As Republicans in the House and Senate continue to try to reconcile their tax bills, it is clear that they do not have the interests of the working class in mind.
One of the most revealing aspects is how both bills go out of their way to enrich a very small group of wealthy heirs and heiresses in California — like, for example, Paris Hilton and her obscenely spoiled dogs — by eliminating or rolling back the inheritance tax, which is paid by children when they inherit estates worth more than twice what the American family makes in a lifetime.
The inheritance tax ensures our primary tax on income is not borne only by workers, but also paid by those who do not need to work and can live off of income from the wealth they inherit.
Republicans have sought to kill this tax for years, claiming it hurts small businesses and family farms, but this is a lie. The inheritance tax applies only to estates larger than $5.5 million for individuals or $11 million for couples, and it doesn’t apply at all if the assets are willed to the deceased’s spouse. Further, there are already various tax credits that can exempt much of an estate’s wealth.
According to the Center on Budget and Policy Priorities, only 1,100 estates in California are wealthy enough for their beneficiaries to pay any estate tax whatsoever — or 0.4 percent of the total number of estates.
The House bill — which 11 GOP congressmen in California, including Rep. Steve Knight of Palmdale, voted for — calls for abolishing the estate tax entirely. The Institute of Taxation and Economic Policy estimates this would result in an $8.4 billion dollar tax break for just those 1,100 families in California.
Even more ridiculous, the House bill expands the “step up in basis” loophole. In layman’s terms, if the estate includes investments, and they grew in value while the deceased was alive, that value does not count towards capital gains tax if their son or daughter sells the assets. This means that a good portion of investments will never be taxed, period — a ridiculously sweet deal for California’s hyper-rich.
The Senate bill does not repeal the estate tax outright, but doubles the deduction to $11 million for individuals or $22 million for couples. That would still give that tiny group of families a tax break of about $700 million.
By fighting to repeal a tax that applies to only the mega-wealthy, on money that they did not even earn themselves, Republicans tip their hand. This plan does nothing for California’s middle class, and no one with the best interests of the majority of the people at heart should vote for it.