Jon Kyl doesn't think much about the government helping the unemployed who have been laid off because of the financial crisis, triggered by greedy excesses at the nation's biggest banks and mortgage lenders. He's afraid that providing additional unemployment compensation will keep people from working--as though it is laziness and not trying circumstances that has forced people out of jobs and on the public dole. Kyl clearly doesn't get it. He must not know the people I know, who were laid off from jobs here at auto supply companies in southeastern Michigan and have tried everything they could to find work, even trying to start their own businesses. That last is hard, when banks won't lend and folks don't have the basic cash to do it.
But Kyl does work hard for his friends. He would like to repeal the estate tax, so the country's millionaires and billionaires wouldn't ever have to pay their fair share of the tax burden. Most of them pay almost no taxes during their lifetimes--especially if their wealth is inherited and most of their income is financial. They get preferential rates for the taxes they do pay, they devise all kinds of scheme to defer payment (using loans to monetize assets that need not be sold til after death), and yet are the primary beneficiaries of the governmental stability and economy that ordinary folks' taxes pay for. The Republicans set the estate tax to return in 2011 at the pre-Bush tax cut rates and exemption levels.
So what is Kyl spending his energies trying to do? It's not trying to help the 8 million unemployed, that's for sure. Nope. He wants the Congress to pass yet another tax cut that benefits those extraordinary wealthy heirs who've done nothing to earn their inheritance. He knows that with the fiscal stress this country is under, there's no way Congress would pass the repeal the GOP pines for. And if nothing is done, we're back where we were pre-Bush (which is not a bad place to be--if only we could unwind Iraq and all the mess Bush made of the economy just like we can unwind the tax laws). So Kyl plans a "compromise"--getting the extraordinary wealthy half the tax cut that he'd hope to give them, with the idea that the rest will be doable at a later date. It is really the "death" tax--death of necessary government funding by a million cuts. And the corporatist senators, with no guts to fight the wealthy "entitlements" appear to be heading towards agreeing to Kyl's ridiculous proposal--an exemption of $5 million with zero tax, and a measly 35% rate on the excess over that amount. An earlier deal supposedly fell through in late May (thank goodness). See FireDogLake, Bullet Dodged: Bad Estate Tax Deal Dead (for now), May 20, 2010. But Kyl seems to think his "compromise" with a 35% rate on the excess over $5 million--i.e., a piddling 10% effective rate on an estate of $7 million (assuming no GRATs or other estate-tax avoiding techniques)-- will be resurrected from the dead with 60 senators willing to support this giveway entitlement for the ultra wealthy.
Why can't Congresspeople act like grown-ups. They bawl about deficits and say we absolutely have to cut Social Security benefits, even though we know that a very small tax increase (or even a very small difference from the conservative trustee estimates) can solve that problem (if there is one). But we can't do any further stimulus, they say, even though we have millions out of work and ordinary people are hurting while bankers and shadow bankers continue to make millions off the cheaper cost of fuinds handed them because of the governmental bailout--because it would cost too much. Yet at the same time that they whine about the deficit, cry crocodile tears over the cuts they so regretably find themselves forced to make in Social Security, they can contemplate another giveaway entitlement package for the ultra wealthy--one that will cost $15 billion a year.
Folks, get on your phones, your iPads, your computers, or hit the streets of DC or your local offices. Tell your Senators that you don't want to pass another tax break for the ultra wealthy while this country is facing huge deficits and talking about cutting Social Security for the elderly and vulnerable. Tell them that their sense of fairness and sound economic policy is terribly scrambled if they think passing a tax cut for do-nothing spendthrift heirs of millionaires will do anything other than put more money offshore.
The estate tax ought to be changed, all right. Make the exemption amount $3 million if you must. But also make the rate a graduated tax, so that estates worth $100 million are not taxed at the piddling rate that applies to estates that are just barely in excess of the exempt amount.
More than fifty of Germany's wealthiest citizens have just asked the government to add a 10% "rich tax" surtax on them for ten years to clear Germany's deficit. See Germany's Millionaires Volunteer to Pay Rich Tax, CNBC.com, Jun. 10, 2010. The Senate should take a lesson from that as far as what to do with the estate tax.