But 10 Democrats, led by Senator Blanche Lincoln of Arkansas, defied Mr. Reid. They joined with Republicans to urge an increase in the value of estates exempt from the tax above the level backed by Mr. Obama (to $5 million for individuals and $10 million for couples) and a cut in the maximum tax rate (to 35 percent from the current 45 percent).
A few opponents of repealing the tax have suggested that Ms. Lincoln, who is up for re-election next year, is looking out for the heirs of prominent Arkansas family businesses like Wal-Mart and Tyson Foods.
“The real beneficiaries are indeed the same kind of people getting the big bonuses on Wall Street,” said Robert Greenstein, executive director of the liberal Center on Budget and Policy Priorities.
A new analysis by the nonpartisan Tax Policy Center estimated that only 100 farms and small businesses in the entire country would be subject to the estate tax under Mr. Obama’s plan, a number that shrinks to 40 under the proposal Ms. Lincoln sponsored with Jon Kyl of Arizona, the No. 2 Republican in the Senate. A subsequent analysis by the center raised the prospect that there may be no farms or small businesses in Arkansas vulnerable to the tax.
Source: "Fate of Estate Tax Imperils Obama’s Ambitions" By CARL HULSE - NY Times - April 11, 2009
Republican majorities in Congress are unrelenting in their drive to pass $70 billion in new tax cuts this fall, most of them for wealthy investors, and $35 billion in spending cuts, most in programs that benefit the poor.
Source: "Washington's Cold Shoulder" - NY Times - October 22, 2005
"We should cut the pork, not the poor." - Rep. Jim Ramstad, a Minnesota Republican who dissented from his party [a]fter immense pressure from Republican leaders [prompted] the House [to pass] $50 billion in budget cuts -- including reductions in Medicaid, food stamps and child support enforcement -- on a 217-215 vote.
Source: "Dysfunctional democracy" by E.J. Dionne, Jr. - Washington Post Writers Group - 11.23.05
If House Republicans and President Bush have their way, more than half of tax reductions over the next five years will go to the top 1 percent of households, those with average incomes of $1.1 million.
House leaders are pushing a $63-billion tax-cutting package that would extend President Bush's tax cut on stock dividends, protect oil companies from a windfall profits tax and shield people caught using illegal tax shelters.
[In the] Senate bill ..., almost half of the bill is devoted to shielding middle-income and upper-income families from the alternative minimum tax.
[B]udget deficits [are] likely to widen again next year, even as Congress cuts money for programs like Medicaid and child support[.] Staunch fiscal conservatives, seeking to attack the budget deficit, forced Republican moderates to vote for politically painful cuts in Medicaid, student loans and child-support enforcement.
Source: "Republicans Are Deeply Split Over How to Apportion New Tax Cuts" By EDMUND L. ANDREWS - NY Times - November 26, 2005
Suddenly, congressional leaders have rediscovered fiscal restraint. After squandering a $2 trillion surplus and creating a tsunami of red ink, Republicans have come to see the benefits of simple arithmetic.
Oddly, their budget epiphany occurred only after they were asked to help the desperate victims of Hurricane Katrina. With Gulf Coast residents who have lost houses, jobs and even loved ones requesting assistance, the GOP wants to halt federal spending.
Congress didn't get fiscal religion when it passed a Medicare drug benefit that will cost $720 billion in its first 10 years, a massive boondoggle that will do far more for the pharmaceutical industry than it will for elderly patients. They have barely batted an eye at the bill for the war in Iraq, running about $5 billion a month.
They didn't care about spending when they passed a pork-laden energy bill, which, among other things, gives the oil industry billions in tax breaks and subsidies -- classic corporate welfare. They didn't mind deficits when they passed an obnoxious transportation bill that includes $230 million for a bridge to connect a remote Alaskan airport to a town of 13,000 and another $300 million for an Alaskan highway that goes nowhere.
