Word of the Week: Malarkey
I just got an email from FactCheck.org (part of the Annenberg Public Policy Center of the University of Pennsylvania, which can easily piss off conservatives and liberals/progressives alike) with the headline: Estate Tax Malarkey. Any time you can slip such a colorful word into a headline, I'll buy. And this report informs us that conservatives are trying again to play up the assault on the so-called "death tax":

The American Family Business Institute and Free Enterprise Fund launched a TV and radio ad campaign May 10 that targets potential swing votes in the Senate for full repeal of the estate tax.

Here's some text from the ad:

You work hard all your life. You pay your taxes and play by the rules, and, yeah, you're proud of what you've accomplished. You'd like to leave your family farm or business to your kids. It's a legacy, something they can hold onto. It's the American dream, right? But the IRS death tax can turn that dream into a nightmare. When you die, the IRS can bury your family in crippling tax bills. It can cost them everything. What's worse, the death tax is a double tax on all you've worked to build. The death tax is wrong. It's unfair. And this year, Montana's family business owners and farmers have joined together to kill this unjust tax, before it destroys one more family legacy.

And here's some of the facts about the estate tax:

Contrary to ad's claim that "your family" might be crippled, the vast majority of  families actually are not affected by the estate tax. In fact, less than 3 percent of deceased adults in 2002 had estates subject to the tax, according to the nonpartisan Urban-Brookings Tax Policy Center and figures from the IRS. And though the ad focuses on family farms and businesses, the truth is that very few actually pay the estate tax. The Tax Policy Center projects that roughly 440 taxable estates were primarily made up of farm and business assets in 2004. [...] Far from imposing tax bills on farms and businesses that "cost them everything," the average estate tax paid by all farm and business estates in 2004 was just under 20 percent of the value of the estate, according to calculations by the Tax Policy Center. The effective rate was far less for smaller estates. Of the 440 taxable family farm and business estates in 2004, two out of five paid an average rate of only 1.6 percent. These were taxable estates valued at less than $2 million.Very large estates valued at over $20 million paid at an average effective rate of just over 22 percent, a hefty tax bite but well short of "everything."

The key takeaways here are that less than 3 percent of taxpayers are affected by this; of that group, only 440 estates were made up of farm business assets, and 40 percent of that group (176) paid an average tax rate of 1.6 percent (check out the easily digestible table in the FactCheck article). It's no secret that BushCo will do anything to help their constituency: the well-off. Or, as the NYTimes put it this weekend, in one of their articles on class differences, the "hyper-rich":

• Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
  
• Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.
  
• The alternative minimum tax, created 36 years ago to make sure the very richest paid taxes, takes back a growing share of the tax cuts over time from the majority of families earning $75,000 to $1 million - thousands and even tens of thousands of dollars annually. Far fewer of the very wealthiest will be affected by this tax.

I started looking around for a bit more background on this issue, and discovered that a book about the fight over the "death tax" was published earlier this year: Death By a Thousand Cuts: The Fight over Taxing Inherited Wealth by Michael J. Graetz and Ian Shapiro. Here's some detail about the book from the London Review of Books:

It tells the story of the campaign to repeal the estate tax (what we would call inheritance tax) in the United States, which culminated in the inclusion of the measure in George Bush’s massive tax-cutting legislation of 2001. [...] What makes it so fascinating is that it is a mystery story. The mystery is this: how did the repeal of a tax that applies only to the richest 2 per cent of American families become a cause so popular and so powerful that it steamrollered all the opposition placed in its way? The estate tax was the most progressive part of the American tax system, because it rested on the principle that the wealthy few, if they were not willing to bequeath their money to charity, should not be permitted to pass it all directly to their heirs. [...] Because it was a tax that so obviously took from the relatively few to relieve the burden on the very many, there seemed no possibility that a sufficiently large or durable coalition of interests could ever be formed to get rid of it. Yet during the 1990s just such a coalition came into being, and not only did it hold together, it grew to the point where the clamour for estate tax repeal seemed irresistible.

I'll be putting this book on my list. Let's hope current Democratic Senators and Congressmen do the same.