The House Takes Up Permanent Repeal of the Estate Tax - June 16, 2003 Vol. 4 No. 12

June 16, 2003 Vol. 4 No. 12:

Published: 06/16/2003

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The House Takes Up Permanent Repeal of the Estate Tax

After hijacking the child tax credit with add-ons that inflated the cost to $82 billion, House GOP leaders continue this month in their headlong rush to drain resources from government by cutting taxes for corporations and the wealthy. The campaign has just moved from the outrageous to the egregious.

The House leadership has scheduled consideration of the "Death Tax Repeal Permanency Act of 2003" (H.R.8) for Wednesday or Thursday of this week. The purpose of the bill is to permanently extend full repeal of the estate tax -- which under the "sunset" provisions of the 2001 tax bill is repealed for 2010 but reinstated in 2011. The estimated 20-year cost of full repeal would be a stunning $1 trillion. This comes during the same decade that the baby-boomer generation will be retiring in record numbers, creating huge burdens on Social Security and Medicare.

This headlong rush for more tax cuts comes in spite of:

A record $400 billion budget deficit predicted by the Congressional Budget Office for FY 2003, and deficits expected to continue for as far as the eye can see.
A national debt that is estimated to reach $7.9 trillion by 2013, when the first baby-boomers begin retiring.
An unemployment rate remaining over 6%.
The worst state fiscal crises since World War II, forcing states to cut services and raise taxes to balance their budgets -- actions that work against economic recovery.
Increased military costs as conflict continues in Iraq.
Continuing unmet needs for domestic security.

On top of these counter-indications for passing a huge new tax cut is the lack of public support for more tax cuts. But then, the "public" -- ordinary voters -- don't seem to matter much to the House leadership.

Of all the possible tax cuts, repealing the estate tax is perhaps the most flagrant. It reveals the unbridled ideological bent of a radical right ideology to reduce government by rewarding wealthy contributors.

The estate tax affects the wealthiest 2 percent. It provides substantial federal and state revenue. It is the only tax on appreciated wealth that is passed from generation to generation. Finally, it provides a vital incentive for charitable bequests and lifetime giving, which is especially needed at a time when charities and nonprofits -- from soup kitchens to universities -- are facing increased demand and declining resources. It certainly isn’t an economic stimulus; it doesn’t even go into effect until 2011.

As government shrinks, the people who will be most affected are the poor. But ordinary, middle-class Americans who cannot pay for a private education for their children or afford the full cost of a decent retirement and health care in their old age will also be harmed. The environment, national parks, regulatory protections, transportation, and security against events like terrorist attacks or natural disasters will all suffer. That the House can continue to ignore real issues and concerns about long-term priorities in favor of cutting taxes for the wealthy is unconscionable.

The "Death Tax Repeal Permanency Act of 2003" will almost surely pass the House, and just as certainly be stopped in the Senate. Debating this bill will be another waste of the taxpayers' money -- another act of theater -- but it is also a warning about the extent to which an ideologically driven House majority is willing to go to accomplish its aims of shrinking government.