Source: "Katrina bait and switch" by Cynthia Tucker - Universal Press Syndicate - 10.17.05
More than a quarter of American children - and half of black children - belong to families too poor to fully qualify for the $1,000-a-year child tax credit, which President Bush signed four years ago and has cited in arguing that his program of sweeping tax cuts helps low-income families, a new study has found.
The numbers come from an analysis by the Tax Policy Center, a nonpartisan group in Washington
In 2001, Mr. Bush signed a compromise that extends the credit, in the form of an annual government check, to some working families that earn too little to owe income tax. Still, the study found that the families of 19.5 million children were too poor to receive the full $1,000 benefit. About half get a partial benefit, and half get nothing. More than three-quarters have parents who work.
"These aren't people who are lounging around all day," said [Senator Blanche Lincoln, Democrat of Arkansas], whose bill would extend the payments to about a million children, at a cost of a little more than $1 billion a year. "They're working to provide for their families."
Told of the study, which will be published Monday, some conservatives repeated their opposition to making the credit more of an antipoverty program. "This is completely and utterly predictable," said Dan Mitchell, an economist at the Heritage Foundation, a Washington research group influential with Capitol Hill Republicans. "People who don't pay taxes don't get a tax cut."
While most of the $1.3 trillion in tax cuts passed that year went to wealthy families, Mr. Bush cited the child credit in arguing that tax cuts were "principled" and "compassionate." Currently, families that earn less than $11,000 are ... excluded, so a family with one full-time worker at the minimum wage of $5.15 an hour receives nothing. Above that, families receive $150 for every $1,000 they earn, up to a maximum of $1,000 per child. A family with two children gets the full benefit when its earnings reach about $24,300.
Both sides in the tax credit debate have cast their arguments in moral terms. "The income gap is wide and growing," [Senator Olympia J. Snowe, Republican of Maine] said. "We're talking about giving a helping hand to families who through no fault of their own are at or near poverty."
Source: "Study Finds Many Children Don't Benefit From Credits" By JASON DePARLE - NY Times - October 2, 2005
If estate or inheritance taxes were frozen at today's levels, they would have almost no impact on family farmers and most small-business owners.
And while opponents contend that the estate tax is a "double tax," many of the earnings that are subject to it were never taxed in the first place.
[D]espite the populist rhetoric and oft-repeated horror stories about families being forced to sell their farms in order to pay estate taxes, the battle is over a very large amount of money held by a very small number of families. A report last month by the Congressional Budget Office found that in 2000 only 2 percent of all estates - about 52,000 - were subject to any estate tax. At that point, taxes were imposed only on estates worth $675,000 or more. The limit rose to $1.5 million in 2004, and if that limit had been in effect in 2000, only 13,771 estates - fewer than 1 percent - would have been subject to the tax.
Killing the estate tax is one of President Bush's top priorities, and the House of Representatives has already passed a repeal measure four different times. Unable to muster the 60 votes they need to overcome a Democratic filibuster, Senate leaders are now vowing to push for full repeal as soon as they come back in September.
Source: "Death Tax? Double Tax? For Most, It's No Tax" By EDMUND L. ANDREWS - NY Times - August 14, 2005
President Bush has excoriated the "death tax," as he calls the estate tax. But his profligacy will leave every American child facing a "birth tax" of about $150,000.
That's right: every American child arrives owing that much, partly to babies in China and Japan. No wonder babies cry.
Source: "A Glide Path to Ruin" - By NICHOLAS D. KRISTOF - NY Times - June 26, 2005
The number of farms on which estate tax is owed when the owners die has fallen by 82 percent since 2000, to just 300 farms, as Congress has more than doubled the threshold at which the tax applies, the Congressional Budget Office said in a report released last week.
The number of farms subject to the estate tax, always a minority, has fallen because Mr. Bush persuaded Congress to raise the threshold for estate taxes to $1.5 million, double that for married couples, for last year and this year. With simple planning, couples with children can shield several million more dollars from the tax.
President Bush, the American Farm Bureau Federation and the National Cattlemen's Beef Association have asserted that the estate tax is destroying family farms. None, however, have cited a case of a farm lost to estate taxes, although in June 2001 Mr. Bush said he had talked to such farmers.
