-Caveat Lector- Published on Friday, March 2, 2001 in the St Paul Pioneer Press Repealing Rather than Repairing Estate Tax Could Regild America's Gilded Age by Glenda Holste Peter Barnes, a self-made wealthy man, was blunt: ``We have an aristocracy of wealth in this county. Repeal of the estate tax would make that aristocracy hereditary.'' Barnes, founder of Working Assets, a financial services enterprise that ties use of its products to socially responsible giving, is one of the 550-plus signers of Responsible Wealth's ``Call to Preserve the Estate Tax.'' William H. Gates Sr., the co-chair of his son and daughter-in-law's foundation, got the petition rolling. (Gates' commentary opposing repeal appeared on these pages Wednesday.) ``There is no conceivable justification for repeal,'' Barnes said in a briefing with journalists this week. The briefing was conducted by the Center for Budget and Policy Priorities, a progressive economic think tank. The center has just analyzed Internal Revenue Service data on after-tax income in 1998. Most measures of wealth concentration used in the current tax policy debate are not as recent, so the 1998 information shows an arguably more accurate picture of a continuing trend in which the rich get richer -- and do it faster than the rest of us get ahead. The study found that the top 1 percent of tax filers enjoyed an average increase in income of $69,000 in that year. The income growth among this 1 percent group grew 40 percent between 1989 and 1998, eight times faster than for the income of the bottom 90 percent of the U.S. population. Meanwhile, a drop in the capital gains tax helped the 1 percent at the top reduce the percentage of income they paid in federal income taxes from 27.9 percent to 27.1 percent. In his budget speech this week, President Bush devoted only one sentence to his proposal -- a Republican favorite -- to phase out the federal estate tax. Of course, he had a lot of material to cover in a short time. But it is telling that he chose to gloss over the estate tax issue with the stump speech distortion that to tax estates is to tax the money in them twice. Unfair, he says. What would be unfair is to take care of the very rich at the expense of the rest of us. It is possible to reform the estate tax, increasing exemptions, as has been done in the past, to protect the assets of family farms and small businesses. In fact, the exemption -- $675,000 per individual -- is now rising and will be $1 million in 2006, if the law isn't changed. Congress certainly can revisit the amount that protects family businesses without showering the already rich with more cash. In 1997, fewer than 43,000 people of the 2.3 million who died had to pay estate tax. Repeal would reduce taxes by $55.3 billion in 2010, according to Congress' Joint Tax Committee. That's almost a fourth of all the money from the overall tax cut in the Bush plan for that year. Repeal? No need to use an ax where a legislative scalpel will do the job precisely. Still, the mantra from political proponents has been powerful. They call it the ``death tax.'' The implication is that because we all will die, we all will get socked with a confiscatory estate tax. Not so. In 1997, about 2,400 estates -- the largest 5 percent of estates even large enough to be taxable -- paid about half of all the estate tax. If the estate tax had not existed then, each of these 2,400 estates with assets of more than $5 million would have enjoyed an average of $3.5 million in retained assets. Nonprofit groups that do charitable work are very concerned that if the estate tax is repealed, the very wealthy -- who often endow foundations and other large philanthropies rather than just fork over the money in taxes -- would have no incentive as donors. Gary Bass, executive director of OMB Watch, a Washington outfit that keeps track of the White House's fiscal behavior, was in St. Paul this week, arguing the same case as Barnes. The concentration of wealth from repeal, he said, would revive a problem solved almost a century ago when it was apparent that the Gilded Age had opened an income gap of monumental proportions in America. Theodore Roosevelt and the Progressives took this on, resulting in re-establishing the estate tax to keep America from going the way its founders so despised in the English: a rich aristocracy sustained on inherited wealth instead of work; a place where the class system created the very conditions that led Americans to revolt. Even though the train has been rolling during the past few years for repeal of the estate tax and even though Republicans who favor repeal are in the engineer's seat, Bass is optimistic that when the issue is fully evaluated by a wide array of Americans, the estate tax will be reformed, not repealed. ``I think we can win this (battle against repeal),'' Bass said. ``We had a meeting last week of about 150 groups. There is a growing sentiment, among a range of these groups -- representing kids, religious and civil-rights groups.'' There are billions of reasons to hope he is right. © 2001 PioneerPlanet / St. Paul (Minnesota) Pioneer Press ============================================================================= Boston Globe Welfare reform's success at issue Brandeis study: Data misleading By Ralph Ranalli, Globe Staff February 21,2001 Brandeis University think tank has accused state officials of seriously understating the hunger and other problems former welfare recipients face after leaving public assistance. The state Department of Transitional Assistance gave an overly rosy picture of life after welfare in a report last year, and downplayed more disturbing statistics, the university's Center on Hunger and Poverty said. ''What was disturbing to me was that the DTA wasn't giving us the straight story,'' said Dorie Seavey, director of the center's Food Security Institute, who reviewed the state report. ''There was a discrepancy between what they actually found and how they reported it.'' The question of what happens to women on welfare who are either forced off the rolls, or leave voluntarily, is a contentious one. Advocates for the poor say the welfare reform law, which generally limits recipients to two years of cash assistance, has left some families in more precarious circumstances. But state officials believe the law, which emphasizes work over government benefits, has boosted the quality of life for many families. State officials yesterday insisted their report was not misleading and said they had already taken steps to address hunger-related issues. The state report, ''Life After Limits: A Study of Households Leaving Welfare between December 1998 and April 1999,'' said the vast majority of people required to leave welfare were finding jobs and keeping them. The study, the most extensive ever undertaken of former recipients of public assistance in the state, also found that even those people forced off welfare by time limits enacted in 1995 earned on average three times more than their monthly welfare check. The Brandeis review, however, alleges that key statistics on hunger were buried in the back of the state report and barely mentioned in its executive summary or the glowing press release that accompanied it. The most glaring statistic downplayed in the report, according to Seavey, was that while about 14 percent of those surveyed reported hunger in their families before leaving welfare, that number jumped to almost 22 percent after they left the rolls, a 56 percent increase. There was also a 31 percent increase among families reporting ''food insecurity without hunger'' after they left welfare or their benefits ran out. The food insecurity category includes families who may be at imminent risk of going hungry or who are stretching their food budgets to the point where nutrition is suffering. Some negative statistics that were mentioned in the report, meanwhile, were offered in a way that minimized their impact, the Brandeis review alleges. ''Severe food insecurity'' among people forced off welfare by time limits, for example, rose from 13.3 percent to 23.5 percent over the course of the study. The state report, however, listed the increase as a ''10.2 percentage point'' increase rather than stating the actual percentage of the change - 77 percent. Gloria Nagle, director of evaluation for the DTA and the author of the report, said yesterday that she was ''rather surprised'' at the criticism and defended the presentation of the numbers as appropriate and ''balanced.'' Department spokesman Dick Powers, meanwhile, said that while the hunger numbers were not highlighted in the report, state officials had noted the trend more than a year ago and had already called for measures to address it, including improvements to food stamp programs. © Copyright 2001 Globe Newspaper Company. <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, mis- directions and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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