Removing estate tax will not lead to economic growth

 

 

At some point, if a lie is told often and long enough, reinforced over and over, and stuck with in the face of debunking evidence, it just becomes a joke. Republicans just voted to repeal the estate tax, and now it’s time to laugh at them.

The joke goes something like this: If the government lowers income tax rates, the economy will grow more, and people will earn more money, so the government will take in more money even though tax rates are lower. Also, the best place to lower taxes is for the rich, because they create jobs, so their extra wealth will trickle down to everyone else.

Let’s take this joke claim by claim, and as we do, remember that these are facts — measurable, testable data. Regardless of what your political philosophy is, numbers do not have opinions, so attempting to debate with them is useless.

  1. Lower tax rates lead to economic growth: Historical tax rates are easy to find, and so is historical economic growth. Adjusted for inflation (making old dollars equal to new dollars) there is no correlation between tax rates and economic growth. None. It turns out people want to be successful whether or not the government taxes them. The economy can and has flourished during periods of higher taxation.
  2. People will earn more money: I guess it depends on who we classify as “people.” As tax rates have gone down poor people have seen their incomes remain flat or decrease. Only the uber rich have gotten richer as tax rates fell.
  3. The government will take in more money: This has not happened once. When President Reagan passed a massive tax cut in 1981 he had to raise taxes for the next seven years because this didn’t happen. When President Bush passed the “Bush tax cuts,” income tax revenue was lower for five straight years and has never returned to the same level in proportion to the economy. The tax cuts also only helped the rich.
  4. The rich create jobs: This is the best part. As if rich people, out of the goodness of their heart, grant poor people the privilege of receiving minimum wage from them. No matter how much or how little an employer is taxed, they hire someone when they have the need. When a staff is unable to meet its workload, this demand requires new employees. Tax rates are irrelevant.
  5. Wealth will trickle down: Just to repeat, only rich people have seen their incomes grow in the last generation.

So with all these facts readily available, Republicans voted to repeal the estate tax, a 40 percent tax put on wealth passed down after death. The tax sounds unreasonable, but the details tell a different story. The tax applies only to estates worth $5.4 million and up, and would only affect about 5,400 Americans.

So the richest 0.2 percent of people were so burdened, because, you know, passing on $3.24 million is just not enough.

The irony is palpable. This is the same party that insists people in this country should rise or fall based on their own abilities. Apparently they include the ability to be born into a bassinette of Benjamins because, you know, that is completely merit based.

Jokes aside, this tax cut has serious implications. It will cost $269 billion or, in student dollars, enough money to cover half the tuition of every student at a public university every single year.

But rather, Republicans feel $3.24 million is just not a high enough minimum endowment. Thank heaven this joke will never pass the Senate.