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Horowitz: It’s Time to Revive the “Death” Tax

Tuesday, November 21, 2017

 

“No Taxation without Respiration”, the long-time rallying cry of conservatives and Republicans who have made it their mission to do away with the estate tax, is one of the most effective political slogans ever devised. These anti-estate tax proponents cleverly renamed the estate tax the death tax and have largely succeeded in exempting all but a very small percentage of Americans from paying it.

The tax cut legislation that passed the House of Representatives last week does away with the federal estate tax completely and the Senate version, which details have yet to all be made public, reportedly takes another big bite out of it.

This is despite the fact that, according to the Joint Commission on Taxation, in 2017, only 2 out of 1,000 estates will pay any estate taxes. This is due to the fact that the current exemption is $5.49 million per person and nearly $11 million per couple-- a dramatic increase from the $650,000 that was exempted in 2001.  Once the estate tax is completely phased-out, it would cost the Federal Treasury $269 billion over 10 years, either increasing the federal debt, forcing cuts in vital programs, or triggering future tax increases.

The fact that we continue to go down this path when only a small sliver of the richest Americans now pay the estate tax is a tribute to the effectiveness of the long-term campaign run against it. As public policy, however, when the current Republican tax cut legislation explodes the deficit and is by all objective analysis conducted highly tilted to the rich, it makes little or no sense.

In fact, the so-called ‘death tax’ is not a tax on dead people; it’s a tax on inheritances. As more precisely defined by the Center on Budget and Policy Priorities, “the federal estate tax is a tax on property (cash, real estate, stock, or other assets) transferred from deceased persons to their heirs.” The Center notes that contrary to the claims of double-taxation by proponents of doing away with the estate tax, most of the income and assets people inherit have yet to be taxed.

The nation’s second richest man, Warren Buffett, called eliminating the estate tax, ‘a terrible mistake’ during an interview on CNBC last week. As he has done many times over the years, Buffet pointed out that the estate tax contributes to the idea of the United States as a meritocracy and provides at least some brakes to advancement based on accidents of birth.  Buffett told CNBC, "I don't think we should have our 'Olympic team' 20 years from now be the eldest sons of the 'Olympic team' currently."

Given that we need to raise a certain amount of revenue to fund the federal government, the estate tax is one of the more sensible ways to do it.  Instead of doing away with it, we should return to a lower exemption of about $1 million or so.  This would still only impact a small percentage of the richest Americans whom despite some taxes taken out will still inherit robust sums.

There is no prospect, of course, of an estate tax expansion happening in the short-term. For now, the best we can hope for is that Congress ends up rejecting the ill-advised effort to do away with it completely.

Rob Horowitz is a strategic and communications consultant who provides general consulting, public relations, direct mail services and polling for national and state issue organizations, various non-profits and elected officials and candidates. He is an Adjunct Professor of Political Science at the University of Rhode Island .

 

Related Slideshow: GoLocal: Benchmark Poll, October 2017

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Sponsor: GoLocalProv

Sample: N=403

Rhode Island General Election Voters Margin of Error: +/- 4.9% at 95% Confidence Level

Interviewing Period: October 9-11, 2017

Mode: Landline (61%) and Mobile (39%)

Telephone Directed by: John Della Volpe, SocialSphere, Inc.

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Are you registered to vote at this address?

Yes: 100%

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When it comes to voting, do you consider yourself to be affiliated with the Democratic Party, the Republican Party, Moderate, or Unaffiliated with a major party?

Unaffiliated: 49%

Democrat: 32%

Republican: 15%

Moderate: .4%

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Will you definitely be voting, will you probably be voting, are you 50-50...

Definitely be voting: 78%

Probably be voting: 13%

50-50: 9%

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In general, would you say things in Rhode Island are headed in the right direction or are they off on the wrong track?

Right track: 39%

Wrong track: 45%

Mixed: 10%

Don't know/Refused: .6%

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What would you say is the number one problem facing Rhode Island that you would like the Governor to address?

