WASHINGTON--''Shame on you, Mr. Broder,'' the self-described political independent from Estes Park, Colo., writes. ''You are living in a Marxian Utopia.''
What aggravated this gentleman--and a great many other readers--was a column criticizing the House's recent vote to phase out the inheritance tax, a staple of the revenue system originally sponsored by Theodore Roosevelt, another well-known Marxist in their eyes, I suppose.
''My wife and I started with $20 and an old Plymouth and, after having sold a successful small business, have a sufficient estate to be comfortable in our retirement years,'' the Coloradan says. ''We paid tax on every dollar we earned and would like to pass the fruits of our 14-hour days over 40 years to our children and grandchildren, whom we love very much. ... The money we earned does not belong to the government and eliminating the socialistic, immoral (inheritance) tax is an idea whose time has come.''
Senate Republican leaders clearly think so, because they plan to send the House-passed bill on to President Clinton this week, where it awaits a veto. The net result: A campaign issue on which public opinion is solidly on the Republicans' side--and a lot of people feel very strongly.
At the risk of causing further heartburn, let me try to parse the ''death tax'' rhetoric with a few facts. First, the issue is not how hard mom and dad have worked or how much in taxes they have paid. They don't pay the estate tax. Their heirs do--on whatever portion of the estate exceeds $675,000. That exclusion, which couples can double to $1.35 million with some estate planning, meant that 98 percent of the inheritors in 1998 paid nothing on their legacies. The $28 billion in inheritance taxes came from the 2 percent of very large estates.
Rep. Pete Stark, a crusty California Democrat who built a successful banking business before he came to Congress, addressed his five children and 10 grandchildren in personal terms in explaining, during House debate, why he was not going to vote to give them a ''seven-figure business'' entirely tax-free. Under existing law, he said, ''you are going to get a down payment from your mother and me of $1.35 million (tax-)free. You have not worked a day in your life for that.''
While the excess value of the estate will be taxed, Stark said, ''you are going to get 10 years to pay that off at below-prime-rate interest rate. If you are so dumb that you cannot run that business with over a 50 percent down payment given to you and 10 years to pay off the balance at a low rate, you do not deserve it.''
Not many members of Congress will be as blunt with their well-off constituents as Stark was with his children. Indeed, Democrats have offered a counterproposal, tacitly endorsed by Clinton, which will make the inheritance tax burden for farmers and small-business owners even lighter. Under a 1997 law, a couple with a farm or business worth up to $2.6 million can give it to their heirs tax-free. The Democrats would raise that to $4 million, which would mean that only 1 out of every 100 estates would face any inheritance tax.
But it would not help the super-rich, as the Republican proposal would do. The inheritance tax is a progressive tax. In 1998, more than half the money collected came from estates of $5 million or more. How many such estates were there? Exactly 2,898.
Compare that reality with the political rhetoric. ''The death tax is turning the American dream into the Nightmare on Elm Street,'' says Rep. Thomas M. Reynolds of New York.
''The burden of this tax ... does not fall on the dead rich person,'' says Rep. Chris Cox of California. ''The real burden of this falls on the low-wage worker who pays a tax rate of 100 percent, when he or she loses a job because that medium-sized business or small business ... has to be liquidated in whole or in part to pay the tax man.''
And here is the ultimate in Orwellian double talk: Foundations and charities know that many of their biggest bequests come from people eager to reduce the size of their estates, before inheritance taxes are levied. But Rep. Lindsey Graham of South Carolina says the tax is unfair to people who ''want to give money to the church instead of to the government. ... Philanthropy is lost. The human spirit is suppressed. Most people want a legacy. They want to give something back, a library, a hospital wing, a donation to their church. This (inheritance tax) is a form of socialism that must go.''
If ever a bill deserved a veto, it is this one--if only for false pretenses.
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