The recent Barron's cover story which anointed Mitt Romney and Bill Richardson as the candidates best suited for investors contained this political propaganda: "Polls show that most Americans consider estate taxes to be unjust."
That statement is misleading.
The latest Gallup poll on the topic from 2000 showed that 53% of people surveyed didn't know enough about the estate tax to have an opinion. Once the issue was explained to them, 60% said they favored eliminating it though only 17% said they would personally benefit from such a move.
Exactly how this was explained isn't clear and a recent Yale University paper argued that people's opposition to the estate tax evaporates once they learn how few people actually pay the tax and the enormous $30 billion to $40 billion hole it would leave in the federal budget if it were repealed.
"Precisely how misrepresentations about the estate tax change people's views is difficult to say, but it may be through affecting a person's perception of self-interest in repeal or through affecting [their] unselfish evaluation of the social fairness of the tax," the paper says.
The estate tax is a political red herring. Most people don't even know someone who knows someone who has to pay it. Despite all of the rhetoric to the contrary, there's never been any evidence that small business owners or farmer are hurt because of it.
None of the Republicans, including Romney and former New York Mayor Rudy Giuliani who support eliminating the estate tax, has a good idea where the money will be made up. Just cutting spending won't do the trick, particularly in the middle of a war.
The Democrats aren't fiscal saints either. To win the support of investors, they are going to have to propose a meaningful reduction in the capital gains tax and a fix to the Alternative Minimum Tax. Those are far more pressing issues than the estate tax.
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Reader Comments (Page 1 of 1)
7-03-2007 @ 7:57AM
Michael Davis said...
Thank you for writing something... anything... about this topic. As an estate planner, I can tell that we have a laughable arrangement facing most persons trying to plan around the estate tax.
The Republicans nobly tried to eliminate the so-called death taxes back in 2001, but then failed to find the funds from other sources that were necessary to fight the wars that arose out of the 9/11 tragedy. Now what do we do? President Johnson proved that we shouldn't fight a war on credit. Is the war on terror any different?
Unless other sources of revenue can be identified to fill the hole caused by the permanent eradication of the death taxes, it will be necessary for this Congress to take on this issue as soon as practicable.
Taxpayers, regardless of their respective tax brackets, deserve predictability.
8-06-2007 @ 5:58PM
DAN said...
Being a tax accountant for over 30 years, I always laugh when I hear the Republicans scare tactics on the Estate Tax. Just where are all these families that had to sell the farm or the family business because of it?
As for the Alternative minimum Tax, are those who drafted the tax changes of the last few years really dumb enough to not realize that changing the tax rates but not making adjustments to the AMT would result in the mess we have today? These clowns that accelerated the AMT mess are now claiming it can't be fixed so it should be eliminated. TOTAL BS. A few simple changes such as increasing the exemption amount would help keep the middle class from getting hit while restoring the AMT to it's original purpose. Of course this wouldn't benefit those that the Republican party want the bulk of tax adjustments to benefit. In the meantime many in the middle class are now directly subsidizing the massive tax cuts given to the ultra wealthy the last few years. While the Cheney's are enjoying their annual $150,000 tax cut, many in the middle class are paying more in increased "fees" & "rates" then they save on their 1040. The Republicans yell tax cut but there isn't a rate or fee increase they don't love. Unfortunately they have many fooled that saving $1 in taxes is somehow worth more than paying out an additional $2 in fees or rate increases.