Some 450 business executives and investors are members of the Responsible Wealth Project. They include William Gates, Sr., father of Microsoft magnate William Gates; billionaire financier George Soros; David Rockefeller Jr., former chairman of Rockefeller & Company; and Agnes Gund, a philanthropist whose family owns stakes in many companies.
Another voice opposing a change in the estate tax laws is the New York Times, most of which is owned by the Sulzberger family. "Eliminating the estate tax could dry up bequests to charitable, philanthropic and educational organizations," the paper stated in an editorial.
Some, like Warren Buffett, advance anti-working-class notions as they oppose elimination of the estate tax. He argues wealthy people are rich because they are talented. "We have come closer to a true meritocracy than anywhere else in the world," he said. "You have mobility so people with talents can be put to the best use. Without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command resources of the nation based on heredity rather than merit."
Estate taxes are levied on the net worth of an individual when that person dies. There is no tax on the first $675,000 and under the current law the exemption will rise to $1 million by 2006. Farms and family businesses currently have a $1 million exemption. Amounts above the exemption threshold are taxed at rates that rise to 55 percent when assets reach more than $3 million. Only about 2 percent of estates in the country are affected by inheritance taxes. The wealthy have numerous ways to get around the tax and pass on the maximum amount of capital possible to the next generation, ensuring it remains in the individual bourgeois family.
Bush is proposing elimination of taxes on assets held at death as well as gift taxes. Various articles in the big-business media estimate savings for the 2 percent of the most wealthy families who have to pay the tax at $236 billion over the next 10 years.
Tax cut skewed toward the rich
The president is also pushing a huge income tax rollback, which together with the estate tax cut amounts to a $1.6 trillion savings during the same time period. The income tax reductions are structured so that those in higher income brackets receive the largest tax breaks, placing a greater share of the overall tax burden on working people and the middle class. The richest 1 percent of taxpayers will receive 40 percent of the tax breaks under Bush's plan. "The Washington lawyers, the executives who make $1 million or more, are going to get the big cuts," Sheldon Cohen, a tax lawyer and former commissioner of the Internal Revenue Service, noted.
According to the Wall Street Journal, as many as 14 of the 17 cabinet members in the Bush administration as well the president and Vice President Richard Cheney, are wealthy enough to benefit from the repeal of the estate tax. Bush filed financial disclosure forms during the presidential campaign that indicate his heirs could save between $6 million and $12 million from the proposed repeal, if his estate remains at its current value.
The president's plan to abolish estate taxes is opposed by at least one person in the administration: John DiIulio, director of the White House Office of Faith-Based and Community Initiatives, a religious charity post set up by Bush. DiIulio said the repeal of the estate tax would devastate large donations to charities, cutting across the program he is to head up. "I don't think the estate tax should be eliminated--modified maybe, but not eliminated," he said in an interview February 8.
The debate on repeal of estate taxes reflects anxiety among a layer of the ruling class who see social conflicts and class battles looming on the horizon as working people resist the effects of the economic crisis of capitalism and attacks on their rights and unions.
Combined with the bipartisan assault on the social wage--including elimination of Aid to Families with Dependent Children and other attacks on Social Security, and cuts in welfare--they fear cutbacks in charitable programs will mean there is nowhere left to turn for working people facing hard times.
For example, in his open letter, William Gates, Sr., wrote: "Already, states are cutting back as the economy slows, tax revenues drop and state budget surpluses disappear. It would be unconscionable to give the wealthy a massive tax break at a time when crucial programs assisting children and seniors are on the chopping block."
By advocating charitable giving rather than government-funded cradle-to-grave social security coverage for all, the wealthy liberals who oppose repeal of the estate tax advance a reactionary campaign that plays into Bush's proposal to direct tax dollars that would normally come into the federal treasury to churches and private charities. Advocating "charitable and independent sectors" taking a more prominent role in "confronting social problems" in effect reinforces the bipartisan drive to undermine government entitlements.
The president has already started a "compassion fund" aimed at encouraging rich individuals to donate large sums of money that would be matched with federal funds and given to charities and religious and other nonprofit organizations to provide social services.
One element of the debate around the tax cuts is the rise in payroll taxes working people are paying. The Congressional Budget Office reported that 80 percent of working people in the country today pay more in payroll taxes--Social Security and Medicare deductions--than they do in income taxes.
Bush is touting his proposal as a measure to ease tax burdens on middle-income and working-class families, downplaying the windfall it will mean for the rich. "No matter how the data is sliced in the upcoming debate in Congress and the country, most of the tax cut dollars go to wealthier Americans," said a February 7 article in the Washington Post.
According to an Internal Revenue Service report, between 1989 and 1998 the after-tax incomes of the richest 1 percent of the population grew about eight times as fast as the bottom 90 percent, as the share of income they paid in federal taxes in 1998 fell to its lowest level since 1992. The Center on Budget and Policy Priorities says that the top 1 percent of taxpayers had an average after-tax income of $594,814 in 1998, up $69,000 or 13.1 percent over 1997. The bottom 90 percent--those who make less than $83,220 a year--saw their average income rise only 3.9 percent in 1998.
Tax the rich, not working people
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