American Family Business Foundation Pushes Tax Relief For Wealthy Heirs

The secretive American Family Business Foundation is busy pushing for tax relief for those waiting heirs.  It wants the deficit reduction commission to include repeal of the estate tax as a job creating measure, according to BNA, 202 DTR G-5 (Oct. 19. 2011). 

The gist of the message is this:  If only you'll do "dynamic scoring" (that takes into account changes in taxes because of the changes in taxes), you'd conclude that eliminating the estate tax (saving wealthy families billions in taxes) will create jobs, because those wealthy people will now invest their extra billions rather than spending it wastefully.  Why, you'd achieve 30% of the $1.2 trillion in deficit reductions that you need just be eliminating that stream of revenue to the federal government.

Dynamic scoring is nothing but magical, since you can tweak the numbers until they yield the kinds of figures you want.  According to the AFBF, dynamic scoring can turn a losing proposition (repeal costs the government a 6.54% increase in budget deficits) into a winning proposition (repeal raises revenues that reduce the deficit by 5.17%)!

Dynamic scoring would allow JCT to take into account changes in national economic output as a result of the estate tax repeal—a method that would result in a $3 trillion increase in U.S. gross domestic product over 10 years, said the study's author, Stephen Entin.

Entin, president of the Institute for Research on the Economics of Taxation, said the current “static” scoring method used by JCT would show that an estate tax repeal would raise the federal budget deficit by 6.54 percent by 2021, but incorporating the dynamic scoring method would cut the deficit by 5.19 percent over the same period. Id.

Trying to sell estate tax repeal and the loss of billions of tax revenues as a revenue raiser, on the grounds that cut taxes will be invested in ways that create new jobs, has got to be a new low in the pro-business, anti-government, anti-safety net, pro-tax-cuts-for-the-wealthy arguments that the radicalized right feels free to make now.  This is like the 2004 argument that repatriation would create 6 million new jobs.  It didn't, but it hasn't stopped the same pro-business groups from arguing that another repatriation deal will surely create 6 million new jobs.

Congress ought to recognize that the inequality in the US has reached truly problematic levels, and that the various tools offered by the tax system, including the estate tax, should be used to redress the imbalance.  Instead of repealing the estate tax, it should be turned into a graduated tax with top rates at 65 or 70%.