April 22, 1997

Administration Attacks Bipartisan Effort to Repeal Estate Tax

Usually the White House is adept with its "spin" of putting its message in the best possible light -- to the point of saying one thing and meaning another. However, there are chance occasions when their meaning and their words exactly coincide. That may have been the case with Deputy Treasury Secretary Lawrence H. Summers [from today's Washington Post]:

A senior Clinton administration official [Summers] yesterday condemned congressional efforts to roll back inheritance taxes as part of this year's federal budget agreement, declaring proponents of such tax relief to be motivated by "selfishness."

Not content with a passing slap at the deceased, the bereaved, and those who wish to aid them in the effort to leave a family's assets with the family and not with Washington, Summers elaborated further -- attacking the effort on substantive as well as moral grounds: "In terms of substantive arguments," the evidence..."is about as bad as it gets. . . . When it comes to the estate tax, there is no case other than selfishness" [Washington Post, 4/22/97].

On one hand such breathtaking bluntness really speaks for itself. It says a lot about the White House -- and presumably very accurately, coming as it does from "a senior Clinton administration official." On the other hand, it says nothing accurate about the estate tax.

What It Says About the Clinton Administration's View of 'Selfish'

Evidently, the White House has redefined the concept of being selfish from excessive concern with oneself to merely wanting your family to retain your property.

• You are selfish if you want to leave your family your assets.
• You are selfish if you want to make a gift of your assets.
• You are selfish if you want the farm or business that your parents established to be there for your children.

What It Doesn't Say About the Estate Tax: Ignoring Confiscation

The President and his officials in their blanket rejection of substantive reasons for reducing the confiscatory estate tax ignore what even members of their own party in Congress must think are quite valid reasons for supporting a reduction. In the last Congress, there were 60 bills introduced to amend the estate and gift taxes. In the current Congress, 49 such bills have been so far introduced. Most prominent among them are S. 2, Majority Leader Lott's bill that would increase the unified estate and gift tax credit to $1 million, create a family-owned business exclusion, and ease payment of the taxable portion of an estate, and S. 479, Senator Grassley's bill to similarly reduce the estate tax burden.

The Grassley bill has several Democratic senators as cosponsors, including Senators Baucus, Breaux, Torricelli, Landrieu, Kerrey, Murray, and Ford. Evidently many members see "substantive arguments" in favor of reduction that have eluded the Administration.

• First, the estate tax is confiscatory. Assets subject to it have already been subject to federal payroll, excise, and income taxes. Once the money is invested, the return is subject to corporate and capital gains taxes. All these actions carry with them a tax burden, yet the only action that has taken place with the estate tax is death.
• Second, the estate tax is unfair. Not since 1987 has the current $600,000 exclusion been increased. It therefore has been eroded by 10 years' worth of inflation and is worth 38 percent less -- just $372,000 in 1987 dollars. This is in contrast to the income tax code which is indexed to remove the effects of inflation.

Who's More Entitled To Your Money?

The Administration's position begs the question as to who is really entitled to the money that your family earns, saves, and invests. In contrast to the "selfishness" of wanting to leave your money to your family, it is also worth noting that the Clinton Administration proposed increasing welfare spending in its latest budget by $22 billion -- $18 billion for noncitizens. That $18 billion is roughly the cost of S.2 ($18.5 billion/5 yrs) for reducing the estate tax burden.

Quoting Mr. Summers, "You have to raise revenue somewhere..." In fact, you don't "have" to raise revenue, you could simply restrain the growth of federal spending and not only not have to "raise revenue," but actually cut taxes -- something that Congress did and President Clinton vetoed last year.

The White House Just Doesn't Get It

"Getting it" apparently lies at the bottom of the White House's concerns and standing moral definitions and substantive arguments on their heads are no impediment to going after "it." In the past they have been willing to use class warfare in their politics of division, not satisfied with that gap, they have now sought the chasm between dead and living for their purpose. Yet last year's tax cut veto and this recent statement by a Treasury official lead one to think that in fact the White House just doesn't get it -- that it's your money first, not theirs. And you should be able to make sure that it's your family's too.