A few wealthy heirs-to-be had plenty of reason to celebrate the new year. That’s because on Jan. 1, the federal estate tax temporarily disappeared.
As part of the Bush tax cuts of 2001, the estate tax was scheduled to be repealed for one year in 2010. Congress failed to enact an extension.
So as the ball dropped in Times Square, counting down the final seconds of 2009, a piece of our tax code that has been in place since 1916 went away, too.
The magnitude of this recession means that economic recovery will be lengthy and painful, especially for those of us who don’t make a living on Wall Street.
In times like these, we count on public investments that provide health care to the millions of people who have lost coverage and unemployment insurance for the millions who have lost their jobs. We need to invest in transportation projects, infrastructure improvements and jobs programs that put people to work right away.
But we can’t continue making these investments if we keep giving tax cuts to the wealthiest people in this country. And that’s exactly what happened when Congress let the estate tax lapse.
Under the 2009 levels, which allowed the first $3.5 million of an estate to be passed down completely tax free, 99.8 percent of us would never pay a dime. As part of the Bush tax cuts, the tax was steadily and significantly reduced over the past decade.
Congress’ willingness to let the tax expire is deeply troubling. If nothing is done to reinstate the estate tax, we’ll lose out on more than $20 billion in federal revenue this year alone. That’s roughly what the federal government spends on K-12 education every year.
This comes at a time when we face historic federal deficits and unsustainable national debt, and when nearly every state is facing a second year of devastating budget problems brought on by the recession.
Mired in the worst recession since the Great Depression, Congress essentially approved a hefty tax cut for the Bill Gateses of the world.
If we learned one thing from the past decade of conservative economic policy, it’s that the trickle down logic of tax cuts for the wealthy simply doesn’t work. That experiment, if we are generous enough to call it that, failed miserably.
Congress needs to send the right message to the American people. The wealthiest among us have benefited a great deal from the society we live in. Many of them have benefited directly from policies that are responsible for landing us in this economic tailspin.
The Bush tax cuts, the deregulation of Wall Street, and numerous tax loopholes that benefit the wealthiest corporations are all to blame for this recession and the widening gap between the rich and poor.
It is time the wealthiest Americans begin to share the responsibility for our collective economic recovery.
To this end, reinstating the estate tax is a good place to start.
Deana Knutsen of Everett chairs the Board of Directors for Washington Community Action Network, the state’s largest grassroots consumer advocacy group with more than 30,000 members. Washington CAN! works on a broad range of social, racial and economic justice issues.
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