SHORT ATTENTION-SPAN ESTATE TAX THEATER! House Democrats have screeched and yelled. So why is their own plan so soft? // link // print // previous // next //
THURSDAY, DECEMBER 16, 2010
Michelle Rhee unleashes Chris Matthews: Weve seen a lot of uninformed garbage on Hardball over the past dozen years. Just imagine: As late as December 2007, Chris Matthews still thought that Barack Obamas mother (and maternal grandmother) had been Islamic.
We know, we knowthats hard to believe. But go aheadsee THE DAILY HOWLER, 12/21/07. This guys in a class by himself.
Chris has done it all through the years. In our view, he has been the most destructive cable news host, although hes largely been repurposed as a cable news liberal. That said, Matthews staged one of his most offensive segments on last evenings underfed program.
Chris knows nothing about public schools; in fairness, theres no particular reason why he should. But is there any topic about which this $5 million man wont blather, despite his manifest ignorance? Last night, Chris blustered and blathered about public schools, loudly complaining about various topics he plainly knows nothing about. Rhee, who may even know a bit more, wasnt a whole lot better.
As we type, the transcript hasnt been postedbut this was a disgusting performance. (To watch the full segment, click here.) Feigning outrage on childrens behalf, Matthews blustered, postured and wailed, displaying his vast lack of knowledge. We expect to return to this segment next week as we pursue some educational topics, including the results on those new PISA tests. But for today, well leave it at this:
Chris blustered and flailed against social promotion, asking why children get promoted despite their lack of preparation. At this point, the analysts threw up their hands:
Look whos talking, they sardonically said. Then, they posed a sardonic question: By what process do people like Matthews get promoted to cable host jobs?
What explain this fools promotions? Dont ask, we incomparably said.
SHORT ATTENTION-SPAN ESTATE TAX THEATER (permalink): How does the estate tax work? Presumably, most people dont know. (Its remarkably hard to find out. More on this matter tomorrow.)
Yesterday, Ezra Klein noted a semi-puzzling fact at his Washington Post blog. [T]he estate tax is going to dominate the final arguments over the tax deal, he correctly said. Before were done, well ask why that has been the case. But Klein then offered a quick review of the way the estate tax works:
At the end of the Clinton years, only the first $675,000 of an estate was exempt from taxation. (That rose to $1.35 million if the estate had belonged to a married couple. Never mind where they got that figure.) But under the Bush tax plan of 2001, the exempted amount began to increase, while the tax rate began to go down. By 2009, the exemption was up to $3.5 million [$7 million for a couple], and the rate down to 45 percent, Klein wrote. And in 2010, the estate tax was repealed.
Thats how estates were taxed under Clinton, then under Bushleading to this unusual year, in which estates arent taxed at all. Next year, though, the estate tax returns, even if Congress fails to pass the current proposed budget deal. If no action is taken, [the estate tax] returns in 2011 with an exemption of $1 million and a rate of 55 percent, Klein correctly noted.
Thats the same tax rate which obtained under Clinton, with a slightly higher exemption ($2 million for couples). Those are the rules which obtain next year if no budget deal is passed.
Thats the way the estate tax has worked over the past dozen years. This brings us to an ongoing disputeand to an ongoing piece of theater, a bit of a minor con.
This con has been staged by House Democrats. Its been aimed at us gullible liberals.
Oh, those fiery House Democrats! Klein was careful not to complain about their semi-peculiar conduct. But as he continued, he described the dispute in which theyve engaged in the past weeka minor dispute they have presented as a major matter of conscience. In the following passage, Klein describes the way the estate tax will work under terms of Obamas proposed budget deal. He then describes the alternate proposal made by House Democrats.
Kleins prose gets murky at the start of this passage. Below, well helpfully translate:
Lets translate. The Lincoln-Kyl proposal is part of Obamas proposed budget deal. Its much softer than the Clinton-era estate tax: $3.5 million is exempted ($7 million for a couple); the remainder is taxed at 35 percent. House Dems have screeched about this proposal, expressing their fiery progressive fury. But uh-oh! They have also proposed a tax which is much softer than the tax which obtained under vile centrist Clinton.
Just to summarize, here is the Clinton-era estate tax system, along with next years three possibilities. Well assume the estate in question belonged to a married couple:
House Democrats have bellowed in the past weekeven as they proposed a tax which is much softer (much less progressive) than the system which obtained under Clinton. (Their proposal is also much softer than the system which will obtain next year if no budget deal passes.) Are we trying to raise more revenue to reduce future deficits? Thats one of the House Democrats protestations. But uh-oh! In the following passage, Klein explains how much revenue the three proposals would raise in the next ten years:
In our view, Klein was being polite in this passage; well take a slightly different approach. The system slated to obtain next year would bring in $700 billion over the next ten years. (The rules which obtained under Clinton would have brought in a bit more than that.) By way of contrast, the much-despised Lincoln-Kyl plan would bring in just $300 billion. But uh-oh! Those fiery House Democrats dont do much better! Their loudly ballyhooed progressive plan would bring in just $400 billion.
In short, their ballyhooed plan is substantially closer to Lincoln-Kyl than it is to the rules which obtained under Clinton. As compared to Lincoln-Kyl, the loudly-ballyhooed Democratic plan only generates an extra $10 billion per year! If were talking about deficit reduction, this is a tiny drop in the bucket when compared to the giant deficits currently being projected.
Which of these four estate tax systems is best? That is a matter of judgment. (For ourselves, wed suggest using more than one tax rate.) But Rep. Jan Schakowsky and her fellow Democrats have been screeching and yelling in the past week, pretending that they have come up with a much more progressive plan. They have said the estate tax provision is their principal problem with the proposed budget deal. Theyve even suggested that they will scuttle the deal over that troubling provision. We know, we know: A person can view this conduct as a (constructive) form of negotiation. But heres our question: Based on all the screeching and yelling, how many people would understand that their complaint concerns just $10 billion per year? That their proposal is much closer to the plan they despise than it is to the plan which obtained under Clinton? That their plan is much closer to Lincoln-Kyl than to the system which will obtain if no budget deal gets passed?
Have House Democrats been pimping a con? That is a matter of judgment. But here, as in so many matters, we see the way a relatively minor matter grabs the headlines in a debatein a situation where few people understand the actual stakes involved, which are surprisingly small.
Our question: If these House Democrats are such fiery progressives, why have they proposed such a soft estate taxa plan which is so much softer than the one which obtained under Clinton? When Schakowsky appeared on the December 7 Maddow show (see THE DAILY HOWLER, 12/15/10), a competent host would have asked her. But over the course of the past ten days, we have been mired in an installment of Short Attention-Span Estate Tax Theater. Schakowsky postured about Paris Hiltonand Maddow simply let her do so. The focus on the estate tax was never challenged. Larger questions about this proposed budget deal were pretty much lost in the shuffle.
In yesterdays New York Times, Ray Madoff offered some sensible thoughts about the way the estate tax works. (Dont be fooled by that headline!) Just a guess: Few people understand the way this tax works. More on this matter tomorrow.
Fiery progressive speaks: In yesterdays Washington Post, Rep. Chris Van Hollen (D-Md.) offered this fiery op-ed column supporting the House Dems estate tax proposal. Question: Why is this progressive proposal so much closer to Lincoln-Kyl than to the plan which obtained under Clinton? Why does this progressive plan turn out to be so soft?
Rep. Van Hollen was full of firehe even mentioned Paris Hilton! But why is the Democrats plan so soft?
Caught up in a bit of theater, Van Hollen forgot to explain.