Favorite

Pity the billionaires 

President Bush and the Senate Republicans who are trying again to eliminate the estate tax forever have some wonderful grist in Forbes magazine’s latest list of the world’s billionaires. Among many such examples on the list, they can point to the heirs of Sam Walton and demonstrate how the estate tax undermined their well being. Sam’s widow and four children are down this year to a little more than $90 billion among them, which would only be enough to run the state of Arkansas, its colleges and medical center, health and welfare programs, prisons, 250 public school systems and everything else for only 10 years at the present rate of spending. All right, maybe the Waltons are not the best example. But there is poor Win Paul Rockefeller, whose assets were inherited from his wonderful dad, who inherited them from his dad, who inherited them from his dad, all of whom one after the other had to pay the dreaded estate tax on their inheritance. After all those inheritance taxes, Win Paul is worth only $1.2 billion, according to Forbes. And he says he is not quite that well off. The billionaire list is not off the point of the debate over the estate tax, which will be phased out in 2010 but will return the next year if Congress does not make the repeal permanent. The House of Representatives voted in April, for the fourth year in a row, to kill the tax forever, but the Senate, worrying about the looming megadeficits and perhaps even the appearance of once again helping the super-rich at everyone else’s expense, has balked at making the repeal permanent. Sen. Bill Frist, the majority leader, could not corral the votes last week and delayed a vote until next month. Forbes’ list is on the point because the current and aspiring billionaires — and aspiring heirs — are the real objects of the crusade. No one flatly says so. The proponents of repeal, which include Sen. Blanche Lincoln, say it’s all about protecting the poor family farm and small family business from being taxed out of existence, the heirs having to sell the farm to pay the taxes or be left in penury when estate taxes are paid. Lincoln is proposing, as an alternative to outright repeal, just exempting farms and businesses from estate taxes. That would not be quite fair either, but President Bush and the Republican leadership care very little about those people, who represent a tiny portion of the estates subject to the tax and of the taxes that are actually paid. A bipartisan group of senators worked out a compromise to exempt the first $8 million or $10 million from the tax and to slash the top tax rate, on the fattest estates, from 47 to 15 percent, but Bush & Co. won’t accept that either because the super-rich would still have to pay something. The goal is to abolish taxes on people with vast unearned incomes from inheritance and investments. He is getting pretty close. Owing to the Bush tax cuts in 2001, 2002, 2003 and 2004, all personal federal taxes on wages and other earned income this year amount to an average of 23.4 percent of income. But total personal taxes on investment income — stocks, bonds, interest, etc. — are only 9.6 percent of income. If the president finally gets his way and abolishes income taxes on capital gains, that will shrink to nearly zero. Virtually all taxes would be borne by workers, which would be Bush’s perfect tax system. Bush says the ancient estate tax is terrible because it destroys family farms and amounts to double taxation: He is fond of saying that people’s earnings are taxed while they are alive and taxed again after their death. Neither, of course, is true. A Congressional Budget Office analysis of estate tax payments showed that no more than 27 farmers in all the United States last year passed on estates that did not have enough liquid assets to pay all estate taxes immediately. (People can take up to 14 years to pay estate taxes.) The authors thought the number might actually be zero. Only inherited assets greater than $1.5 million, $3 million for a couple, only about 1 percent of estates, are subject to taxation. As for double taxation, the exact opposite is true. The vast majority of large estates consists of unrealized capital gains, the appreciated value of stocks and other investments. Income from appreciated value is not taxed until the asset is sold. If it is not taxed at inheritance, it is never taxed because the value when the property is transferred to the heir becomes its base value for future tax purposes. Thirty-five years ago, the nation was shocked to learn the number of multimillionaires who did not pay a dime of income taxes, which led to the enactment of the alternative minimum tax. Someday, after the estate tax is gone, someone will report the hundreds of billions of completely untaxed income enjoyed by millionaires and billionaires and Congress will rush to pass an inheritance tax again.
Favorite

From the ArkTimes store

Comments

Subscribe to this thread:

Add a comment

More by Max Brantley

More by Ernest Dumas

  • Not Whitewater

    Just think: If Democrats had turned out 78,000 more votes in three states in November, people could be reveling today in the prospect of impeaching and convicting President Hillary Clinton, not Donald Trump, as some Republican lawmakers had promised to try to do if she won.
    • Jul 27, 2017
  • Trusting

