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Published: Monday, 7/9/2001

Deception and death taxes

Americans fooled by the notion that federal estate taxes - which affect the mere 2 percent of the population with estates larger than $675,000 this year - were unfair because only the rich paid them are about to savor a taste of Bush II democracy.

State officials across the land inevitably will call on the public to take up the slack in lost state estate tax revenues. These are expected to be about 1.5 percent of most state budgets to 4.6 percent in New Hampshire, a state that has no income or sales taxes.

First, states lose because for 75 years they've tied their own inheritance tax schemes to the federal estate tax and it is being phased out.

On top of that, what President Bush did, without fanfare or discussion with state leaders, is accept a Senate version of estate tax repeal that called for states to lose their inheritance tax revenues by 2005, while the federal government, from 2006 to 2011, picks up money states would have collected.

This means that states will be called on to pick up about $138 billion of the 10-year cost of the temporary estate tax repeal, something not envisaged, in particular, by Republican state elected officials, who, for the sake of party unity, supported what Mr. Bush called the “death tax.”

In Florida alone, Gov. Jeb Bush estimates a $210 million revenue shortfall from the estate tax repeal in the 2002-03 fiscal year.

What Republican governors and state legislatures got from their support of President Bush on this one is a chance to annoy citizens by cutting more and more government services - or in Ohio, continuing to seriously underfund higher education - or a chance to annoy citizens by raising taxes to make up for the breaks rich Republicans, through Mr. Bush, are giving themselves over the next 10 years.

There have been enormous and despicable sleight-of-hand tactics with this legislation that robs from the states to make Mr. Bush look good, and, in exchange, puts the pocketbooks of most Americans at risk for the benefit of the wealthy 2 percent. It subverts the positive nature of federalism and exposes, for all to see, how self-serving actions corrupt the political process.



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