Everyone Remember: We’re Doing This for Minorities and Women ... Minorities, Women and Small Farmers

Join in as a bunch of rich white men lobby to repeal the Estate Tax.

By Nathaniel Loewentheil, Yale University

On the top floor of Hart Senate Office Building on Capitol Hill, overlooking the often-overlooked senatorial tennis courts, 80 white men (and at least four women) got together for some lessons in effective lobbying on Tuesday. "Remember," lectured Senator Jon Kyl (R-AZ), the leader of the “death tax” repeal movement in the Senate, "cost should not be a factor at this point … and compromise is a smokescreen." The occasion was the eighth annual Summit for Permanent Death Tax Repeal, appropriately hosted by the Family Business Estate Tax Coalition (FBETC).

Senator Kyl’s remarks set the tone for the entire event. The Summit was filled with a steady stream of death-tax-killers-to-be from the White House, House of Representatives, Senate and more than 30 different lobbying and advocacy groups including Americans Against Unfair Family Taxation, Americans for Fair Taxation, The Center for the Study of Taxation and so on and so forth. Despite their names, many of these “organizations” really only represent a handful of actual people and primarily serve as fronts for wealthy individuals interested in tax repeal.

Right about now, you might be confused. What is this “death tax” of which I speak? The “death tax” is the fun, new conservative name for the estate tax, or inheritance tax, which taxes estates upon the death of their owners. In the eyes of the Founding Fathers, the Estate Tax has preserved American democracy by preventing the rise of a wealthy "landed aristocracy." While we want to reward hard work, as Americans, we understand that a concentration of too much wealth in too few hands makes equality among citizens almost impossible.

In the last few years, the “death tax” has come under attack by a coalition of wealthy businessmen who have argued that it is fundamentally unjust. In 2000, before the tax came under attack, every individual got to pass $675,000 to their heirs tax free before the estate tax kicked into effect. President Bush’s tax cuts, passed in 2001, legislates the gradual phasing out of the “death tax” over nine years, with the exemption rising each year, until 2010, where there would be no tax at all. Then, in 2011, the “death tax” would return, this time with an exemption of $1 million per person, or $2 million per couple. Currently, the exemption stands at $1.5 million per individual, or $3 million per couple, tax free. The FBETC, along with many other similar organizations, hopes to maintain the full repeal of 2010 indefinitely.

Perhaps the well-organized event would have been more entertaining had it not been so terrifying. The attendees were some of the most powerful players in Washington. The event was co-sponsored by the National Federation of Independent Businesses (NFIB), named by Fortune magazine as the third most powerful lobbying group in Washington. Also in attendance were powerhouse groups like the American Farm Bureau Federation, the American Forest and Paper Association, and the National Cattlemen’s Beef Association. Two current senators and two representatives (three Republicans and a Democrat) were joined by a host of former congressional members, in addition to one of the most influential right-wing pollsters in the nation, Frank Luntz. (Luntz was one of the conservative masterminds behind the creation of the term “death tax” and has played a major role in propagating its use.)

Things got rolling with a sumptuous breakfast provided by the Newspaper Association of America. Watching overweight men in suits worth more than my car gulp fresh squeezed orange juice and swallow organic corn muffins whole was perhaps the most disturbing aspect of the entire event. Those wolfish grins were focused on food, but I thought they might turn on me at any moment and devour me. That’s why this reporter managed to avoid mentioning his progressive credentials or his belief that “death tax” was a misleading term, fearing swift retribution.

Why This Year is Different Than All Other Years

Unlike in past years, when the summit was organized to broadly support the movement for permanent repeal, this year the event was centered on converting a small number of key senators. The FBETC is on the scent of a full repeal, and they know it. Although speakers refused to publicly name any names, Summit attendees had to turn no further than the 200+ page information packet, which had a section listing potential senatorial supporters, some gaily highlighted in blue and double-starred ** as a “projected gain.” Your job, Senator Kyl admonished summit attendees, is to find those wavering lawmakers and “nail them down.” “We’ve just about got them,” he exclaimed to great applause.

Given the seriousness of the event, the conservatives in attendance had a pretty good time. There was a sort of malevolent playfulness blanketing the whole party. Every jab at liberals was met with hearty laughter. Speakers joked about the disposition, weight and capabilities of various Democratic lawmakers and lobbyists. But it wasn’t funny. The master of ceremonies for the event, Frank Blethen, the board chair of the Seattle Times Company, opened the morning describing the basic lobbying strategy for achieving permanent repeal. His explanation ran something like this: the “death tax,” despite all appearances, punishes only small businesses and farms, and not the super-wealthy. In the event of an owner’s death, farms and businesses are forced to sell some of their assets to pay the tax, which can lead to bankruptcy and loss of jobs. This is Our Story, he seemed to be saying, and we are sticking to it.