The cattlemen's group, in materials distributed Friday [7/8/05], asserted that $125,000 of tax was owed on farm estates valued at $1 million even though estates of that amount were exempt from tax.
Neil E. Harl, an economics professor at Iowa State University whose expertise in estate tax planning for farmers has made him a household name in the grain belt, said many Americans had a false impression that the estate tax was destroying family farming.
He said the Congressional study "adds to the weight of the evidence that this is a myth that has been well spun."
"Farms, in particular," Mr. Harl said, "are not in jeopardy because of estate taxes."
Michael J. Graetz, a professor at Yale Law School who was a tax policy official in the administration of President George Bush, said repeal was primarily a benefit to people with large estates held in stocks and other securities, not to farmers.
Source: "Few Wealthy Farmers Owe Estate Taxes, Report Says" By DAVID CAY JOHNSTON - NY Times - July 10, 2005
The number of affluent individuals and married couples who paid no federal income taxes jumped more than 15 percent in 2002, to 5,650, new government data showed yesterday.
Among that high-income group, however, almost 83,000, or one in 33, paid less than a dime in taxes for every dollar of income. An additional 79,000 paid less than 15 cents. The average for all Americans was 13 cents.
The I.R.S. report said that "the most important item in eliminating tax" was taking income in the form of tax-exempt interest on state and municipal bonds. Nearly two-thirds of those who lived tax free reported income from such bonds.
Source: "The Nontaxpaying Affluent Grew by 15% in One Year" By DAVID CAY JOHNSTON - NY Times - July 1, 2005
Fifty years ago, corporations paid 60 percent of all federal taxes. But by 2003, that was down to 16 percent. So individual taxpayers have to make up the difference, as corporate profits soar and wages fall.
Source: "April 15th: You're getting screwed" by Molly Ivins - Creators Syndicate - 4/14/05
In its February 10 issue, the business magazine Economist noted that in 2004 "America’s after-tax profits rose to their highest as a proportion of GDP for 75 years.... The flip side is that labor’s share of the cake has never been lower.... Over the past three years American corporate profits have risen by 60 percent, wage income by only 10 percent."
Source: "Real wages fall as attack on US workers intensifies" - By Joseph Kay - World Socialist Web Site- 16 May 2005
Bush's cuts have brought the United States tax code closer to a system under which income from savings and investments aren't taxed at all and revenues would be raised exclusively from taxes on labor. The consequence of those policies is that a greater proportion of tax revenues now come from what the middle class earns and a smaller proportion from what the wealthy earn. Whatever changes the Bush administration pursues, there is every reason to believe it will aim to move further in that direction. "I think Bush does have a master plan on tax policy," Stephen Moore [former budget expert at the conservative Heritage Foundation and now a senior fellow at the Cato Institute] says. "The goal is to eliminate all taxes on savings and investment. That means no capital-gains tax, no dividends tax, no estate tax, no tax on interest."
"We're already seeing the current account deficit increase by $600 billion a year," [said John Podesta, the last chief of staff to server under Clinton]. "People are mortgaged to the hilt. The middle class is now being fundamentally squeezed. They've gotten no benefit from the tax reduction. G.D.P. growth is going almost all to corporate profits. And we're creating an overall economic circumstance in which the dollar is certain to drop, interest reates are certain to rise and growth over the long term looks kind of sketchy."
To understand why the G.O.P. has pursued such a policy, Podesta argues, you have to look at the political dividends, not the economic ones. "What are the structural elements of what they are trying to do with the tax code? I would say there are three. One is to eliminate taxation on wealth and investment. Second is to create a revenue stream that aims at a government the size of which we haven't seen almost since before the Depression." Already, he points out, the government takes in far less than it spends, forcing the Bush administration to borrow billions of dollars to cover the revenue lost from cutting taxes. "Three is that if you build in taxation only on wage income, you have massive resistance by the middle class to letting those taxes rise. So you've kind of locked in three structural components that end up being highly beneficial to wealth people."
