4.12.2005

Help Save the Millionaires of America

Tax time for most of us doesn't mean the same thing for the wealthy. Lots of stuff here about how the middle class is getting screwed.

First up, the The Paris Hilton Tax Cut...

The same people who insist that critics of Social Security privatization should offer reform proposals of their own are working feverishly to eliminate alternatives that might reduce the need for benefit cuts or payroll tax increases.

I refer to the fact that House Republican leaders have scheduled a vote this week to abolish the estate tax permanently. Under a wacky provision of the 2001 tax cut designed to disguise the law's full cost, Congress voted to make the estate tax go away in 2010, but come back in full force in 2011.

With so many other taxes around, it's hard to understand why this is the one Congress would repeal. It falls, in effect, on the heirs to the wealthiest Americans. Fewer than 1 percent of the people who died in 2004 paid an estate tax, and half the revenue from the tax came from estates valued at $10 million or more.

Yet, because the wealthy have gotten wealthier over the past three decades or so, the estate tax produces a lot of money. Counting both revenue losses and added interest costs, complete repeal of the estate tax would cost the government close to $1 trillion between 2012 and 2021, according to the Center on Budget and Policy Priorities.

[snip]

The Friends of Paris Hilton realize that as federal deficits mount and rising Medicare costs loom, the case for the total repeal of the estate tax grows steadily weaker. That's why they're hoping they can sucker defenders of estate taxes into a so-called compromise that gives away the store -- the store, in this case, going to Neiman-Marcus shoppers, not to those who rely on Target.

This is an instructive moment. What we are having is not a real debate on the future of Social Security but a sham discussion in which the one issue that matters to the governing majority is how to keep cutting taxes on the wealthiest people in our country.

Those who vote to repeal the estate tax this week will be sending a clear message: They see the "crisis" in Social Security as serious enough to justify benefit cuts and private accounts. But it's not serious enough to warrant a minor inconvenience to those who plan to live on their parents' wealth.

Oh E.J., if Terry Neal weren't our man at the Post right now you might be getting more of our attention... thanks for these thoughts (and more).

But where does this NEED to save our bazillionaires more and more $$$???

Well it turns out that Jonathan Weisman at the post has a few answers:

In 1992, when heirs to the Mars Inc. fortune joined a few other wealthy families to hire the law firm Patton Boggs LLP to lobby for estate tax repeal, the joke on K Street was that few Washington sightseers had paid so much for a fruitless tour of the Capitol.

Today, the House is expected to vote to permanently repeal the estate tax, moving the Mars candy, Gallo wine and Campbell soup fortunes one step closer to a goal that once seemed quixotic at best: ending all taxation on inheritances.

[snip]

Last month, Graetz and Yale political scientist Ian Shapiro published "Death By A Thousand Cuts," chronicling the estate tax repeal movement as "a mystery about politics and persuasion."

"For almost a century, the estate tax affected only the richest 1 or 2 percent of citizens, encouraged charity, and placed no burden on the vast majority of Americans," they wrote. "A law that constituted the blandest kind of common sense for most of the twentieth century was transformed, in the space of little more than a decade, into the supposed enemy of hardworking citizens all over this country."

The secret of the repeal movement's success has been its appeal to principle over economics. While repeal opponents bellowed that only the richest of the rich would ever pay the estate tax, proponents appealed to Americans' sense of fairness, that individuals have the natural right to pass on their wealth to their children.

In other words the children & grandchildren of the wealthy are selfish and are taking you, and your representatives, for suckers.

And it's working! Yes, they got you with that bastard Frank Luntz came up with the whole "death-tax" bit. Well you folks thought that you were saving small business, but you weren't: you were just helping Paris Hilton. HAHA Hilarious! Don't believe us?
The most recent Internal Revenue Service data back opponents' claims. In 2001, out of 2,363,100 total adult deaths, only 49,911 -- 2.1 percent -- had estates large enough to be hit by the estate tax. That was down from 2.3 percent in 1999. The value of the taxed estates in 2001 averaged nearly $2.7 million.

Congressional action since 2001 will likely bring down the number of taxable estates still further. President Bush's 10-year, $1.35 trillion tax cut in 2001 began a decade-long phase-out of the estate tax. The portion of an estate exempted from taxation was raised from $675,000 in 2001 to $1.5 million in 2004. Next year, the exemption will rise to $2 million for individuals and $4 million for couples.

HAHAHAHAHA! Paris Hilton laughs at you rabble for being silly enough to not pay attention and to help her save money while you lose your jobs, healthcare and legal protections! WHEEEEE! Welcome to Bizzaro world - please watch your step.

Oh but it gets better: How rich get richer: all the rest pay more IRS scrutinizes wage earners but takes investors at their word under separate, unequal system
Get a raise last year, or a bigger job, or make some extra money working overtime? You'll pay the tax man.

Too bad you did not get a job as a hedge fund manager. If you had, you would not owe any taxes come April 15 on your share of the hedge fund's profits.

Hedge funds are unregulated investment pools open only to rich individuals and big institutions. They operate offshore. And for their managers, some of whom earned a half-billion dollars last year, taxes are deferred as long as they keep the hedge fund open and the profits offshore, while you get taxes deducted from your paycheck. And, thanks to our government, their tax avoidance is perfectly legal.

What few of us realize is that the United States has two income tax systems, separate and unequal.
Oh we realize, we realize... do you?
One system is for wage earners. Congress requires that your employer report your pay so Internal Revenue Service computers can check up on your tax return. Banks report interest. Brokerages report dividends. You must provide a Social Security number for each child you claim as a dependent. Congress does not trust you.

The other system is for business owners, landlords and investors. Congress does not require such independent reporting, saying that would be a burden.
Sounds like we're back to the 19th century! Hmmm, child labor is probably just around the corner (just like good old Grover Norquist wants!)
Studies by the government show that investors understate their capital gains by close to $200 billion each year. The IRS has no mechanism -- none - - to check up on capital gains, according to two professors, Jay Soled, who teaches business at Rutgers in New Jersey, and Joseph Dodge, who teaches tax law at Florida State University. They estimate that capital gains tax cheating alone costs the government $29 billion annually.

But IRS auditors will catch people who cheat, right? Not really.

For more than a decade, Congress has steadily eroded the capacity of the IRS to enforce the tax laws, with one exception. Since 1997, Congress has approved more than $1 billion in extra funds to audit the working poor. In recent years, parents who work full time at the minimum wage have been as much as eight times more likely to be audited than millionaire investors in partnerships.

The wealthy who mine the tax system face little risk of getting caught. Only 1 partnership in 400 gets audited, and agents say many audits are superficial and closed quickly to make statistical reports create the appearance of toughening enforcement.
We laugh so that we do not cry... we laugh so that we do not cry...

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