Destroying Social Security may not be the only “reform” the faltering Bush administration has trouble passing this year. Apparently, a permanent repeal of the estate tax is facing strong opposition, only this time from traditional GOP allies: the insurance industry.
Leading the charge for the life insurers, who stand to lose a combined $12 billion in premiums if the estate tax is ended, is Frank Keating, the Republican former governor of Oklahoma who now is president of the American Council of Life Insurers. “I am institutionally and intestinally against huge blocs of inherited wealth,” he says. “I don’t think we need the Viscount of Enron or the Duke of Microsoft.”
Speaking of Microsoft, the senior member of the royal family will testify before Congress this week, also in opposition to repealing the estate tax. Bill Gates Sr., the father of the world’s richest man, has suggested that the tax be retained on estates in excess of $3.5 million, a level that would exempt all but one-half of 1 percent of estates from the tax.
“We wouldn’t have an Internet or microprocessors or human genome projects without the funding from the federal government,” Gates, co-chairman of the Bill & Melinda Gates Foundation, said in an interview.
“Those are the things that make our economy so wonderful and make it possible for people to get very, very wealthy.”
Gates says his son, whose net worth is estimated by Forbes magazine to be $46.5 billion, “doesn’t have any confusion about the fact that his success has a lot to do with this country.”
The Republican response? The estate tax isn’t fair to rich people.
“The death of a family member should not be a taxable event,” says Rep. Kenny Hulshof, R-Mo., who sponsored the repeal in the House of Representatives.
I’ll tell you what isn’t fair… the record budget deficits that will be paid off by our children and grandchildren… the millions of kids who are losing their health insurance nationwide… the unfunded mandates from the ironically named “No Child Left Behind” that are bankrupting our public schools. Meanwhile, the wealthiest Americans are saving billions from the Bush tax breaks, while Dick Cheney’s Halliburton buddies don’t even get their hands slapped for overcharging the Pentagon by more than $108 million for fuel imports into Iraq.
There’s absolutely no economic rationale for repealing the tax on the top one-half of 1 percent of estates. If anything, the estate tax is pro-billionaire, as it gives the very wealthy a powerful disincentive to die.