The Rich Get Richer If House Republicans Repeal the Estate Tax
Bill Black, a former bank regulator, discusses the history of why the federal estate tax exists and why the Republicans want it repealed
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries coming to you from Baltimore.
Both sides of the house are gearing up for a vote on Thursday to repeal the estate tax. To give you a better understanding of what all of this is about, I’m joined by Bill Black. Bill is an associate professor of economics and law at the University of Missouri, Kansas City. He’s a white-collar criminologist and a former financial regulator, and author of The Best Way to Rob a Bank is to Own One. He’s a regular contributor to The Real News Network, and he’s joining us from Quito, Ecuador today.
Thank you so much for joining us, Bill.
BILL BLACK, ASSOCIATE PROFESSOR OF ECONOMICS AND LAW, UMKC: Good to be here.
PERIES: So Bill, give us some context as to what the estate tax is all about, and why the Republicans want to repeal it.
BLACK: So the estate tax is all about not wanting to create aristocracy in the United States, and many other countries that have similar taxes, in which you start out as, with a hundred million bucks, and you’re sent to–money’s no object, every activity you can imagine to try to get you into Harvard, and et cetera. And so that wealth would simply be self-perpetuating.
Now, the Republicans had a brilliant move about ten years ago, and they started calling this the death tax. And you can see why that’s a very effective label. It’s interesting because the Republican strategist who came up with the idea said he could never figure out why the Democrats hadn’t answered and said no, it’s the billionaire’s tax. Because that’s actually what it is. It’s a tax that falls almost exclusively on people who are billionaires. And so we’re talking about, in any given year, ballpark 5,000 households. So this is not something of the 1%, this is something of the one ten thousandth of 1%.
PERIES: Now Bill, why is this back on the agenda of the House? Give us some history to that lineage.
BLACK: Yes. Bush, President Bush the second, George W, passed a repeal of the estate tax. But he was only able to get sufficient political support to make the repeal temporary. And eventually, President Obama refused to agree to extend the elimination of the estate tax, and so the Democrat–I’m sorry, the Republicans have made it an important part of their agenda for their absolute, again, wealthiest backers. The ones who give, of course, the mega dollars that allow these political campaigns to try to get rid of the estate tax. And for the political class, the donor class within the Republican party that gives these $50 million dark money contributions. The death tax, as they would call it, is a major issue.
PERIES: And what happened, when did–you know, historically it was quite accepted that an estate tax is a good thing for the nation. When did this historically turn?
BLACK: Only within the last 15 years. You’re quite correct that from fairly early times in the United States there was considerably opposition from all major parties to the idea of creating an aristocracy of the ultra-wealthy that would continue to control a huge portion of the wealth of the nation. And that uniformity of position among the political parties was broken, as I say, only about 15 years ago in the Bush administration.
PERIES: And then apart from the terminology polarizing the discussion and debate, what are the real issues that the Republicans have in opposing it?
BLACK: Well there aren’t many real issues. There is an effort to create a phony issue that says oh, this tax causes terrible problems for regular people. And the quintessential example that they’re talking about is, say, the Iowa farmer. Because it turns out the Iowa farmer, if he or she owns really vast tracts, is not middle class, or anything remotely like that. They have the machinery and equipment–if you’ve driven through Iowa as I have many times, such that even smaller farmers have millions of dollars of equipment, and larger farmers given the sharp rise in agricultural land prices are now multi-multi-millionaires in many cases.
So again, because Iowa plays such an important role, particularly in the Republican quest for the nomination, you get a very strong push, especially this time of year every four years, to have a permanent repeal of the estate tax.
PERIES: So Bill, the bill was suspended, or the tax was suspended, for a long time. When did it go back on the books?
BLACK: It went back on the books a couple of years ago when the Republicans and Democrats were unable to reach a broader agreement on some fiscal issues. So the Republicans in essence were using the estate tax repeal to hold hostage these broader agreements with Obama at the beginning of his term. Saying we’ll only give you that if you agree to continue the suspension of the estate tax, so that those broader agreements would never–very principled agreements of course. They were bad public policy. And finally the Republican demands became too large and President Obama said no, and that meant that the temporary repeal of the estate tax lapsed. So the estate tax is back in operation.
Now, the Republicans are moving as I say, particularly in this election season, particularly under their arguments about how this is supposedly so important to farmers in Iowa to try to make it a high priority repeal.
PERIES: Bill, as always, thank you so much for joining us and giving us this update of what’s happening in Washington.
BLACK: Thank you.
PERIES: And thank you for joining us on The Real News Network.
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