Both capitalists and workers might agree on one thing: it’s time to restore the estate tax.
This was the message sent last week by United for a Fair Economy’s Responsible Wealth Project. The Bush 2003 tax cuts temporarily suspended the estate tax for 2010, a move that benefits only the wealthiest fraction of American families and adds tens of billions of dollars to the federal deficit.
In a media teleconference on behalf of United for a Fair Economy, labor leader Richard Trumka made the issue clear.
“The estate tax is a progressive tax, and it is the only wealth tax we have,” he said.
Trumka, who is the president of the AFL-CIO, noted that if the estate tax bills currently pending in Congress were to pass only a fraction of one percent of estates would be required to pay any taxes.
Small farmers and businesses owners simply aren’t valuable to be taxed under the provisions of the estate tax.
The revenue from the estate tax should be used to fund public investment in infrastructure, saving teachers’ jobs and providing aid to states with budget shortfalls, Trumka explained.
He noted that the federal deficit remains a long-term issue and should be handled as a structural issue in the future.
“Our economy remains on the edge of a double-dip recession, and we urgently need to create millions of jobs and invest in our future, not give more tax breaks to the wealthy,” Trumka said.
“Anyone who pretends to care about cutting deficits while opposing the restoration of the estate tax is clearly residing on a different planet.”
Trumka further noted the hypocrisy of Republicans who want to provide more tax cuts for the very rich while blocking aid to the unemployed or for job creation under the guise of reducing the deficit.
Joining Trumka was former Treasury Secretary Robert Rubin.
“Our country is on an unsustainable fiscal path. A progressive estate tax can provide needed revenue with no adverse supply-side economic effect, and that revenue can then fund deficit reduction, additional public investment, or added assistance to those affected by the economic crisis,” Rubin said.
Rubin also suggested that a retroactive restoration of the tax for 2010 would not be unfair.
Abigail Disney, the grandniece of the legendary Walt Disney, explained that inherited wealth without adding any new contribution to society would make the children of the very wealthy “parasites on the good work of others.”
She explained that American society as a whole benefits from the public services paid for by taxes.
“After all, without reliable and safe roads there’d have been no Disneyland; without high functioning legal systems and a well regulated business environment there would have been no copyright protection for Mickey Mouse.”
“I don’t intend to compound my already good fortune,” Disney said, “by enjoying security, health, and good social order without contributing to the cost of those things by paying my fair share of taxes.”
Hedge fund manager Julian Robertson said the tax is needed to help reduce the deficit. “America desperately needs to bring its budget more in line. Any move in that direction is favorable,” he explained.
“The fairest way to do to that is to increase taxes for the very least deserving of wealth, inheritors.”
Lee Farris, UFE’s Estate Tax Policy Coordinator, added, “Hardworking families who live paycheck to paycheck pay their fair share of taxes, and so should the heirs of millionaires. If Congress chooses to shrink the estate tax, the middle class will face higher taxes or cuts in vital services like unemployment benefits or education. We don’t need to weaken the estate tax – we need to strengthen it.”
Right now, two bills are pending in Congress that will restore the estate tax and will likely be considered before the end of the year.
Sens. Bernie Sanders, D-Vt., Tom Harkin, D-Iowa, and Sheldon Whitehouse, D-R.I., have authored a measure to create a $3.5 million exemption per spouse, a tax rate of 45-55 percent on most estates, and a 65 percent rate on amounts over $1 billion.
A similar measure in the House would create a smaller exemption but without the highest bracket created by the Senate bill. The White House says it favors some combination of the two.
Photo: Robert Rubin (J. Scott Applewhite/AP)