House Conservatives Peddle Falsehoods to Justify Repealing Estate Tax

Washington, DC – Ahead of the vote to repeal the federal estatetax taking place in the U.S. House of Representatives this week on Tax Day, Americans for Tax Fairness (ATF) has compiled a list of direct quotes from conservative leaders exposing the misinformation being spread to justify this tax giveawayto the wealthiest 0.2%. ATF also collected quotes from conservative leaders expressing their concernabout income inequality, exposing the hypocrisy of claiming to care about the growing gap betweenthe wealthy and everyone else while voting for a $270 billion tax giveaway to the estates of multi-millionaires and billionaires.

“Conservatives know their economic priorities are extremely unpopular – the American people want an economy that works for everyone, not just the wealthy few. So when they try to eliminate the estate tax, which affects only multi-millionaires and billionaires, they resort to outright falsehoods in making their case and use phony rhetoric claiming they care about the rest of us,” said Frank Clemente, executive director of Americans for Tax Fairness. “Repealing theestate tax will only increase inequality in America. These quotes help the American people understand what conservatives do, not what they say.”

As early as Tax Day this week, the US House of Representatives will vote to eliminate the federal estate tax, a levy on the intergenerational transfer of wealth that provides an important check on thegrowing concentration of wealth in the US, encourages charitable giving and generates revenues from those most able to pay. The repeal vote comes as Republican leaders proceed with budget blueprints that would slash $5 trillion in benefits and services that mostly support working families and communities – while refusing to raise a dime of new revenue from the wealthy and corporations.

Fact-Checking Conservatives’ Claims About the Estate Tax

The federal estate tax is a levy on the intergenerational transfer of wealth. It provides an important check on the growing concentration of wealth in America, encourages charitable giving, and generates revenues from those most able to pay. Repealing this commonsense tax will exacerbate inequality in America. It will hand a huge tax cut to the nation’s wealthiest heirs – $3 million on average – asRepublican leaders proceed with budget plans that will slash $5 trillion in services and benefits overthe next 10 years that mostly benefit working families.

The House Ways and Means Committee voted to repeal the estate tax in a 22-10 party line vote on March 18, 2015. Also in March, the U.S. Senate passed an amendment to the budget resolution that called for the repeal of the federal estate tax in a 54-46 vote almost entirely along party lines.

Below are claims made by GOP lawmakers that have been used to support their estate tax repeal efforts, and the facts that show how false their claims are:

1. The Repeal of the Estate Tax is Not About the Wealthy.

“[T]his tax doesn’t just hit the big guy. It hits the little guy – like the small business and the family farm. It is both unwise and unfair, and it needs to go.” – Rep. Paul Ryan (R-WI), March 25, 2015 HouseCommittee on Ways and Means hearing

FACT: Estates worth less than $5.4 million for an individual and nearly $11 million for a married couple are exempt from paying any tax. That means 99.8% of estates would not be affected, accordingto the Joint Committee on Taxation (JCT).The wealthy heirs who benefit from repeal are slated to get a $3 million tax cut, on average, in 2016, according to JCT data. The 318 estates worth at least $50 million would receive tax windfalls averaging more than $20 million each.

2. The Estate Tax is Killing Family Farms.

“The Death Tax is still the number one reason family-owned farms and businesses in America aren’t passed down to the next generation.” – Lead estate tax repeal bill sponsor Rep. Kevin Brady (R-TX), March 26, 2015 press conference

FACT: No family farm has ever been lost as a result of the estate tax. David Cay Johnston won a Pulitzer Prize for exposing this fabrication in 2001 at a time when the estate tax was significantly more robust.

3. A Significant Portion of Farmers and Small Businesses Pay the Estate Tax.

“If you…make the argument that only rich and wealthy people pay this tax,that is not true. It’s not true for almost every farmer and rancher in this country, it’s not true for every small business owner out there.” – Rep. Kristi Noem (R-SD), March 25, 2015 House Committee on Ways and Means hearing (starts at 4:00 mark)

“I am committed to repealing this unjust – and frankly, immoral – tax that hurts small businesses and family farms most.” – Rep. Kristi Noem (R-SD), March 25, 2015 press release

FACT: Of the millions of small businesses and small family farms in America, only 20 paid any estate tax in 2013, according to the Tax Policy Center. If large farms are included, the number is still only 120 estates (Table 3), the average net worth of which is over $20 million. Protections exist for farms and small businesses that do owe estate tax.

