I try not to yell at the radio. I don’t like to scare passengers in my car or passing drivers. I try to stay calm.
But I wasn’t just shouting when I heard Iowa Senator Chuck Grassley’s interview with National Public Radio host Robert Siegel on “All Things Considered” Thursday evening. I went clear through to stomping in anger.
The topic, of course, was the giveaway to the wealthy that was careening through the Senate like a runaway garbage truck. Throughout the five-minute interview, Grassley either lied or deflected questions with non-sequiturs. What really sent my blood pressure up, however, was when he denigrated people who have difficulty saving in today’s economy as a justification for doubling the amount the wealthy can pass on to heirs tax free.
Siegel noted that estate tax affects only a tiny percentage of the population, asking, “Why is it so important to raise the ceiling on estate taxes when already a couple can pass on an estate of up to $11 million dollars tax free?”
Grassley’s response was that we must show all those moguls and corporate titans how much we appreciate them – to show how great it is that they spent all their lives pinching pennies and putting off buying that yacht or jet so they could build their estates.
“It seems to me there ought to be some incentive and reward for those who work and save and invest in America as opposed to those who just live from day to day,” Grassley said, effectively maligning every hourly wage earner who has to stretch a paycheck.
He went on to cite two hypothetical taxpayers (or two couples; it’s not clear), each making $100,000 a year.
“One them, they spend it, have it all spent at the end of the year, and the others have saved a fourth of it and invest it and create jobs and leave something for the future. The first person leaves nothing for the future,” Grassley said.
Let’s take a break here to note a couple things. First, putting money in the bank or buying stock, in and of itself, does little if anything to “create jobs.” Unless it’s an initial offering, buying stock doesn’t put money in a company’s pocket to invest in infrastructure or jobs. It puts money in the pocket of the person who sold the stock. The purchaser is buying a share of future company earnings. Using savings to start a new company may create jobs, and God bless those who do that.
Second, those companies would fail without the people who spend all or nearly all of their $100,000 – and depending on where someone lives, the size of their family, their health and other factors, $100,000 could be barely enough to survive. Businesses make money when people have money to spend. Cutting taxes on the wealthy yields little benefit this way because the wealthy already can afford all they want. Giving aid (food stamps and welfare payments) to the poor stimulates the economy more effectively because it’s immediately spent, going right back into businesses and factories. These are the people Grassley thinks aren’t doing enough to save.
Back to Grassley: Siegel then pointed out that “very, very few couples that make a combined income of $100,000 are going to have estates of $20 million” – the estate tax ceiling proposed in the Senate bill.
Grassley’s answer: Don’t confuse me with actual facts.
“In no way is my statement meant to dispute the statistics you gave me,” he said. “I’m giving you a philosophical reason for recognizing savings versus those who want to live high on the hog and not save anything or invest.”
This is nonsense. The current estate tax has no effect on most people who save for retirement or invest in stocks or small businesses. In fact, the law already treats most dividend and capital gains income more favorably than the money people earn by the sweat of their labor, taxing it at a maximum 20 percent rate compared to a maximum 39.6 percent rate for ordinary income, like wages.
And the estate tax is hardly devastating to those few heirs who have to pay it. They’ll still walk away with at least the $5.49 million an individual or $10.98 million a couple can bequeath. They’ll have to pay a 40 percent tax on any money over and above that amount, so if the estate is $6.49 million, they’ll still clear an additional $600,000 on top of the $5.49 million. I think those heirs will squeak by somehow. I’m not shedding any tears for them.
Grassley formerly defended reducing or eliminating the estate tax by saying family farmers had to sell out to pay it. But he could never find an ordinary family that actually lost its farm that way. So I guess this is his new approach: that we must “appreciate” the fat cats who skipped a second dish of ice cream to save and invest while we miserable creatures at the lower end of the scale foolishly spent our money on things like housing, clothes, college educations and health insurance.
Republicans have long said Democrats want to turn the United States into Europe, with a big social state and high taxes (never mind that people in those countries tend to enjoy better income equality and are happier than most Americans.) But Republicans really are the ones determined to make America into Europe, taking us back to the feudal era when serfs served a permanent class of rich, landed gentry.
by Tom O’Donnell