Anti-tax Republicans are trotting out the old canard that the estate tax destroys family farms and small businesses.

Rep.David Reichert (R-Wash.), chairman of the Subcommittee on Select Revenue Measures in the House of Representatives plans to hold a hearing Wednesday on the impact of the federal estate tax on family farms and small businesses.  The hearing is a red herring, a distraction from a substantive conversation about the concentration of wealth and the real needs of farmers and small businesses.

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We’ve been here before.  In the late 1980s, anti-estate tax campaigners complained that the estate tax was the “death of the family farm.”  Americans for a Fair Estate Tax, a group advocating for the preservation of the estate tax, challenged the anti-tax groups to show one example of a farm lost because of estate taxes. David Cay Johnston, a reporter at The New York Times did exhaustive research and couldn’t find a single farm dissolved as a result of the estate tax.   Johnston won a Pulitzer Prize for his reporting.

The estate tax, a levy on the intergenerational transfer of immense wealth, has been weakened by Congress through increased exemptions and lowered rates as well as egregious loopholes.  As a result of these changes, the estate tax today raises less revenue than it did fifteen years ago, despite a major increase in wealth concentration in that same period.  The exemption for a married couple was raised from $1.35 million in 2001 to $10.8 million today while during the same period rates dropped from 55 percent to 40 percent. 

A Tax Policy Center study of 2013 tax returns found just 20 small farms and closely held small businesses paid any estate tax at all.  Their average effective rate was below five percent.  If you include large farms and businesses the total is still only 120 estates, their gross value averaging over $50 million each. 

Nationally, the effective estate tax rate is just 16.6 percent and only affects the top 0.15 percent of estates, just 3,780 in total, or about the same number of people who sat in luxury boxes this past Super Bowl. Those affected are among the wealthiest people in American history.

As economists Emmanuel Saez and Gabriel Zucman point out, wealth inequality is ten times greater than income inequality today with the nation’s ultra wealthy capturing nearly all gains in new wealth.  The share of the nation’s wealth owned by the top 0.1 percent - those with assets over $20 million - is three times higher than it was in the 1970s and now rivals the Roaring Twenties.

Talk of farmers and small business is a political ploy to distract from who actually pays the estate tax – the modern robber barons who hoard more money than they could spend in many  lifetimes.  It’s also a distraction from focusing on policies that would actually help farmers and small businesses, like investing in our nation’s crumbling infrastructure and education for their children.  Further, it’s a distortion of the true intent of the estate tax —to reduce the concentration of immense wealth.

Support for an estate tax goes back to our founding fathers who were deeply concerned about the power of a wealthy aristocracy to transfer immense wealth generation after generation.  As John Adams put it, “when economic power became concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny.”

Rather than repeal, Congress should reform the estate tax to close egregious loopholes and increase its revenue.

Hoxie tracks the debate over the estate tax and other grand divide-related concerns for the Institute for Policy Studies’ Program on Inequality and the Common Good. He is a regular contributor to Inequality.org, and a former legislative aide for Sen. Bernie SandersBernie SandersSanders apologizes to Biden for supporter's op-ed Jayapal: 'We will end up with another Trump' if the US doesn't elect progressive Former health insurance executive: Current system is bankrupting country MORE (I-Vt.).