A WEEK AND A half ago, Democratic Sen. Blanche Lincoln of Arkansas took to the Senate floor to decry the estate tax as unfair. “I, for one, intend to fight for these family businesses, fight for these communities and fight for these jobs in rural America,” she preached. It was all very moving. Especially if you stand to inherit an enormous fortune.
That same day, Lincoln again appeared on the Senate floor, this time to decry the lack of funding for federal anti-hunger programs. This too was unfair. Lincoln was particularly nonplused by the counter-argument that there was insufficient money for such programs.
“I understand our current budget constraints. I know we all do,” she said, “Yet I didn’t create this mess.”
Oh, you didn’t? Let’s look at the main causes of the budget mess. There’s the 2001 tax cuts. Lincoln voted for those. There’s the war in Iraq. Lincoln voted for that too. There’s the Medicare prescription drug benefit, which she likewise supported. Other than that, how did you like the budget, Mrs. Lincoln?
Lord knows I’m no fan of Republican fiscal policy. But at least Republicans pretend they have some vague future intention of slashing the hundreds of billions of dollars from the budget it would take to balance out their tax cuts, even if everybody knows it will never happen. Anti-estate tax Democrats such as Lincoln, on the other hand, don’t even have the charade of fake spending cuts to hide behind.
They want to spend money on the poor because they’re compassionate. They want to spend money on the military because they’re hawkish. They want to cut taxes for the middle and working class because they’re populist (Lincoln has passionately endorsed expanding the child tax credit for working-class families). And they also want to cut taxes for the super-rich because they’re ... um, help me out here. Oh, right -- they want to help the poor family farms and small businesses that are ruined by the estate tax.
In reality, any sentient person could tell you that the populist arguments against the estate tax are hokum. Under current law, every individual will soon be able to pass on $3.5 million to his heirs tax-free. That’s $7 million per couple before a single dollar of taxes kicks in. And this assumes zero estate planning; any competent lawyer can shelter a whole lot more than that. Even among the tiny percentage of estates that pay inheritance tax, the effective rate is under 20%.
Lincoln and other estate tax opponents, who are trying to abolish the levy even on the super-rich, like to repeat sob stories about families that have to sell their small business or farm to pay Uncle Sam. In fact, those families can spread out the pain in installments over 14 years, which is plenty of time to come up with the money.
But critics never talk about the handful of massively wealthy families who have bankrolled the anti-estate tax campaign. Those families stand to save billions, and they have found the small-business owners and family farmers to be useful mascots for their enterprise. One such family is the Waltons, who own Wal-Mart. They live in Lincoln’s home state of Arkansas. I’m sure any connection between that fact and Lincoln’s support for repeal is purely coincidental.
So Lincoln doesn’t want rich heirs to pay any inheritance tax on their windfall. She wants middle- and lower-income workers to pay lower taxes as well. And she doesn’t want to slash the federal budget. So, who does she want to pay more in taxes? This is the question estate tax foes who aren’t rabid conservatives never answer: Name the group of people who you want to pay higher taxes so that the heirs of the very rich can pay less. They don’t answer because their vision of government is incoherent.
After the 2004 elections, Lincoln explained how she won reelection, at one point declaring: “There’s an old adage that says that ‘if you don’t know where you’re going, you’re sure to get there.’ ”
Guess what, senator? We’re there.