During his State of the Union address, Barack Obama suggested “Let’s close the loopholes that lead to inequality by allowing the top 1 percent to avoid paying taxes on their accumulated wealth.” In other words, we should close the loopholes that allow the richest people to hide inheritance from any taxes. And I totally agree.
The Republicans have virtually eliminated inheritance taxes completely. Even worse, they made it so the rich can leave stock to their heirs, and avoid paying capital gains taxes on that stock. That’s right. If you earn money, you pay high taxes on it. If you get dividends on stock, you pay far less in taxes. But if you leave that stock to your heirs, you pay no taxes at all.
As a result, the gap between the rich and the poor is expanding at the highest rate in modern times. And it is because you are paying taxes to make up for the taxes that the rich don’t have to pay. And this is very bad for our economy and our country.
But that won’t stop the GOP from totally freaking out about trying to restore even some inheritance taxes. For example, Congress critter Jason Chaffetz (R-UT) responded to Obama’s suggestion angrily:
That’s a non-starter. The audacity, that he thinks the government has a right to people’s money? He wants to transfer wealth. It’s one of the most immoral things you can do, is try to steal somebody’s inheritance, to steal it away from their family.
So it is ok to transfer wealth from the middle class to the rich, but immoral to transfer it the other way.
The other thing you hear from Republicans is that inheritance taxes hurt small businesses and family farms, but there is plenty of evidence that they are lying. There are plenty of easy ways to shield businesses, including farms, from inheritance taxes. But that doesn’t stop Senator John Hoven (R-ND) from claiming:
Think about all of the small businesses and the farms, and how are you going to maintain a small business or pass a farm on to your kids? They grew up on that farm, they worked on that farm, and then they have to sell it when you die? I mean come on, that’s not how you foster small businesses or entrepreneurship.
I have friends (and family members) who are family farmers, and they say that this argument is complete bullshit.
Even Marco Rubio (R-FL), who is a potential presidential candidate plays this game, even using the bogus language of trickle-down economics to attack inheritance taxes:
My preference is to have as much money available for people to reinvest back into the economy. I think we can succeed at helping the middle class without having to go after anybody, or make an example of anybody, or punish anyone.
And actually, he is right that wealth is not a zero-sum game. Unfortunately, the truth is that the more wealth that is held by the middle class, the more trickles up.
Can we stop taking money away from the middle class and redistributing it to the rich?