Source: "Breaking the Code" by Nicholas Confessore - New York Times Magazine - 1/16/05
Because spending [in Bush's 2006 budget] has not been cut to match revenues, but instead is increasing, the federal debt is growing rapidly.
That means that the tax cuts people are noticing today on their tax returns are, in the aggregate, just a deferral of taxes, along with interest, into the future. For everyone who pays federal income taxes this year, a dime of every tax dollar will go toward interest on the national. Debt, a portion expected to rise as the debt grows and interest rates rise.
While nominal income tax rates are progressive, rising to as high as 35 percent of earned income for the top 1 percent, the actual tax rates paid are no longer the highest for the people with the highest income, the latest I.R.S. data shows.
A major reason is the cut in the maximum wage tax rate, combined with lower taxes on dividends and capital gains, major sources of income for the richest Americans. Those who earned $500,000 to $1 million paid 27.9 percent of their income in federal income taxes in 2002. Those who made $10 million or more paid 26.1 percent, the I.R.S. tables show. The 400 highest-income Americans paid about 18 percent of their income in federal income taxes that year, a Sunday Business analysis applying 2002 tax rates to I.R.S. data for the year 2000 shows. The I.R.S. issued data on the 400 highest incomes for 1992 through 2000, but the Treasury Department has put a lock on later figures.
Studies in tax journals have shown that one result of lax law enforcement is that cheating by those reaping big capital gains can be an easy and nearly risk-free proposition. Just one technique, overstating the cost of a stock or other assets, costs the government $250 billion in taxes annually, according to a study by Jay A. Soled, a business professor at Rutgers, and Joseph M. Dodge, a law professor at Florida State University.
While lax rules and weakened enforcement benefit both those paid under the table and cheaters among the richest taxpayers, the government efficiently and effectively taxes wage earners.
The I.R.S., in reports to Congress, has said that it captures nearly all wage income, but a much smaller share of income to investors, landlords and business owners -- perhaps less than 70 percent. That is because employers of legal wage earners must report these payments to the I.R.S., while Congress lets business owners, investors and landlords control most of what they tell the I.R.S. about their finances.
Source: "The Bill's Lower Now. What About 4/15/11?" by David Cay Johnson - New York Times 2/13/05
Some opponents [of retaining the estate tax] complain that the estate tax imposes an unreasonable burden on the owners of small businesses and farms. But inheritances of less than $1.5 million ($3 million for married couples) are currently untaxed, and exemption that will rise to $3.5 million ($7 million for couples) by 2009. Far fewer than 1 percent of heirs will ever pay a penny of estate tax; most of the revenue from estate taxes comes from inheritances larger than $10 million
Repealing the estate tax would reduce federal revenues by close to $1 trillion from 2012 to 2021, according to the Center on Budget and Policy Priorities. This shortfall would require at least one of the following steps: raising income taxes, sales taxes or other taxes; further cuts in government services; or increasing the rate at which we borrow from the Chinese, Japanese and others.
Source: "Economic Scene" by Robert H. Frank - New York Times - 5/12/05
This is not about saving mom-and-pop shops or the family farm, as President Bush and his allies would have you believe. Repealing the estate tax would cut taxes for the top 2 percent of Americans at an estimated cost of $745 billion during the first 10 years of repeal. That is more than the United States is projected to budget for homeland security.
Another bad proposal is to shield owners of privately held family businesses from the estate tax, including some of the richest families in America. (Despite the scaremongering of pro-repealers, nearly all family farms and small businesses are already exempt from the estate tax.) The rationale is that unless they're protected, such families might have to sell some of the business's assets to pay the estate tax, imperiling the business. That's nonsense. Business owners have a responsibility to plan for the estate tax bill that will come due when they die, the same way a freelance consultant must set aside a chunk of his fees to avoid being caught flat-footed on April 15.
Source: "Repeal Lite" - NY Times - 6/21/05
Source: NY Times - 8/14/05