Thursday, November 19, 2009

Blue Dogs Show Their True Color On The Estate Tax-- And It Ain't Blue

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People who live in nice houses like this have pretty tulips-- and the clout to get out of paying their fair share of taxes

The battle over the Estate Tax is heating up again. The simplistic way to look at it is that the defenders of wealthy elites-- the Republican Party and DLC and Blue Dog Democrats (particularly Blanche Lincoln)-- are opposing real Democrats, who want to reform a system that the Bush Regime re-jiggered to save a handful of billionaires immense amounts of money (which is, at least in part, what put the deficit out of whack). That story line works, but it doesn't tell the whole story. It really isn't just the obvious villains who are currying favor with the richest 1 percent of Americans.

Tuesday CQPolitics carried a report that the House was likely to delay consideration if any kind of estate tax. Recall that when Blanche Lincoln and Jon Kyl tried to lower the rate on estates worth more than $7 million (under which the rate is zero; they pay nothing), their efforts (in her case on behalf of the Walton family which owns so much of WalMart) met some success.
Congress is under extreme pressure to act by the end of the year. If it does nothing, current law will make the estate tax disappear on Jan. 1, only to return in 2011 at higher rates and lower exemptions... Democratic leaders [K Street toadies Steny Hoyer and Rahm Emanuel] want to move a permanent extension of the 2009 structure of the estate tax, which features a $3.5 million per-person exemption and a top rate of 45 percent.

Liberals are upset that such an extension-- which would cost $233.6 billion over 10 years and benefit the country’s wealthiest families-- would not be offset, even as they have to scrape up every dollar they can to offset health care legislation.

Meanwhile, a moderate faction led by Shelley Berkley, D-Nev., has offered a proposal that would be more favorable to estates. It would gradually bring the top rate down to 35 percent, and push the exemption up to $5 million and index it for inflation.

Berkley’s legislation mirrors a plan supported by a bipartisan group of senators during the budget debate earlier this year. The amendment-- offered by Blanche Lincoln, D-Ark., and Jon Kyl, R-Ariz.-- was adopted by a 51-48 vote, signaling that Republicans and moderate Democrats had the clout to get a better deal for estates than the 2009 rates.

Wednesday's CQPolitics followed-up with the story of a revolt from the Democratic congressional ranks. Real Democrats are telling Hoyer and House Ways and Means Committee Chair-- and notorious crook-- Charlie Rangel that they're not going along with this proposal that puts an unfair tax burden of the middle class to clean up the mess that corporate America made on behalf of the very wealthiest families. John Larson (D-CT) and Richard Neal (D-MA) led the revolt that ended in a Ways and Means Committee vote that backs a one-year extension and ties it to a broader overhaul of the tax code next year.
That move would spare Democrats from endorsing a tax cut for the wealthiest few families during a time of double-digit unemployment.

But Rangel, D-N.Y., and Majority Leader Steny H. Hoyer, D-Md., have been seeking a permanent extension of current law, which would cost $233.6 billion over 10 years but would not have to be offset under the budget framework backed by Democrats.

An estate tax bill is expected to reach the floor after the Thanksgiving recess.

Under current law, the tax includes a top rate of 45 percent and a per-person exemption of $3.5 million. If Congress does nothing, the tax disappears Jan. 1 and then returns, with a $1 million exemption and a 55 percent top rate, in 2011.

Rangel said that no final decisions had been made and that committee Democrats would meet again later Wednesday.

But Larson and Neal said the direction Democrats were heading was clear. A one-year extension would make the estate tax levels expire at the same time as many other provisions in the tax code, potentially giving members an opportunity for a broader rewrite of the revenue structure. It was unclear whether the estate tax measure would include specific language that would somehow trigger a broader tax measure.
A one-year bill could face some difficulty, however.

A leading Ways and Means moderate, Earl Pomeroy, D-N.D., warned that the push for a one-year extension might falter in the broader Democratic caucus.

“It’s not about that room,” he said, gesturing toward Rangel’s off-the-floor office, where Democrats met Wednesday morning.

He threatened to vote against the rule that would bring such a bill to the floor and said other members of the fiscally conservative Blue Dog Caucus might do the same.

Before you listen to Parker Griffith (Blue Dog-AL), who is both a multimillionaire and the single most reactionary Democrat in Congress, please remember that assets left to spouses (or charities) are exempt from estate taxes, as are family farms. The idea behind an estate tax is to ameliorate the accumulation of tax free wealth in the hands of a small number of families. Estate taxes in America are far too low and have already led in the dangerous direction of perpetuating the nation's wealth in the hands of a few powerful families. Even conservative icon Winston Churchill famously argued that estate taxes are argued that estate taxes are “a certain corrective against the development of a race of idle rich," and argument entirely embraced by two of America's wealthiest men, Bill Gates and Warren Buffett. As Buffett pointed out in 2006, in regard to predators like Griffith: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.” That same year he also said "I would hate to see the estate tax gutted. It's a very equitable tax. It's in keeping with the idea of equality of opportunity in this country, not giving incredible head starts to certain people who were very selective about the womb from which they emerged."

