In a recent diatribe urging repeal of the federal estate tax, Republican state senator Pam Gorman (R-Anthem) tells a big, black lie. In 2011, she claims, the estate tax will rise to 55 percent. If true, that claim would mean a $55,000 tax on a $100,000 estate.
Here are the facts: for an estate less than $3.5 million, the current tax rate is ZERO! In 2011, according to Bush-era tax legislation, this minimum figure is scheduled to drop to $1 million. Also in 2011, a top of rate 55 percent would start at $3 million.
It is, however, virtually certain that Congress will repeal the decade-old tax legislation establishing the noted reversions. Exempted assets for federal estate tax will probably rise to $4 million, and the 55 percent top rate will apply only to the super wealthy, representing less than one per thousand estates.
An astonishing number of credulous Americans – concentrated among Fox News viewers – believe lies like Sen. Gorman’s. According to one poll, 49 percent believe that the majority of estates pay tax. In fact, only one in 600 pays estate tax.
The Reagan administration perpetrated an even more economically destructive lie – i.e., that tax cuts for the rich always increase federal tax revenue. Recent economic history demolishes this preposterous, but nonetheless relentlessly parroted myth. Of the past 11 former presidents, the two biggest debt creators got the biggest tax cuts for the rich. Reagan increased federal debt (as percentage of GDP) by 61 percent; Bush 43, by 26 percent.
In stark contrast, Clinton cut federal debt by 16 percent, after raising the top tax rate by 26 percent. During his two terms, employment increased 10 times more than under Bush 43; total GDP growth topped Bush’s by 50 percent (33 percent vs. 22 percent). I challenge “conservatives” to deny these incontrovertible facts.
Sen. Gorman’s arguments for abolishing the federal estate tax are as phony as other arguments for coddling the rich. Abolition of the estate tax would add $1 trillion to federal debt over the next decade. Her proposal is redundant evidence of Republican plutocracy: government of the naive masses, by and for the rich.
C.W. Griffin has lived in Ahwatukee Foothills since 1988. He is a retired consulting engineer.