Congress’s pending vote to abolish the estate tax will make the rich even richer and accelerate the decline of the middle class.
The American dream is slipping out of reach for millions of Americans. Real wages have been declining for decades. 40 million young adults are now saddled with unprecedented amounts of college debt as they enter the workforce. The national homeownership rate is declining for the first time since World War II.
Unfortunately, GOP leaders in Congress place a higher priority on helping the rich get richer.
The estate tax has historically raised tens of billions a year from those with the greatest capacity to pay. Repealing the estate tax would cost an estimated $269 billion over the next decade. Imagine the number of preschoolers who could get a free education and the number of college students whose debt could be reduced.
As someone whose family would personally benefit from abolishing the estate tax, I strongly oppose such a reckless and irresponsible action. Our country needs less inequality and more opportunity. Instead, we’re moving toward a society that will be economically and politically dominated by the sons and daughters of the Forbes 400.
Today, only couples with wealth over $10.8 million are subject to the estate tax. According to the Joint Committee on Taxation (JCT), repealing the estate tax would give a $3 million average tax cut to the wealthiest 0.2 percent of households, or 1 in 500 estates.
Much maligned since 2000 through a campaign of myths and innuendo, the estate tax is our nation’s only tollbooth stop on the transfer of substantial inherited wealth.
In addition to raising revenue, the estate tax provides an incentive for charitable giving and puts a brake on the concentration of wealth and power. In the last three decades, U.S. society has become increasingly polarized between the very wealthy and everyone else. In the three years after the Great Recession, 2009-2012, the wealthiest 1 percent captured 91 percent of income gains.
In testimony before the Senate Finance Committee, Warren Buffett invoked the historical roots of the estate tax –established in 1916 during the first Gilded Age. “Dynastic wealth, the enemy of meritocracy, is on the rise,” Buffett told the panel. “Equality of opportunity has been on the decline. A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy.”
But if we abolish the estate tax we will either have to cut spending, raise taxes on everyone else, or add to our national debt.
I, and many others like me, would rather pay an estate tax –and see funds invested to expand opportunity for the next generation.
Those of us in America’s top 1 percent already benefit from existing tax policies that allow us to pass on wealth through gift tax exclusions and trusts. Much of this wealth is appreciated property and investments that have never been subject to taxation. The estate tax levels the playing field.
Without substantial investments in taxpayer-funded research, technology, education and infrastructure, “the noble experiment” of the Founding Fathers, our democracy, would be diminished.
The estate tax is an appropriate mechanism for those of us more fortunate to pay back to the country that created the fertile ground for our good fortune.
Hiatt is the chairman of the Stride Rite Charitable Foundation and retired founder and chairman of The Stride Rite Corporation.