Melvin B. Miller
Editor & Publisher

Worthy of attention

When efforts in the U.S. Senate to repeal estate taxes after the year 2010 failed by only three votes a few weeks ago, African American leaders barely batted an eye. But the loss of revenue from the estate tax would have had serious consequences for those dependent on government programs.

Complex tax issues do not ordinarily arouse the interest of the public, because people are more concerned with what they have to pay to the IRS than with the benefits financed by tax revenues. And since estates must be valued at $2 million before there is any tax liability, few people are in that financial bracket.

Many African Americans are looking at the wrong end of the issue. While most are not in the tax bracket to be concerned about the liability, they should certainly be concerned about the loss of revenue if the estate tax is abolished. There will be intense pressure to cut the federal budget for education and a number of safety net programs.

Analysts have projected that abolition of estate taxes would result in more than a $1 trillion addition to the deficit in the ten years from 2012 to 2021. There would be about $808 billion in lost revenue and $222 billion in higher interest payments.

Under the present law, the amount of assets exempt from estate taxes will rise each year until the tax is abolished entirely in 2010. Then the law will return the next year to the tax levels existing in 2001 unless another law is passed to repeal estate taxes entirely.

There has been a major campaign by conservatives to create the impression that estate taxes are inappropriate and unfair. They have cleverly renamed the estate tax the “death tax,” a move intended to frame the debate as a simple question: Why should a person’s property be taxed only because he or she has suffered the misfortune of death?

However, another way of looking at the issue is that wealth provides enormous benefits to the affluent. One objective of American society is to enable all citizens to enjoy a comfortable standard of living, which the estate tax aids both by providing revenue to support government programs and by making it more difficult to concentrate enormous wealth in the hands of a few.

Indeed, the rigors of estate planning apply to only a few taxpayers. In any year fewer than 1,000 estates in the U.S. are valued at more than $20 million. In 2004 only 736 tax returns were filed with assets in excess of $20 million. Of these, 116 paid no tax at all. The 520 that paid taxes averaged only 19 percent of their values, for a total of $5.6 billion.

No one, neither laborer nor financier, likes to pay taxes. But it is generally recognized that taxes are necessary. However, conservatives have developed an unproven theory that lowering the tax rate on the wealthy benefits the economy.

Democrats developed the concept of progressive taxation, in which the tax rate would increase on incomes above certain levels. The Bush tax cuts were designed to destroy progressive taxes. The result? Taxpayers with an average income of $26 million paid about the same share of their income in taxes as those earning $200,000 to $500,000.

The other part of the tax cut strategy is to reduce the budgets or outright eliminate so-called “entitlement” programs in order to reduce the deficit. The black leadership must remain vigilant and active in opposition to the Bush tax reform agenda. Otherwise, programs needed for black progress may have their budgets fatally gutted.