Congratulations, absurdly wealthy people! You win yet another Tax Day. After exploiting the galaxy of loopholes, deductions, and exclusions that disproportionately benefit people at the very top of the income ladder, America’s wealthiest have managed to slash their tax burden by substantial margins. It’s great to be rich in America, and it’s entirely likely that at some point in the next couple of years, things will only get better for the wealthiest of the wealthy.
Right now, there’s a heated competition happening within the Republican Party to see who can come up with the tax policy that is the most generous towards the people who don’t actually need that generosity. Case in point: the upcoming votes in the Republican controlled Congress to repeal the estate tax, a policy choice that would accomplish absolutely nothing beyond allowing the wealthy offspring of wealthy people to grow even wealthier.
What I love about these periodic estate-tax fights is that the preferred GOP policy – elimination of the tax – is such a flagrant and blatant giveaway to the wealthy that Republicans are compelled to lie about their motivations. Typically, Republicans aren’t really shy about wanting to skew the tax code in favor of the rich. The explicit argument behind supply-side economic theory is that when you lower taxes on “job creators” and the wealthy, they’re freer to invest and take risks and promote economic growth, the benefits of which will trickle on down to the plebes.
But with the estate tax, Republicans will never come right out and say that they want Chip Von Whiffersnort IV to pocket a greater share of Grandpa Whiffersnort’s estate. Instead, they promote the estate tax repeal as part of a noble crusade to save family farms and small businesses from crushing double taxation. “This tax doesn’t just hit the big guy. It hits the little guy – like the small business and the family farm. It is both unwise and unfair, and it needs to go,” said Paul Ryan at a Ways and Means Committee hearing last month.
That’s all lies. “In the entire country, only 120 small businesses and farms (100 of them large farms) were hit by the estate tax in 2013,” writes Dana Milbank in today’s Washington Post. “And for that tiny number affected, there are all sorts of provisions already in place to soften the blow: low valuation rules, delayed tax payments and other breaks and discounts.” All told, just 0.18 percent of estates were hit with the estate tax in 2013. It’s a policy that targets “the big guy” only – all this weeping on behalf of threatened small businesses and farms is purely theatrical, and it’s been going on for years.
Speaking of theatrics, whatever progress the Republicans in Congress make in repealing the estate tax will be undone by President Obama’s veto pen, so there’s no real threat of the tax’s demise in the immediate future. But that will change if a Republican wins the White House in 2016.
The declared and presumed 2016 Republican candidates are largely united in their desire to see the estate tax repealed, and they pair that repeal with other goodies that will also redound exclusively to the benefit of the mega-rich. Marco Rubio’s tax plan envisions a cut to the top marginal rate, total elimination of (already low) taxes on investment income, and an end to the estate tax. Rand Paul endorses a flat tax alongside estate-tax repeal and an end to taxation on investments. Ted Cruz has a similar plan, only he also wants to get rid of the IRS altogether.
This is going to be the basic architecture of every Republican tax plan as we slide into 2016 and the candidates try and out-do each other by finding new and exotic ways to torture the tax code in order to benefit their wealthy donors (and themselves). There’s no practical reason to repeal the estate tax – it would just be a nice bonus for a vanishingly small percentage of already wealthy Americans who don’t want to pay taxes on money they haven’t earned.