In a week when President George W. Bush's tax cut plan suffered major
setbacks in the Senate, 49 leading African-American businessmen and
businesswomen, including Bob Johnson of BET, Earl Graves of Black Enterprise
magazine and Alice Houston of Automotive Carrier Services, took out an ad in
newspapers across America to urge Congress to repeal the "death tax."
Ironically, this ad makes the case better than the president's own party has
made it.
As these leading African-American entrepreneurs point out, "The estate
tax will cause many of the more than 1 million black-owned family businesses
to fail or be sold when the 55 percent estate tax is imposed on already
undercapitalized minority-owned businesses. The entire black community
suffers when these minority- and family-run businesses that provide jobs and
services in underserved communities are forced to shut down to pay the
estate tax."
As first-generation, risk-taking capitalists who have earned their wealth
the hard way, these business leaders understand the profound impact of tax
incentives and penalties. Their arguments also dramatize why the capital
gains tax rate should come down, as well, because that tax locks in assets
that could realize greater value if put in play in the marketplace.
These business leaders who have struggled long and hard to achieve
economic success don't say a word about tax rebates, refunds, lockboxes or
budget caps. What they care about is the true economic effect of destructive
taxes on jobs, businesses, savings and the economic aspirations of Americans
of all races and backgrounds who want a better life for themselves and their
families.
If the administration's tax proposal had been expressed in these terms
from the beginning, and had Republicans spent more time reminding us of
these profound truths about federal taxes, they would not now be in the
position of trying to negotiate with themselves and with senators who would
rather retire debt than help American entrepreneurs grow this struggling
U.S. economy.
The estate and gift taxes are not taxes on wealth, as their advocates
would have you believe. They are taxes on the process of wealth creation, as
these businesspeople understand. They tax success and undermine income
growth for all workers by depressing the return to capital investment. They
are just another government-imposed obstacle that prevents those on the
bottom rungs of the economy from achieving the American dream.
Abraham Lincoln said it best: "I take it that it is best for all to leave
each man free to acquire property as fast as he can. Some will get wealthy.
I don't believe in a law to prevent a man from getting rich; it would do
more harm than good." Nothing violates the spirit of Lincoln's sentiment
more than for the government to tell people they are free to acquire as much
property and wealth as they can during their lifetime but will not be free
to pass the fruits of their success along to their heirs when they die.
It is ironic that the Senate passed most of the Bush budget but reduced
the Bush tax cut by $400 billion. Hopefully the balance (or more) can yet be
restored in conference. But note that under the estate tax repeal bill
passed by the House, the static revenue loss from repeal is under $200
billion. Since the president is trying to fit a modest tax cut package into
an artificially tight budget box, the Senate action is an arrow aimed
straight at the heart of the drive to repeal the death tax. It is hard to
imagine a more profound signal of disrespect to African-American business
leaders and to Asian, Latino and all hard-working entrepreneurs.
I would beg Bush and Vice President Dick Cheney to call the signers of
the African-American business leaders ad along with other minority
entrepreneurs into the Oval Office and let them tell the American people
that death taxes, capital gains taxes and high marginal income tax rates
aren't taxes on the rich but on the poor, and on others who want to get
rich.
With support like this on his side, the president should be empowered to
come out strongly and unambiguously for a cut in the capital gains tax, as
well. That's equally important to small and start-up entrepreneurs of all
creeds and races trying to raise capital. As these black leaders' ad points
out, "More capital investment means higher incomes for all workers."
It's late but not too late. These African-American leaders and a
coalition of minority entrepreneurs and businesspeople can save the tax cut,
not just for the Bush administration alone but more importantly for the
people of America. Capitalism without capital is just an abstraction, but it
becomes a reality when capital begins to flow into the hands of every
working American who has aspirations for a better future.
