Republican Sen. Bill Frist delayed a vote on repeal of the estate tax until September to increase the pressure on reluctant Democrats. This means Arkansas can expect a continued bombardment of dishonest advertising about how the estate tax can “bury your family in crippling tax bills.”
From the beginning of this battle, U.S. Sen. Mark Pryor has opposed total repeal of the law. He worries about the effect on an already crippled U.S. treasury. Sen. Blanche Lincoln now says she, too, opposes total repeal. But she is being disingenuous. She still has legislation pending to end estate taxes entirely on family businesses and farms, no matter how large the business. A Stephens, Walton, Tyson, Dillard or Hussman enterprise, properly set up, wouldn’t be too big for Lincoln’s tax relief.
What’s most misleading about Lincoln’s crusade for the wealthy is her insistence on overstating the impact of the estate tax. Tiresome, too, is her tireless invocation of the tax’s 55 percent maximum burden, as if it’s commonplace. She and her ilk have been so successful that there are actually impoverished people in Arkansas who believe the government is ready to snatch their Beanie Baby collections, their only tangible assets, when they die.
Many Democrats and even some Republicans favor a better solution — a simple increase in the tax exemption on estates. One proposal, to exempt $3.5 million worth of an estate’s value (the equivalent of a $7 million tax-free passage to a spouse), would have left a tax burden for only 65 farmers and 95 business owners in the most recent year studied by the Congressional Budget Office. Of those, only 54 lacked the cash on hand to instantly pay the tab. And remember, too, farms can get an extended payment plan — 14 years — on any tax bill.
For more facts on the “death tax” scam go to www.factcheck.org, a nonprofit that studies political ads. There, facts aren’t confused with Lincoln’s sentimental fiction about the noble and hard-pressed millionaire farmer (many of them awash in government subsidies and water they’ve sucked from our dying aquifer). Fact Check says that in 2004, only about 440 taxable estates were primarily made up of farm and business assets.
Was the tax on that handful of businesses crippling? No. About 40 percent of those 440 farms and businesses paid an average estate tax rate of 1.6 percent (not the 55 percent Lincoln loves to cite). Even the very largest estates paid an average of only 22 percent. Fact Check also notes that if heirs agree to keep a family business for 10 years, they can reduce the tax bite by 40 to 70 percent.
Double taxation is another argument you hear from Lincoln and others. It’s misleading, too. The majority of the assets of very large estates (more than $10 million) consist of unrealized (untaxed) capital gains from stock and land.
So why the onslaught of misleading TV ads? Simple. They’re financed by the real beneficiaries of the death of the estate tax — a tiny handful of the super wealthy. Only 1 percent of estates paid any tax at all in 2003 and 75 percent of the money came from estates larger than $5 million.
Give Blanche Lincoln a call. Remind her she’s from one of the poorest states in the country. Remind her that there are more poor folks here than winners of the lucky sperm sweepstakes. Tell her to stop working for the Walton and the Stephens families and rejoin the Democratic Party.
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