(The heirs to the Blethen fortune, by the way, can be counted as part of the super-wealthy and would benefit mightily from estate tax repeal. Blethen is reportedly worth over $500 million, so a repeal would benefit his heirs to the tune of as much as hundreds of millions of dollars.)

Gaily colored information packets were handed around that highlighted key “discussion points.” First, the “death tax” is a burden on family owned business, and “one of the most unfair and inefficient taxes on the books.” Second, reform proposals are impossible, and counter-arguments are all myths. Another section of the packet exhorted participants to run advertising campaigns and included sample newsprint advertisements. Though it will certainly play differently in the media, this is not a grassroots movement. It is a cold and calculated campaign against a progressive tax.

Creating a Unified Lobbying Strategy

During his speech, Blethen pointed out the obvious: the image of the “death tax” repeal movement is that it helps middle aged white guys. This needs to change by stressing the impact on minorities and women. Right. Rather than viewing this as an estate tax to help fund the government and maintain an open society, it needs to be seen as a “death tax” that robs families. As Luntz put it, this tax is not about supporting pivotal government programs or trying to suppress dynastic families, but about “confiscation.”

The White House representative from the Office of Budget and Management argued that the two key arguments were injustice and economic inefficiency. The “death tax” is unfair because it taxes people twice: once while they are living, and once when they die. Small businesses and farms are the biggest job creators, and punishing them with such taxes will only injure the economy, and in the long run, drive down tax revenues.

In perhaps the brashest display of self-serving lobbying strategy, the event featured a speech by famed tax attorney Harold Apolinsky, a self-proclaimed “accountant for the ultra wealthy.” He argued that the richest members of our society remain unaffected by the tax, as there are “fairly generic ways” of shielding virtually all taxation of inherited wealth. Perhaps not surprisingly, Apolinsky is also the chief counsel for the American Family Business Institute.

The astounding thing about the event was that everyone in the room understood the illegitimacy of their arguments. The data just doesn’t back them up. There’s no need to list all of the reasons to support the tax, but a few points to counter the permanent repeal theories will help clarify the situation:

• An elimination of the tax will cost the government approximately $1 trillion dollars in loss tax revenue and increased interest payments on debt in the first ten years (2012-2021). The repeal would either increase our already tremendous deficit or create higher taxes for non-millionaires.
  


• The “death tax” is actually an extremely progressive tax, targeting only the wealthiest members of society. Last year, only 340 estates consisting primarily of a business or small farm were subject to the tax. (“Small” in this case means with a value of under $5 million.)
  


• Apolinsky’s theory that the ultra-wealthy remain untaxed by the estate tax, leaving the burden to the slightly less wealthy, is flawed because they can only avoid the inheritance tax by creating trusts and not selling assets. If this were true, why would they be fighting so hard to repeal it? As soon as the inherited assets are sold to be used, they are taxed.
  


• The New York Times reported that the American Farm Bureau Federation publicly admitted that it could not cite a single example of a farm lost because of estate taxes. So much for saving the desperate farmers. In fact, the National Farmer’s Union has supported retaining the tax.
  


• As far as the minority and women argument goes, the lack of racial or sexual diversity in the room was equaled only by the complete absence of any argument to support their claims that those groups suffered as a result of this tax. Particularly given the extensive advertising and legal research they had done, the lack of data on the benefits to minorities, women and farmers should have been surprising. It wasn’t.
  


• The claim that the estate tax is a drag on the economy and that eliminating it will increase tax revenues in the long run is as unfounded as it is pernicious. The Congressional Research Service noted in a recent report on the “death tax” that there was no clear evidence that its repeal would increase savings by individuals. Furthermore, the elimination of the tax would force government to borrow more, thus divesting the market of other needed capital. Finally, the increased deficit would do far more damage to the economy than the few jobs that might be lost to small businesses.
  

The irony of the situation was how obvious all of these arguments are, even to the strongest “death tax” opponents. As I sat listening to speech after speech, I had to hold myself back from striding up to the podium, winking collegially at the audience, and saying, “Remember, whenever anyone starts to press you on the ‘death tax,’ turn to your big guns: we are out to save women and minorities. And small farmers. Repeat after me: minorities, women and farmers.” I know I would have gotten an appreciative chuckle. Unfortunately, before I could act, the conference ended and hordes of rich, white men raced to the elevators to begin an afternoon of direct lobbying. Luckily, they didn’t even have to leave the building.

Illustration: Matt Bors

Related Stories

• Gender-Neutral Housing Comes to Princeton
• Campaign Communications Director, Repower America
• Toke Up Marijuana Laws
• Send a Health Care E-Card
• The Battle for Pittsburgh