Now please listen to this neo-Confederate Blue Dog scumbag reading Republican Party talking points, all distortions, about the estate tax:



And speaking of slimy, greed-obsessed and selfish rich people like Parker Griffith, the IRS announced this week that their crackdown on off shore banking cheats will produce billions of dollars. Almost 15,000 Americans who were cheating have come forward in time for the leniency window.
A rush of tax evaders applied before the program's Oct. 15 deadline-- nearly double the IRS preliminary tally-- taking advantage of guarantees that they wouldn't face criminal prosecution if they paid taxes, interest and reduced civil penalties... The leniency offer accompanied the IRS' legal battle with UBS, which in February agreed to a $780 million settlement of criminal charges that it had secretly sent bankers into the U.S. to help American clients evade taxes. The bank later turned over data for up to 250 Americans whose accounts had alleged signs of tax evasion.

Under the federal civil settlement, Swiss authorities have until August to disclose accounts for 4,450 American clients of UBS. Federal officials said the first 500 would be identified by month's end.

The targeted UBS accounts include those that held more than 1 million Swiss francs-- roughly $985,000-- any time between 2001 and 2008 for which "tax fraud or the like" is suspected.

And a bonus-- Forbes is reporting that the IRS will be looking for patterns that point to specific financial advisors and companies that were steering their clients into cheating on their taxes. I sure hope there's no amnesty or leniency for them.

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8 Comments:

At 5:11 PM, Anonymous wjbill said...

I begin to wonder about the 50 state strategy .... we brought in many republicans with it and now are shocked to find out they vote like republicans! I also wonder if we have gone beyond the "tipping point" of corruption .... everyone has so much funding from corporate America they can't back away. Guys like Liebermann, Nelson, etc just wait for the right time to extort whatever is not nailed down .... woe to those who actually believe in something.

 
At 6:32 AM, Blogger Unknown said...

It's also important to note that one staggering victim of the estate tax deal was the state of California.

California had an estate tax that was fully deductible against federal estate tax, which would be generating 1.2 billion a year had it not been eliminated by changes in federal law.

Every Dem in California should be fighting to roll back the changes that gave the state such a huge fiscal hit.

 
At 7:44 AM, Anonymous michael said...

The estate tax does two things: (1) it lines the pockets of big insurance companies like AIG, to the tune of $12 Billion a year. (2) It destroys jobs by destroying small businesses. With double digit unemployment, is that what we need now? (read the FACTS at www.estatetaxtruth.org) The fact that people still support this tax shows how far class warfare rhetoric divorces people from reality.

 
At 8:23 AM, Blogger Seth said...

Looking at the title of this blog, I'm beginning to doubt that any Democrat is truly blue. Democrats used to stick up for the little guy, not stick up the little guy. Small Businesses, not the super wealthy are the ones harmed by the estate tax. Here's an analogy that I think is apt:
Years ago mobsters used to go shop to shop, threatening business owners and breaking up their stores. A couple of days later a very nice man would come by and offer to protect them from the guy with the baseball bat in exchange for a minor fee.
Today, large insurance companies lobby the federal government to keep the estate tax in place and then send some very nice insurance agents out to small businesses to collect "second-to-die" insurance premiums.
Here's the moral question: Is it anymore righteous because it is sanctioned by Congress?
The estate tax is nothing more than corporate welfare for Big Insurance Boss, Warren Buffett.
The fact that Mr. Buffett seems like a very nice man doesn't change the fact that, in effect, he's pointing a gun at a small business owner's head.

 
At 8:41 AM, Blogger Adam Nicholson said...

Wjbill is right - funding from corporate America seems to skew priorities. For instance, the life-insurance lobby spent $18 million on lobbying just in the first three quarters of 2009 - much of it on keeping the estate tax permanent.

Interestingly, many of the life-insurance companies are the same ones that are flexing so much muscle in the health care debate.

As for the author's assertion about the estate tax and family businesses, he isn't entirely accurate. Yes, the NYTimes pointed out that the estate tax impacts a relatively small number of people.

However, there is no "family farm" exemption. Family farms do pay the estate tax, and some pay rather substantially. For example, see here, and here.

 
At 10:45 AM, Anonymous Anonymous said...

I keep on hearing that the estate tax hurts small business. If a small business is large enough to be hurt by the estate tax then maybe it should be a corporation. The basic problem is that an over concentration of wealth corrupts society. An unfair distribution of wealth puts stress on the bonds that binds us.

 
At 2:38 PM, Anonymous Anonymous said...

The estate tax is essential to the provision of important government programs and policies, as well as to the preservation of democracy. Furthermore, some believe an extension of the 2009 estate tax policy is a tax break for millionaires. For more information: http://faireconomy.org/news/estate_tax_action_alert_12109

 
At 12:28 AM, Blogger Unknown said...

Personally, I don't think there should be an estate tax at all, unless the government has to pay the cost of the person (who died) medical bills or funeral expenses, then it should only recoup those costs. We have far too many taxes in America (both above and below board). Remember the ostensible reason we rebelled from Britain was TAXES!

 

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