The estate tax only affects estates valued at above $2 million today, and maybe down to $1 million if things are allowed to lapse in 2011 (not $675,000 no matter what your talk radio told you). How much do you expect to leave in net worth for your heirs? More than a million dollars? Not likely. Yet, a significant number of people who will never be affected by the estate tax are fighting to repeal it, on behalf of people making amounts of money most of us can’t imagine.
There are so many complicated economic issues wrapped up in estate tax debates, it would be ridiculous to try to summarize them. My curiousity is piqued by the rabid defense of the “repeal the death tax” mantra by people who will likely never have to pay it anyway. What kind of strange phenomenon causes people to spend time and effort fighting for something that helps only people most of us would classify as filthy rich?
I recently read a Princeton research paper, which showed quite clearly that the party in the Executive has historically been a good indicator of the rate of increase in income inequality. Republican presidents have been very good to the top 20% of Americans, and pretty crappy to the bottom 20%, with a relatively straight-line graph between them. Democratic presidents have been pretty good to the bottom 20%, and just about as good to the top 20%, with a straight-line graph between them as well. The difference, of course, is that the Dem graph is nearly horizontal. Income growth is about 2.5% for the top quintile under either party, but under a Dem that’s about the same level for everyone in the country (2-2.5%). Under the GOP, on the other hand, the top quintile still gets a nice growth rate of 2.5% or so, but the bottom quintile gets growth of 0.5%. The only exception to this pattern is in election years, when the Democrats seem to shoot themselves in the foot with the poor, and the Republicans somehow discover they can give money to the plebes to gain votes. Economic stimulus package, anyone?
By the way, I’ve been told by someone near and dear to me that the Princeton paper is not nearly as fascinating a read as I think it is. Something about “deathly dull” was murmured, as I recall. I am focusing on income inequality because it is so stark a statistic of economic health for most people, as well as being an indicator of widespread discontent. Discontent breeds instability and all that, ya know. So, currently, the top 1% of people in the country have 22% of the income, which is the greatest concentration of wealth in such a small group since before the Great Depression. We all know how well that turned out, eh? Another good indicator of economic health is personal savings. In 1982, that rate was 11%; in 2006, it was negative 1%. I’m pretty sure that’s not good.
If this income inequality issue is so blatantly obvious, the question remains: Why does anyone who isn’t already wealthy vote Republican? My theory is “the media makes people crazy.” Look at the giant storms of controversy and outrage the media talking heads have been stirring up over relatively minor issues of things like “bitter people” and cleavage and flag pins. Do any of those things really matter to the citizenry? Of course not. But, people have grown so accustomed to the din of information flowing from the magic box that shows them both parties looking stupid and venal and self-serving and hypocritical, people assume there’s no difference between them. We’ve watched the offshore outsourcing and domestic dismantling of our industrial base, through several presidents of both parties. People have become used to the idea that either party will screw the citizenry over. So, the parties end up ceding the ground of substance to “none of the above” and spend all their time fighting over trivia and “social issues.” Most of the social issues affect very few people, and based on my reading of that quaint document called The Constitution, are none of the government’s business anyway. But, you can sure rile folks up if you claim your opponent wants to take their guns or Bibles away (no matter how fictitious your claim may be).
It’s all rather disgusting. If you can stand it, watch the Pennsylvania Democratic debate – the first half is devoted to flag pins and bitterness. We’re so screwed.