During the course of debate on the estate tax, several questions were raised in my mind that were never answered by supporters of the estate tax. I still think that they need answers before final resolution of this issue.
First, opponents of repeal say that they now support permanently raising the estate tax exemption and reducing the tax rate. I would like one of them to tell me whether this would be their position if the proponents of repeal hadn’t made such a strong case for their position and managed to obtain majority support in both the House and Senate?
Let us remember that before the repeal effort got going, the top rate on estates was 55 percent and all estates larger than $600,000 were subject to a tax of at least 18 percent. The top rate applied to those larger than $3 million. It is simply absurd to believe, as estate tax supporters implicitly argue, that people with such modest levels of wealth are rich in any meaningful sense of the term.
Indeed, financial advisers today tell middle class couples that they will need at least $1 million in financial assets to live comfortably in retirement. And with the big run-up in housing prices in recent years, it is not at all uncommon for middle class families to live in $600,000 homes. These are not the sort of people who deserve special taxes originally designed for the rich in order to break up large fortunes and avoid excessive concentration of wealth.
Yet there is no question that the middle class would still be subject to the estate tax without the efforts of those seeking its repeal. Liberal supporters of the estate tax who now say they favor a big increase in the exemption would never hold this position unless political support for repeal was so strong that they have no other choice.
This brings me to my second question. Supporters of the estate tax constantly say that the repeal effort is driven solely by a few rich families that are selfishly pushing for repeal of a tax that only affects them. But if this is true, why is it that very large majorities of average Americans support repeal and did so long before the repeal effort got going?
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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