Ignore the rich, repeal the death tax

Posted: Jun 18, 2002 12:00 AM
There is nothing the press likes better than a man-bites-dog story, which by definition is "news." The estate tax provides just such a story, because a few wealthy people, such as Bill Gates Sr. (father of the Microsoft founder and rich in his own right), oppose efforts to permanently repeal it. Since the estate tax only affects the wealthy, it appears contradictory that any of them would want to keep it. The press largely operates on the assumption that money is the defining factor behind everything in politics. In its cynical view, the main reason why Congress voted to repeal the estate tax last year is because rich people lobbied them heavily and made large campaign contributions, and because many members of Congress are rich and would save taxes themselves. This model of what is driving the estate-tax debate is wrong on many levels. First, campaign contributions are not driving this debate. The vast bulk of total contributions come from corporate political action committees and lobbyists concerned with specific business interests. They don't care about the estate tax because it has no effect whatsoever on the operations of big corporations. To my knowledge, there is no PAC in the country working primarily to advance estate tax repeal, and a search of opensecrets.org turned up no evidence that any significant money is being contributed to campaigns on this issue. Second, reporters never point out that the only reason money is important in politics is to get votes. In other words, votes, not money, are what really matters in politics. Consequently, if you have the votes, money does not matter at all. That is why the AARP, which represents the elderly, is far and away the most powerful lobby in Washington, even though it has neither a PAC nor does it make any campaign contributions whatsoever. If the journalists who write so glibly about the role of money in the estate-tax debate bothered to do any real reporting on Capitol Hill, they would quickly discover that it is farmers and small businessmen who are the driving force behind repeal. These are not rich people in any meaningful sense of the term. They are modestly well-to-do, but none can be found on the Forbes 400 list of richest Americans. The people on that list could care less about the estate tax because their money is all tax-sheltered in trusts, foundations and other legal devices for avoiding the estate tax entirely. To be sure, these legal tax-avoidance methods are not cheap. They involve complicated planning, heavy legal fees, large payments for life insurance and the loss of control over assets that may sharply reduce their value. But at the end of the day, the estate tax essentially is voluntary for the very rich, like Gates Sr. Keeping the estate tax will likely have no impact on him, so why not keep it? After all, it's not as if his son needs the money. This way, Gates Sr. can feel good about himself as he lounges about his palatial mansion, knowing that he is better than all the selfish little people with modest wealth, who simply want to pass on family businesses and farms to their children without paying exorbitant taxes or fees to bloodsucking lawyers. Despite the demagoguery of left-wing groups like United for a Fair Economy and its various fronts, the American people instinctively understand the fundamental unfairness of the estate tax. That is why national public opinion polls have consistently shown large majorities favoring repeal. For example: -- A 1999 poll by Worthlin Worldwide found 70 percent of voters favoring a phase-out of the estate tax. -- A 2000 poll by the Pew Research Center found 71 percent of voters supporting elimination of the inheritance tax. -- A 2001 CBS News/New York Times poll also found 71 percent of people opposing imposition of an estate tax at death. The consistency of these polls clearly shows that vast numbers of Americans who will never pay one penny of estate taxes nevertheless favor its abolition. It is certainly not because of a massive advertising or public-relations campaign by the ultra-wealthy, because no such campaign exists. Rather, it is because they understand that it is wrong to tax assets again at death when they have already been taxed heavily many, many times already by federal, state and local governments. The real man-bites-dog story is that estate-tax repeal is fueled by a true grass-roots movement and is supported by better than two-thirds of Americans. That, not campaign contributions, is the reason why a majority of the Republican House and Democratic Senate repeatedly votes to get rid of the estate tax.