End of Campaign for "Paris Hilton Tax Break"
June 8, 2006 — -- After a 10-year effort and millions of dollars spent, some of the richest families in the United States weren't about to pop open the champagne today when the Senate rejected the bill to kill the estate tax.
A 57-41 vote fell three votes short of advancing the bill.Senate Majority Leader Bill Frist, R-Tenn., said the Senate would vote again this year on a tax that its opponents call the death tax. "Getting rid of the death tax is just too important an issue to give up so easily," he said.
The estate tax, a tax on the transfer of wealth after death, affects only a small portion of Americans but has caused quite a rift between people who support it and those who oppose it.
Those who support full repeal say the estate tax hurts farms and small businesses, and stands in the way of investing and job creation. Opponents say the government can't afford to lose this important source of revenue at a time of high deficits, and that the tax once again favors the rich over the poor.
Keeping It All in the Family
According to a report by Public Citizen and United for a Fair Economy, 18 families, including the Mars candy family, the Gallo wine family, the Dorrance Campbell soup family and the super-rich Waltons who own Wal-Mart have spent more than $200 million to hire associations, business and trade groups, and lobbyists to get Congress to kill what they call the death tax.
"This report exposes one of the biggest con jobs in recent history," said Joan Claybrook, president of Public Citizen, in a statement. "This long-running, secretive campaign funded by some of the country's wealthiest families has relied on deception to bamboozle the public not only about who must pay the estate tax but about how repealing it will affect the country."
Public Citizen claims that just more than one-fourth of 1 percent of all estates will owe any estate taxes in 2006.
According to Public Citizen, these cash-rich families with a total worth of $185.5 billion could have gotten a $71.6 billion windfall if the repeal had passed the Senate and had been sent to President Bush for his signature.
Democrats met yesterday to further counter Republican enthusiasm for the repeal.
"There is not one death tax in America," said Sen. Kent Conrad, D-N.D. "We do have a tax on wealthy estates ... only one-half of 1 percent of estates pay anything in America."
Congress has approved a schedule that increases the amount an individual can leave to heirs tax-free to $2 million from 2006 through 2008, and to $3.5 million in 2009. In 2010, Congress is supposed to repeal the increases altogether and return to $1 million in 2011.
"We have not found many instances -- and almost no instances when it comes to family farms -- in which the estate tax in some way inhibits passing on estates," said Sen. Barack Obama, D-Ill. "It creates some inconveniences for extraordinarily well-to-do people."
Share the Wealth
Nonsense, say proponents of the bill.
Sen. Jon Kyl, R-Ariz., wrote in a USA Today op-ed on June 5 that "A recent congressional Joint Economic Committee study said that this [estate] tax has reduced the amount of capital in our economy by about $847 billion over the past 60 years."
He wrote that the economy would have been a lot better off if "that capital had been available for private investment rather than being spent by the government."
Economists at the National Center for Policy Analysis agreed, saying the estate tax has never been an important federal revenue source. They estimated that the tax accounts for only 1 percent to 2 percent of federal collections.
Now that the Senate has rejected the bill, experts believe the Senate will probably pass a compromise package instead.
That may mean that the Paris Hiltons of the world may be sipping Laurent Perrier champagne instead of Cristal for some time.