Equality is a core American value- whether it be affirmed by the U.S. Supreme Court for same-sex couples or enshrined in the Declaration of Independence. Our nation’s vision of equality also has always included the idea that everyone should have a fair shot to get ahead. It’s the American dream.
But when the billionaire class hoards wealth and passes it along to generations of heirs while many millions of Americans struggle to make ends meet, that directly conflicts with the dream.
Now, a handful of mega-wealthy families is spending millions to push for a repeal of the estate tax, a move that would enable them to avoid paying tens of billions of dollars in taxes and further exacerbate the already massive economic inequality in our nation.
The federal estate tax originated in 1916 as a way to help reduce economic inequality. It is a tax on the transfer of the estate of a deceased person to his or her heirs. Even though only an estimated 0.2 percent of American estates are subject to the federal estate tax, it is estimated to generate approximately $246 billion over the next 10 years. However, repealing the estate tax is a favored topic among a vocal chorus in Congress.
Those pushing for repeal perpetuate the notion that the tax unfairly affects small business owners and family farms. This is wrong. The estate tax is not even levied unless an estate is worth more than $5.43 million per individual and $10.86 million per married couple. Not only does that mean that the tax does not affect more than 99 percent of Americans, but rules were created to help farmers and small businesses, such as giving them more time to pay the tax. In fact, only 660 taxable estates in 2013 included farm assets, and the average value of those estates was $2.8 million, far below the level at which those assets are exempt from the tax.
Instead, it’s the nation’s richest families with the most to gain from repealing the tax. Just nine families could dodge $25.7 billion in taxes, and perhaps as much as $54.7 billion, if the estate tax were repealed, depending on whether the calculation uses the current maximum tax rate of 40 percent rate or the average effective tax rate for estates over $20 million.
The families pushing to repeal the tax include the Mars, Wegman, Cox, Taylor, Van Andel, DeVos, Bass, Schwab and Hall families. Four of these nine families have spent more than a million dollars apiece lobbying Congress to repeal the tax between 2012 and the first quarter of 2015, a new Public Citizen report, “Billionaires’ Bluff: How America’s Richest Families Hide Behind Small Businesses and Family Farms in Effort to Repeal Estate Tax,” shows.
The Mars and Wegman families alone, who have a combined net worth of more than $63 billion, spent more than $3.5 million to lobby solely for the repeal of the estate tax from 2012 to 2015. The other seven billionaire families lobbied on the estate tax as well.
This lobbying is having an impact. The U.S. House of Representatives passed a repeal of the estate tax in April. The bill, sponsored by Rep. Kevin BradyKevin Patrick BradyHouse panel advances key portion of Democrats' .5T bill LIVE COVERAGE: Ways and Means to conclude work on .5T package LIVE COVERAGE: Tax hikes take center stage in Ways and Means markup MORE (R-Texas), had more than 100 co-sponsors. The U.S. Senate version of legislation to repeal the estate tax (S. 860) is sponsored by Sen. John ThuneJohn Randolph ThuneGOP warns McConnell won't blink on debt cliff Graham tries to help Trump and McConnell bury the hatchet This week: Democrats face mounting headaches MORE (R-S.D.) and has 38 co-sponsors but has yet to be considered.
Thankfully, President Barack ObamaBarack Hussein ObamaTo Build Back Better, improving Black women's health is a must Rahm Emanuel has earned M since leaving Chicago's city hall: report 60 years after the Peace Corps, service still brings Americans together MORE’s administration has signaled that he would be advised to veto the legislation should it reach his desk. But it’s important that the American public understands that it’s really billionaire families who are behind the push to repeal the tax. Instead of trying to kill it, members of Congress should support proposals to close loopholes in the estate tax and make those who can afford to pay more, do so.
That’s why Public Citizen and other members of the Americans for Tax Fairness coalition endorsed bicameral legislation introduced recently by Sen. Bernie SandersBernie SandersBiden touts 'progress' during 'candid' meetings on .5T plan Manchin: Biden told moderates to pitch price tag for reconciliation bill Biden employs flurry of meetings to unite warring factions MORE (I-Vt.) and Rep. Jan Schakowsky (D-Ill.). The bill would close loopholes in the existing tax regime. The bill also would lower the amount at which estates are exempt from the tax to $3.5 million ($5 million per married couple) and change to a more progressive tax with rates of 45, 50 and 55 percent with a 10 percent surcharge on billionaires.
The top one-tenth of one percent now owns approximately the same amount of wealth as the bottom 90 percent. Given that the intent of the estate tax was to mitigate economic inequality, our nation’s leaders should be focused on improving the tax by closing loopholes and better ensuring the super-wealthy pay their fair share.
Harley is deputy director of Public Citizen’s Congress Watch division.