would benefit “everybody who shares in the American dream” is not only false, it’s nauseating.

Ironically, some of these same wealthy families are urging Congress to leave the estate tax exactly as it is. Several high-profile rich guys, including Warren Buffet, Bill Gates Sr., George Soros, and Ted Turner have launched a campaign to fight the Republicans’ effort, despite the fact that they have the most to gain from the estate tax’s repeal.

“Some people object to the notion of a tax at death, but taxing dead multimillionaires is eminently more fair than taxing the not-so-rich living,” Gates recently wrote.

“From a selfish point of view, it would be very appealing to have no inheritance tax,” said David Rockefeller, another super-rich guy who thinks we should keep the estate tax. “But as a source of government income, it is a fairly efficient, fairly cheap way of collecting taxes. There is justification for a moderate level of inheritance tax.”

This prompted Rep. Randy Cunningham (R-Calif.) to call Rockefeller a “socialist,” charging that he and others who support the estate tax “take their message straight out of the ‘Communist Manifesto.'” (It’s worth noting that Rockefeller is a lifelong Republican and former head of Chase Manhattan Bank. With this in mind, I’m making Cunningham’s remark The Carpetbagger Report quote of the day, even though it’s six months old.)

Cunningham and his House Republican cohorts have sent a disturbing message to the country. They say we can’t spend tax dollars on a prescription drug benefit for senior citizens, we can’t support national service programs, we have to cut back on education, and we can’t offer aid to states in the midst of a fiscal crisis. But we can offer the wealthiest of the wealthy yet another tax cut.