    It is a Fourth of July ritual to appraise where we are in meeting the Declaration of Independence's promise to institute a government that would, unlike King George, secure human rights equally for everyone who sets foot on American soil.
    • Jul 6, 2017
  • Obamascare

    Republicans at long last may be about to see their most fervent wishes and wildest predictions materialize — millions of people losing their medical and hospital coverage, unaffordable insurance, lost jobs, a Medicare financial crisis, mushrooming federal budget deficits and fiscal crises across state governments.
    • Jun 22, 2017
  • More »

Readers also liked…

  • AEC dumps ALEC

    No matter which side of the battle over global warming you're on, that was blockbuster news last week. No, not the signing of the climate-change treaty that commits all of Earth's 195 nations to lowering their greenhouse-gas emissions and slowing the heating of the planet, but American Electric Power's announcement that it would no longer underwrite efforts to block renewable energy or federal smokestack controls in the United States.
    • Dec 17, 2015
  • No tax help for Trump

    The big conundrum is supposed to be why Donald Trump does so well among white working-class people, particularly men, who do not have a college education.
    • Aug 11, 2016
  • Dollars and degrees

    Governor Hutchinson says a high graduation rate (ours is about the lowest) and a larger quotient of college graduates in the population are critical to economic development. Every few months there is another, but old, key to unlocking growth.
    • Aug 25, 2016

Most Shared

  • 'Cemetery angel' Ruth Coker Burks featured in new short film

    Ruth Coker Burks, the AIDS caregiver and activist memorably profiled by David Koon as the cemetery angel in Arkansas Times in 2015, is now the subject of a short film made by actress Rose McGowan.
  • Buyer remorse

    Out here in flyover country, you can't hardly go by the feed store without running into a reporter doing one of those Wisdom of the Heartland stories.
  • Not Whitewater

    Just think: If Democrats had turned out 78,000 more votes in three states in November, people could be reveling today in the prospect of impeaching and convicting President Hillary Clinton, not Donald Trump, as some Republican lawmakers had promised to try to do if she won.
  • Head-shaking

    Another edition of so-much-bad-news-so-little space.

Latest in Ernest Dumas

  • Not Whitewater

    Just think: If Democrats had turned out 78,000 more votes in three states in November, people could be reveling today in the prospect of impeaching and convicting President Hillary Clinton, not Donald Trump, as some Republican lawmakers had promised to try to do if she won.
    • Jul 27, 2017
  • The ACA can be fixed

    Majority Leader Mitch McConnell threatened his 51 disciples in the Senate and his party with the gravest injury imaginable.
    • Jul 13, 2017
  • Trusting

    It is a Fourth of July ritual to appraise where we are in meeting the Declaration of Independence's promise to institute a government that would, unlike King George, secure human rights equally for everyone who sets foot on American soil.
    • Jul 6, 2017
  • More »

Event Calendar

« »

July

S M T W T F S
  1
2 3 4 5 6 7 8
9 10 11 12 13 14 15
16 17 18 19 20 21 22
23 24 25 26 27 28 29
30 31  

Most Viewed

  • Narrow opening for Arkansas Democrats

    "Somebody in this room — it's time to go big or go home." At the Democratic Party of Arkansas's Clinton Dinner last weekend, Gov. John Bel Edwards of Louisiana used his platform as keynote speaker to embolden a candidate to step up to run for governor against incumbent Republican Governor Hutchinson.
  • Buyer remorse

    Out here in flyover country, you can't hardly go by the feed store without running into a reporter doing one of those Wisdom of the Heartland stories.
  • Head-shaking

    Another edition of so-much-bad-news-so-little space.
  • Not Whitewater

    Just think: If Democrats had turned out 78,000 more votes in three states in November, people could be reveling today in the prospect of impeaching and convicting President Hillary Clinton, not Donald Trump, as some Republican lawmakers had promised to try to do if she won.

Most Recent Comments

 

© 2017 Arkansas Times | 201 East Markham, Suite 200, Little Rock, AR 72201
Powered by Foundation