And, that is why I have introduced the Responsible Estate Tax Act with Senators Harkin, Whitehouse, Sherrod Brown and Franken. This legislation would raise $318 billion over the next decade by establishing a graduated inheritance tax on estates over $3.5 million.
I actually can't take credit for this legislation. It is an idea that was developed 100 years ago by Republican President Teddy Roosevelt who said: "The absence of effective state, and, especially, national restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power ... Therefore, I believe in a ... graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate."
In order to gain support for the permanent repeal of the estate tax, or a major reduction in estate tax rates, the Republicans and lobbyists representing the super-rich are doing what they do best -- distorting reality. They have created a mythology that a responsible and a fair estate tax (or as they call it, a "death tax") will somehow destroy family farms and small businesses. Nothing could be further from the truth. As usual, they are using their old tactic of pretending to worry about the needs of ordinary people as a smoke screen to serve the wealthy special interests.
In terms of small businesses, the non-partisan Tax Policy Center has estimated that only 80 small businesses and farm estates throughout the country paid an estate tax in 2009 -- representing 0.003 percent of all estates. In other words, virtually every single small business and farm in this country would not pay any estate taxes under my bill, and because of protections in the tax code their effective tax rate was only 14%. And, the relatively few people who inherit small businesses that pay an estate tax are given 14 years to pay it off. They don't have to pay it all in one year.
What this debate is really all about is which side are you on? And the Republicans have answered loud and clear. When it comes to the needs of the unemployed and the uninsured, when it comes to protecting the interests of the struggling middle-class, the Republicans are deficit hawks. But if you are a billionaire family who needs a huge tax break that will cost hundreds of billions, no problem.
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