The New York Times reports that the unnaturally orange John Boehner, the Ohio Republican who dreams of becoming Speaker of the House, suggested this morning that while his priority was to provide a tax cut to the richest 2% of Americans, he would reluctantly support President Obama’s plan to provide relief to only the other 98% of us who make less than $250,000 per year. Perhaps not surprisingly, Mr. Boehner has already walked this comment back, issuing a statement suggesting that he was returning to the Republican position, which is that all Americans will only get a tax cut of approximately $6,000 on average if the richest 2% of Americans are given an extra $103,000 on average per year.
I’ve already explained why the Republican’s insistence on giving $103,000 more per year to the richest 2% makes no fiscal or economic sense. But buried in the New York Times article was an even more insidious proposal from Mr. Boehner – to extend the current one-year moratorium on the estate tax.
The estate tax is a tax on the transfer of wealth at one’s death. This year, there is no estate tax, as George W. Bush gradually allowed rich families to inherit a higher percentage of their decedents’ estates, with the tax entirely eliminated in 2010. Moving forward, President Obama wants to return the estate tax to its 2009 levels, which exempted the first $3.5 million of an estate from any taxes, and applied a 45% tax rate to any value above that $3.5 million. Republicans like John Boehner, however, want to permanently eliminate the estate tax.
President Obama’s position is clearly the correct one for our country for a number of reasons:
- Budgetary Cost: The Republican’s proposed elimination of the estate tax would blow a $667 billion hole in the budget over ten years in comparison to President Obama’s proposal. At a time of cutbacks to critical government services (police, firefighters, education, public health, etc.), and long term budget deficit concerns we cannot afford to give an extra $667 billion to wealthy inheritors.
- Fairness: The people who pay the estate tax are paying it on money that they did nothing to earn. If I had a rich relative who died and left me a $5 million estate, I would be extremely upset about their death, but I would not be upset that I received only $4.3 million after the estate tax, rather than $5 million. Taxes for core government services have to come from somewhere, and the estate tax is probably the fairest place for them to come from.
- Restoring Meritocracy: The estate tax is the most progressive and meritocratic tax in the country, as it impacts only the richest 0.3 % of estates and helps prevent the perpetuation of wealth in wealthy families from generation to generation. Contrary to Republican myth, only approximately 80 small businesses and farm estates nationwide owed any estate taxes under the 2009 standards. With the income gap between the richest 1% and middle class Americans tripling between 1979 and 2007, it is critical that we restore the estate tax in order to help reduce that gap.
Our country is faced with critical needs to restore basic government services, repair our infrastructure, reduce our long term deficit, and further boost our economy. Each of these requires that government has adequate revenue to do its job well. In the face of these needs, Republicans are proposing to provide even more resources to the wealthiest families in our country by eliminating the estate tax and giving an average of an extra $103,000 to the top 2% of Americans. By contrast, President Obama is taking the common sense position of restoring an estate tax that touches only the top 0.3% of estates, opposing further tax relief to the wealthiest 2%, and providing a tax cut to folks making under $250,000 per year. When it comes to taxes, it is clear that President Obama is on our side, and the Republicans are not.
Do you support restoring a tax on the richest 0.3% of estates in order to help reduce the budget deficit and provide basic government services? If so, let folks in your community know by sending a letter to the editor of your local newspaper.