Jobs and economy:  21%

Education: 12%

Taxes: 12%

Roads: 12%

State budget: 9%

Corruption/Public integrity: .8%

Healthcare: 3%

Governor: 3%

Homelessness: 2%

Immigration: 2%

Other: 7%

Don’t know: .9%

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Over the past three years or so, would you say the economy in Rhode Island has improved, gotten worse, or not changed at all?

Changed for the better: 35%

Changed for the worse: 16%

Not changed at all: 43%

Don't know/Refused: 5%

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Over the same time, has your family's financial situation improved, gotten worse, or not changed at all?

Changed for the better: 26%

Changed for the worse: 19%

Not changed at all: 54%

Don't know/Refused: 1%

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Recently, a proposal has been made to permit the issuance of $81 million in bonds by the State to build a new stadium for the Pawtucket Red Sox. If there was an election today on this issue, would you vote to approve or reject issuing $81 million in financing supported moral obligation bonds to build the stadium?

Net: Approve: 28%

Definitely approve: 15%

Probably approve: 14%

Net: Reject: 67%

Probably reject: 19%

Definitely reject: 48%

Don't know: 4%

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Could you please tell me your age?

18-24: 7%

25-34: 15%

35-44: 15%

45-54: 20%

55-64: 17%

65+: 25%

Don't know/refused: 1%

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What was the last grade you completed in school?

0-11: 2%

High school grad: 16%

Technical/Vocational school: 1%

Some college: 23%

College grad: 34%

Graduate degree: 24%

Don't know/refused: 1%

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$50,000 or less: 27%

More $50,000 but less than $75,000: 13%

More $75,000 but less than $100,000: 13%

More $100,000 but less than $150,000: 17%

$150,000 or more: 13%

Don't know/refused: 17%

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What particular ethnic group or nationality - such as English, French, Italian, Irish, Latino, Jewish, African American, and so forth - do you consider yourself a part of or feel closest to?

American/None: 21%

English: 13%

Italian: 13%

Irish: 12%

Black or African American: 6%

Latino/Hispanic: 6%

French: 6%

Portuguese: 3%

Jewish: 3%

German: 1%

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Excellent: 13%
Good: 12%
Fair: 14%
Poor: 57%
Never heard of:  0%
Cannot rate: 3%

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Excellent: 22%
Good: 29%
Fair: 23%
Poor: 15%
Never heard of: 6%
Cannot rate: 6%

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Excellent: 17%
Good: 22%
Fair: 21%
Poor: 28%
Never heard of: 6%
Cannot rate: 7%

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Would you say that David Cicilline has done an excellent good, fair or poor job as a Member of Congress?

Excellent: 9%
Good: 29%
Fair: 21%
Poor: 27%
Never heard of: 6%
Cannot rate:  8%

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Would you say that James Langevin has done an excellent good, fair or poor job as a Member of Congress?

Excellent: 7%
Good: 30%
Fair: 20%
Poor: 18%
Never heard of: 13%
Cannot rate: 11%

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Excellent: 6%
Good: 28%
Fair: 30%
Poor: 31%
Never heard of: 1%
Cannot rate: 3%

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Excellent: 3%
Good: 16%
Fair: 21%
Poor: 8%
Never heard of: 26%
Cannot rate: 25%

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Would you say that Peter Kilmartin has done an excellent good, fair or poor job as Attorney General?


Excellent: 3%
Good: 20%
Fair: 28%
Poor: 17%
Never heard of: 13%
Cannot rate: 19%

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Would you say that Seth Magaziner has done an excellent good, fair or poor job as General Treasurer?

Excellent: 4%
Good: 18%
Fair: 24%
Poor: 13%
Never heard of: 21%
Cannot rate: 21%

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Would you say that Nellie Gorbea has done an excellent good, fair or poor job as Secretary of State?

Excellent: 5%
Good: 21%
Fair: 21%
Poor: 10%
Never heard of: 20%
Cannot rate: 23%

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Would you say that Jorge Elorza has done an excellent good, fair or poor job as Mayor of Providence?

Excellent: 4%
Good: 24%
Fair: 24%
Poor: 22%
Never heard of: 9%
Cannot rate: 15%

 
 

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