4. The Estate Tax Disproportionately Hurts People of Color.

“The Death Tax is especially destructive to women and minority-owned small businesses in America who are building wealth often for the first time. … A study by Boston College professors estimates theDeath Tax could rob African-American households of up to a quarter-trillion dollars of wealth overthe first half of this century.” – Lead estate tax repeal bill sponsor Rep. Kevin Brady (R-TX), March 25, 2015 House Committee on Ways and Means hearing

FACT: A recent study by the Pew Research Center shows the net worth of white households is 13 times more than African-American households. The 2004 report from Boston College (Table 5) that Rep. Brady cites shows that 0.00% of African-Americans have a household net worth above $5 million; the current exemption for the federal estate tax is $5.4 million for an individual and nearly $11 million for married couples.

5. The Estate Tax is a Double Tax.

“For too long the federal government has forced grieving families to pay a tax on their loved one’s life savings that has been built from income already taxed when originally earned.” Lead estate tax repeal bill sponsor Sen. John Thune (R-SD), March 25, 2015 press release

FACT: On average, 55% of the value of estates worth more than $100 million is made up of unrealized capital gains that have never faced income or capital gains tax, according to Federal Reserve Board data. For estates worth between $5 million and $10 million, the unrealized capital gains that have never been taxed are 32% of the estate’s value. If the estate tax were repealed, those capital gains would face no tax of any kind whatsoever. The reason is that a giant loophole allows capital gains toescape taxation by exempting inherited assets from being subject to capital gains taxes. What’s more, with no estate tax, heirs could never face tax on those gains either – over generations, wealthy families can arrange their affairs to avoid ever paying taxes on massive amounts of wealth.

Conservatives’ Hypocrisy on Income Inequality: Believe What They Do, Not What They Say

Increasingly, leading conservatives in Washington say they care about income inequality. Just look atthe quotes below.

But their actions indicate otherwise. Both the U.S. Senate and the U.S. House of Representatives have passed budget blueprints that would slash $5 trillion in benefits and services that mostly support working families and communities – from Medicare and Medicaid to college aid, food stamps, road building and medical research. They refuse to raise a dime of new revenue from the wealthy and corporations to help pay for deficit reduction.

On top of that the U.S. Senate, almost entirely on a party-line vote, recently approved an amendment calling for the repeal of the federal estate tax. House Republicans are likely to do the same on Tax Day. Repealing the estate tax would be a $269 billion tax give away to America’s wealthiest heirs. It only affects millionaires and billionaires. That has many people wondering: why are leading conservativessaying they want to fight income inequality?

Most likely because they know their economic policies are extremely unpopular – the American people want an economy that works for everyone, not just the wealthy few. So conservatives are trying to pull a fast one with their phony rhetoric, while they continue to rig the system in favor of the wealthy and corporations. They get the tax breaks, and we get a lot of brazen hypocrisy:

House Speaker John Boehner (R-OH)

“We do have an issue of income inequality in America. The president’s policies are making that problem worse…the top third of America are doing pretty good. The bottom two-thirds are really being squeezed.” – May 12, 2014

Rep. Kevin Brady (R-TX), lead sponsor of the estate tax repeal bill

“…Wall Street’s index values almost doubled in this economic recovery. But Main Street, middle-class families, their incomes have barely budged. … I don’t think income inequality is dragging down theeconomy; I think this weak economy is dragging down income equality.” – January 16, 2014

Senate Majority Leader Mitch McConnell (R-KY)

“Look, things are getting better. But the point is who is benefiting from this? This has been a top of the income recovery – the so-called one percent that the president’s always talking about have done quite well. But middle and lower income Americans are about $3,000 a year worse off than they were when he came to office.” – January 25, 2015

Gov. Jeb Bush

“The opportunity gap is the defining issue of our time. More Americans are stuck at their income levels than ever before. It’s very hard for people to go from the bottom rungs of the economy to the top or even the middle. This should alarm you. It has alarmed me.” February 4, 2015

Sen. Ted Cruz (R-TX)

“…And I think Republicans are and should be the party of the 47 percent…. we should be fighting for the little guy.” – January 25, 2015

Sen. Rand Paul (R-KY)

“Income inequality has worsened under this administration, and tonight President Obama offers more of the same policies — policies that have allowed the poor to get poorer and the rich to get richer.” –January 20, 2015