Let's analyze his reasons, phrase by phrase.
First, Republicans are calling it a "death tax" because they think that makes it more sellable. It's not a tax on death. It's a tax on multi-million-plus dollar estates. Rep Chris Cox from ritzy Newport Beach, California dramatically declared that those pushing to retain an estate tax "want to pry lots of cash out of the cold, dead fingers of America's deceased entrepreneurs." Cox sounded downright silly.
Second, it IS double taxation, and that is not "fair." The Internal Revenue Code is not intended to be fair to anyone. The Code is riddled with dozens of double taxation situations. For the estate tax, double taxation occurs because the person is taxed annually on their incomes. He is taxed then again on some assets he purchases with income leftover after taxes. Most assets passed on with estates (houses, stocks, bonds) are not taxed until sold.
Is that fair? No. So what? Most of the Code is not fair, least of all to middle class taxpayers. Deal with it.
Third, the President said that if the estate tax remains, small businesses and farms owned by extremely wealthy people will suffer when those people die. This statement is misleading and generally false.
Extremely wealthy people don't accumulate wealth now through small businesses and family farms. Large farms are owned by corporations, and small businesses must grow into enormous corporations to give individuals great wealth. Bill Gates of Microsoft, and Martha Stewart of Martha Stewart Omnimedia are prime examples.
In fact, jobs will be lost if the federal estate tax is repealed, by greatly weakening the economy due to reducing federal tax revenues by $1 trillion.House Democratic Leader Nancy Pelosi summed up the reasons to retain the federal estate tax when she said the bill favored the "super-rich" and would make federal deficits worse.
It's a matter of timing and national priorities, not fairness to rich people. It's a matter of fairness to the nation as a whole, to middle class taxpayers and to the needy in the US.
The US trade deficit, incurred entirely under President Bush, is a world-history high of $61 billion and growing, owed mainly to China and Japan. The US has no plans or methods to repay it. Due to this debt burden, a myriad of scenarios could plunge the US into a drastic economic depression at any time.
Subtracting $1 trillion from the US government would be catastrophic and irresponsible not only in dealing with federal debt, but in funding services for US taxpayers...among them: education, healthcare, local homeland security and, of course, Social Security. These vital programs are already under financial stress. More tax cuts for multi-millionaires will cause even greater erosion of such services.
In truth, the Bush goal to repeal the federal estate tax accomplishes several cherished Republican goals. First, of course, is to give more tax breaks to ultra-wealthy families like the Bushes and Cheneys.
Cutting government revenues is also a "back-door" way to apply more pressure to cut Social Security benefits. President Bush is determined to find ways to eventually stop giving back to the US middle class the money they have paid into the Social Security system.
Repeal of the federal estate tax would require severe cuts in government progams that would be unfair and life-changing to middle class Americans and to the needy, children, elderly and disabled.
Far more unfair than denting the lifestyles of the rich and famous.
Where It StandsLegislation to repeal the federal estate tax next moves on to the US Senate for debate. The Senate has historically defeated this measure. The 109th Senate, however, has only 44 Democrats, so conservative conditions may be more favorable to pass this Bush bill.
Per the Washington Post, Senate Democratic filibuster is expected for this measure, and Republicans don't anticipate mustering the 60 votes needed to overcome filibuster.
Senate Finance Committee Chairman Charles Grassley (R-Iowa) is actively working behind the scenes to forge a compromise on repealing the federal estate tax. Leading negotiations for Senate Democrats is Senator Charles Schumer (D-NY). Rumor is that Senate Republicans'starting position in negotiations would set a minimum estate value taxation threshold at $10 million for an individual.
The federal estate tax issue will likely be addressed by the full Senate in May 2005. A successul compromise with the House bill would be sent to the President for signature.