Wednesday, April 15, 2015

The Reverse New Deal: Eliminating the estate tax and solidifying the American caste system

The Merriam-Webster Dictionary defines "caste" as "a division of society based upon differences of wealth, rank, or occupation."

(Franklin and Eleanor Roosevelt with friends and family, 1942. Photo courtesy of the FDR Presidential Library and Museum.)

Even as income & wealth inequality continues to soar, and even as politicians work feverishly to decimate our already-weak social safety net--screaming, "We can't afford it!"--Republicans are trying to eliminate the estate tax (a tax that only affects the wealthiest of the wealthy), thereby terminating hundreds of billions of dollars of federal revenue.

Republicans want to make sure that the children of the wealthy will never have to struggle for success, or even work for a living, and that these new generations of idle rich citizens will have loads of cash to thank them for it. Make no mistake about it, this is not only a naked display of plutocracy, but it's also a sign that we're heading towards a more rigid caste system where tremendous amounts of wealth are passed down from generation to generation, and within a small number of families. Meanwhile, everyone not born into wealth will be stuck with stagnant wages, rising prices, and rising debt (i.e., more of what's already happening).

President Franklin Roosevelt once said, "The transmission from generation to generation of vast fortunes by will, inheritance, or gift is not consistent with the ideas and sentiments of the American people." And so, with the Revenue Act of 1935, he and his fellow New Deal policymakers raised the top tax rate on estates from 50% to 70%. (See, Joseph J. Thorndike, Their Fair Share: Taxing the Rich in the Age of FDR, Washington, DC: Urban Institute Press, 2013, pp. 162-174).

Today, tens of millions of American voters are electing politicians who are fighting for gargantuan tax cuts for only a few American voters (the 0.1%). Read that again, very carefully. The rest of us? Oh, we might get a $5 tax savings here and there, but we're mainly getting higher (and regressive) taxes, tolls, fees, and fines at the state & local level to make up for the revenue difference. That's right: We're subsidizing tax-cuts-for-the-wealthy by paying more taxes, tolls, fees, and fines, even as we struggle to pay for the basic necessities of life (see my blog posts here and here).

Welcome to the Reverse New Deal: Eliminating the estate tax and solidifying the American caste system.  

(In the video above (full of colorful language, by the way), Bill Maher ponders why the Republican philosophy about the virtue of work doesn't apply to the heirs of the super-wealthy, and why Republicans are trying to get rid of all taxes on inherited wealth. Original YouTube link:

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