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Wednesday, August 02, 2006
Ken Mehlman writes me a letter
This is from the latest letter from RNC chair Ken Mehlman:
This week, the Senate is taking up a bill to end the unfair death tax. Earlier this year, a minority of Democrat senators blocked putting the death tax on the road to extinction. This is the last chance to stand up for economic growth, small businesses, and family farms burdened by the unfair death tax.
This gives me a wonderful excuse to note this post from Kevin Drum which piggy-backs on CBPP data which analyzes a Treasury Department report. The conclusion on making the Bush tax cuts permanent? Drum says:
The report suggested that under a certain set of improbable circumstances, the tax cuts would increase economic growth by 0.7%, and I wondered what that meant. 0.7% per year? 0.7 percentage points? Or what?
The CBPP has the answer: it means that in about 20 years the economy would be 0.7% bigger than it otherwise would be. In other words, instead of a GDP of $20 trillion in a couple of decades, our GDP would be about $20.1 trillion. Yippee!
If the Bush tax cuts to date have such a negligible effect on the total economy over 20 years, what greater economic expansion could be responsibly projected from cutting the estate tax?
That's part A. Part B means to stick up for family farms and small businesses. The problem with Part B is that family farms and small businesses are largely unaffected by the estate tax and -- under Democratic proposals an even more microscopic minority would be affected. If you raise the exemption to $3.5 million, then according to government reports less than 100 family-owned businesses would be effected (in 2000).
An estate tax repeal won't help many family businesses, including family farms. It will help the super-rich become even richer. Does Paris Hilton need another multi-million dollar tax cut while we're at war? Or should we have make sure our financial house is in order before we make that choice?
