Liberals And The Estate Tax

Let’s talk about the estate tax, which seems to be one of the two Mr. Ed-sized pills liberals are expected to swallow, if they are to accept Obama’s deal with the Republican devils.

Currently, the estate tax, known in Republican circles as the death tax, is ZERO.  That’s right.  This year, if you move on to the hereafter, and can’t find a way to bring your treasures with you, you can pass every last cent on to your heirs without those greedy tax-and-spend liberals getting their government-stained hands on your assets.

But prior to this year’s “Die Now” tax sale, the rate and the exemption, or “exclusion amount”—the maximum allowable credit before taxes kick in on individuals—were, according to Wikipedia, as follows:

As you can see, if nothing were done, if no deals were made, then the estate tax would readjust to the exemption levels of 2002 and the tax rate of 2001.  Quite a difference from zero, no? 

By the way, the Obama administration had previously proposed setting the estate tax exemption and rate at the 2009 levels, and while the House agreed, the idea was nixed by Senate Republicans.  Go figure.

According to the IRS, because the estate exemption amount, and thus the estate tax return filing amount, has declined since the Bush tax cuts implementation in 2001, there has been a dramatic reduction in the number of estate returns filed:

So, it’s no wonder that when one considers the effects of the Bush income tax reductions and the higher estate exemptions and lower estate tax rates, added to war spending and other Republican goodies, that we are in a debt mess.

But back to the scene of the latest crime.  The hostage takers, also known as the Republican leadership, with their guns at the temples of the unemployed and middle class taxpayers, told the police—President Obama—not only do they want to protect the income of their rich constituents by keeping their income taxes at a historic low, they also want to make sure that when their rich constituents go to be with that Big Republican in the Sky, that their considerable estates be relatively free from taxation, which is defined as liberal theft.

So, they extracted a ransom from Obama as follows:

Exemption Amount: $5 million     Tax Rate: 35%

Let’s compare that to the do-nothing 2011 estate tax exemption amount:

Exemption Amount:  $1 million     Tax Rate: 55%

So, you can see why liberals, who generally believe that wealth should not be endlessly perpetuated among small groups of, well, wealthy folks, are a little bit perturbed that their leader would make such a bargain.  Liberals also generally believe that the potential inheritors of massive wealth do not have a moral claim on it, since they did nothing to earn it except pass through a Lucky Seven birth canal.

In any case, liberals feel like the estate tax compromise amounts to the Republicans, after kicking Democratic ass, demanding that Democrats send them a thank you note for doing so.

So, if we assume that the Obama administration’s original pre-kidnapping proposal—to return the estate exemption amount and tax rate to 2009 levels—were the baseline in the negotiations with the GOP kidnappers over this issue, then it looks like this:

Obama Position: Exemption Amount:  $3.5 Million Tax Rate: 45%

Compromise:      Exemption Amount:  $5 million  Tax Rate: 35%

The IRS reports that in 2009 fewer than 34,000 estate tax returns were filed, with gross assets of $194 billion (above the filing threshold of $3.5 million).  And here’s how it ended up:

After accounting for marital and charitable bequests, as well expenses and debts of the estate, less than half of the estates filing in 2009 owed estate tax. The combined estate tax obligation of these estates was nearly $21 billion.

As near as I can tell, there are around 250,000 people who have a net worth between Obama’s $3.5 million dollar exemption threshold and the Republicans $5 million dollar exemption threshold. And just as a crude computation, let’s apply the current mortality rate to those 250,000 folks. That means about 2000 of them will die each year for a total of 4000 during the two years of the deal Obama made with the kidnappers. 

So, there you have it. Republicans are presumably willing to hold hostage millions upon millions of Americans—and jeopardize the economic recovery—just so about 4000 or so rich folks will find themselves posthumously exempted from taxes. (Remember, Mr. Obama said that he had to make this concession or the deal would have fallen through.)

That’s why liberals are having problems paying this outrageous ransom to the Republican hostage takers.

The Day After The Deal With The Devil

“He has darted now to the far right, economically.”

