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Investing in Estate Tax Reform: How 18 Families are Working to Strip Billions From the States
PSN on April 27, 2006 - 1:42pm
What was once a brilliant line from a screenwriter is now a solid rule of politics: "Follow the money." And true to that adage, when the federal government scaled back the estate tax, eighteen billionaire families were behind it, as documented in a new report by Public Citizen and United for a Fair Economy. And that "billionaire club" assault means that thirty-two states that peg their estate taxes to federal law lose as much as $5 billion per year in revenues.
The names of some of these families will come as no surprise to many of our readers:
- The Waltons -- Heirs to Sam Walton's billions, the family behind Wal-Mart stands to save billions of dollars with the repeal of the Estate Tax.
- The DeVoses -- The founders of Amway are interested in getting their way. We've profiled Dick DeVos before. He and his wife speak poorly of high wages, but claim to support vouchers because of how they help further education. Right. We're sure his family supports the estate tax repeal in order to help family farmers.
Even more interesting are some of the names you may not be familiar with. Shortly after the report was released, the Seattle Post-Intelligencer published a Bloomberg article and editorialized about the short-sightedness and selfishness of those advocating for the Paris Hilton Tax Cut. Meanwhile, their competitors, the Seattle Times is controlled by one of the families that is leading the charge for estate tax repeal. In fact, the Seattle Times has lobbied for estate tax repeal -- a strange mission for a newspaper lobby. The newspaper's editorial page has also been vociferous in its advocacy for estate tax repeal, to the point that it plays fast and loose with the facts.
For all of these individuals, the expenses of advocating for the estate tax repeal -- $50,000 in campaign contributions, $100,000 in lobbying fees, $200,000 to start shell astro-turf organizations -- are well worth it. With the repeal of the estate tax, they can expect to save anywhere between hundreds of millions of dollars and tens of billions of dollars. The downside, of course, is that the money disappears from the U.S. treasury -- an amount equal to $1 trillion over ten years.
And the impact reaches far into the states -- billions and billions of dollars. At the federal level, shortfalls can be turned into deficits to be paid by future generations flush with cash from their large inheritances. States have no such ability.
What they can do is follow the lead of Washington Governor Christine Gregoire who made the estate tax a priority in her first session. Washington now joins a group of seventeen states with estate taxes that are independent of the federal levy.
Regardless of whether the reform costs us now or later, a lot or a little, the bottom line is that it is a bad idea. Large estates are a sign that the system works. And the estate tax is only paid by the wealthiest of individuals -- not by family farmers or small business owners. That's why despite a ten-year effort to demonize the estate tax, repeal remains deeply unpopular, with voters preferring reform to repeal by more than a 20% margin.