WSJ editorial repeated bogus argument for estate tax repeal


Praising the House of Representatives for voting to permanently repeal the estate tax, an April 14 Wall Street Journal editorial claimed that contrary to the allegations of "liberal editorialists," those "typically devastated" by the tax are not the "super-rich," who usually find ways to avoid the tax, but rather "the thrifty dentist, the canny investor, the small-business millionaire." In fact, a column from the same day's Journal noted that only a tiny portion of affected estates are family farms or small businesses.

This misleading argument echoes House Speaker Dennis Hastert (R-IL), who said of the tax: "It's just evil because it takes away the American dream from too many American families."

In fact, very few small farms and businesses are subject to the estate tax, as David Wessel noted in his "Capital" column from the same edition of the Journal:

The estate tax this year will fall on those who leave assets of more than $1.5 million. That is about 18,800 of the 2.5 million people expected to die this year, according to the Brookings Institution-Urban Institute Tax Policy Center. Only 440 -- that isn't a typo -- will be estates in which half or more of the assets are farms or family-owned businesses, the cases so highly publicized by those who want to kill the tax.

The Tax Policy Center report also noted that revenue from these 440 farms and businesses constituted only 5.6 percent of total estate tax revenue collected in 2004. "Small" farms and businesses -- "defined as those valued at less than $5 million" -- constituted less than 1 percent of total estate tax liability in 2004.

In addition, The New York Times reported on April 8, 2001: "Even one of the leading advocates for repeal of estate taxes, the American Farm Bureau Federation, said it could not cite a single example of a farm lost because of estate taxes."

Posted In
Economy, Taxes
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