—Joe Scarborough, conservative Republican

This morning on Morning Joe, the discussion, naturally, focused on President Obama’s deal with the right-wing in Congress.

Joe Scarborough, speaking from the right, summed up his view of Mr. Obama:

After this, you cannot say he’s a socialist.  The right has been calling him a socialist forever. This is income redistribution, but it’s taking it back to the rich.

I mean, millionaires are getting tax cuts.  Billionaires are getting tax cuts…They’re lowering the estate tax. They’re giving payroll tax breaks for the next couple of years.  My God, I would be afraid to campaign on this, as a conservative with a 95% lifetime rating—actually, I did campaign on stuff like this…it is stunning…He has become a Jack Kemp Democrat.  He needs to embrace it.

Now, there’s no doubt that Scarborough has overstated the case.  President Obama did not become a supply-sider overnight.  He made this deal with the devil because, as he said, “these are not abstract fights for the families that are impacted“:

As for now, I believe this bipartisan plan is the right thing to do.  It’s the right thing to do for jobs.  It’s the right thing to do for the middle class.  It is the right thing to do for business.  And it’s the right thing to do for our economy. It offers us an opportunity that we need to seize.

Obviously, Mr. Obama was in a difficult place.  He acknowledged that, “political wisdom may dictate fighting over solving problems,” but, he said,

I’m not willing to let working families across this country become collateral damage for political warfare here in Washington.  And I’m not willing to let our economy slip backwards just as we’re pulling ourselves out of this devastating recession.

Fair enough.  Except that the main reason the President found himself in this position at the end is because he was so weak at the beginning.  After the November 2 election, he essentially waved the white flag and invited Republicans to come in to finish the rout.

And, being Republicans, who know how to play hardball politics, that is exactly what they did.  Yesterday, here’s how John Boehner played it:

It’s encouraging that the White House is now willing to stop all of the job-killing tax hikes scheduled for January 1.

Get it? That’s the way it will play out, as this thing goes forward.  Obama will get exactly zero credit for any benefits from this deal.  Republicans will take all the praise and leave him with the ill effects. Despite what Scarborough says, Obama will still be a big-spending, liberal, socialist, anti-American scoundrel.

In his statement yesterday, liberals would have at least liked to hear our President call out the Republicans for what they have done.  But this is the closest he could get:

Now, Republicans have a different view.  They believe that we should also make permanent the tax cuts for the wealthiest 2 percent of Americans.  I completely disagree with this.  A permanent extension of these tax cuts would cost us $700 billion at a time when we need to start focusing on bringing down our deficit.  And economists from all across the political spectrum agree that giving tax cuts to millionaires and billionaires does very little to actually grow our economy. 

This is where the debate has stood for the last couple of weeks.  And what is abundantly clear to everyone in this town is that Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans, regardless of the cost or impact on the deficit.

All of that is, of course, true.  But it lacks the fighting force of Boehner’s “job-killing tax hikes” rhetoric. 

So, since Mr. Obama simply refuses to tell it like it is, I will revise his statement to read more Boehner-esque:

Now, Republicans have a different view.  And I not only completely disagree with their view, I believe it is chicken crap. They want to give the richest Americans, who already are cashing in big time in this otherwise dreary economy, a $700 billion dollar bonus.  Wait. That’s worse than chicken crap. That is a Joe Dirt, wagon-sized turd ball is what that is.  There isn’t an economist this side of the Heritage Foundation who thinks that it will help the economy.

And, yes, I screwed up at the beginning of this thing and allowed the Republicans to play me.  I know that.  And I’m sorry.  But now it has become abundantly clear to everyone in this town that Republicans are willing to screw 99% of the American people just to put more jingle in the pockets of their country club friends, no matter the impact on the deficit that they claim to be so damned worried about.  And I just can’t let that happen.

I promise to do better next time.  For now, I’ve got to do what I think is right for the American people.  But I will not let the Republicans do this to me again. 

And I will not let them do this to you again.

 

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