The United States enacted the federal estate tax in 1916, and conservatives have been trying to get rid of it ever since. Over the decades they've propagated an astonishing array of half-truths and untruths, such as labeling it "the death tax." (Rest assured that you can die anywhere in the United States without having to pay a tax to do it.)
Carrying on that long tradition of dissimulation, Congressman Greg Walden sent a letter to constituents at the end of last year explaining why he voted against HR 4154, a bill to permanently set the tax at 2009 levels.The lies begin in the first paragraph: "Estate tax may sound harmless, but here's what it is: the government taxing, when you pass away, about half of what you've worked in a lifetime to save."
To begin with, under the current law the first $3.5 million of any estate is exempt from estate tax. If you leave an estate of $3,499,999.99 you don't pay a dime. Less than three-tenths of one percent of all estates pay any estate tax at all.
And among the minuscule number that do, the 45% tax is levied only on the amount above $3.5 million, not the whole estate. If you leave an estate of $4 million, you owe estate tax only on the last $500,000. So on average the effective tax rate (the percentage of the estate's value that's paid in taxes) is less than 20%, not "about half."
Estate tax opponents love to weep and wail about the hardship it supposedly inflicts on "family farms," so inevitably Walden drags them in. Under HR 4154, he laments, "more and more family farms, ranches and businesses would be subject to the estate tax in years to come."
But unless your family name is Simplot or Walton, your family farm or business has little or nothing to worry about. The Urban Institute-Brookings Tax Policy Center estimated that in 2009, only 80 - count 'em, 80 - small business and farm estates in the whole nation owed any estate tax at all.
Walden's real agenda is complete and permanent elimination of the estate tax, which he claims "discourages work and lifelong savings in favor of large-scale consumption." (Exactly how leaving millions more to the Paris Hiltons of the world would encourage work and thrift and discourage consumption is not made clear.) But alas, with Democrats in control of both houses of Congress that's impossible.
So Walden is pushing a bill that would set a permanent rate of 35% and exempt the first $5 million, or $10 million for married couples. That wouldn't be as bad as outright repeal, which would cost an estimated $1.3 trillion over the first 10 years, but it would still irresponsibly increase the deficit in order to "fix" a non-problem.
Walden is a Republican and we can't blame him for toeing the party line. But we wish he'd come up with some fresh prevarications instead of peddling the same tired old ones. For his lack of originality, we're delivering THE BOOT.