If it's Sunday, it's another week of Republican politicians repeating more of their lies on the bobblehead shows. Lindsey Graham really wants to keep those Bush tax cuts in place and when asked by David Gregory if there's any way the Republicans will compromise with the Democrats on taxes, he offers up being willing to work with them on the "death tax" -- or the more aptly named estate tax, as it used to be called before the Republicans started paying Frank Luntz -- which he claims needs to be fixed before it's reinstated to "prevent devastation to small business and family farms."
GREGORY: Is there room for compromise on tax cuts? Say, if the president were to extend all the tax cuts for a period of a couple of years, would that be able to attract Republican support?
GRAHAM: It might. There's certainly some room to compromise on the death tax. In January it goes back to 55 percent, at the end of this year it's at 0. So maybe you could find a way to compromise on the death tax to have something below 55 percent, a $5 or $6 million exemption for American families out there that would prevent devastation to small business and family farms. But if the--the idea of increasing taxes now, David, makes no sense to most people.
And the agenda the president and his Democratic colleagues has offered the country has increased the deficit, increased the role of the federal government. And he ran as a centrist, and most Americans would say, "Well, I never believed he would do all this." And everything has been so partisan. There was a bipartisan bill on health care, Wyden-Bennett, that was rejected. Senator McCain had a $450 billion stimulus bill. But we didn't go down any of these compromise roses--roads, just big government, more spending. And the Democrats don't have a whole lot to talk about going into November other than more debt and more government.
That's some major projection Graham's got going on there when it comes to partisanship and the failure to compromise. He needs to go take a look in the mirror if he wants to see what a partisan hack looks like. And The Center on Budget and Policy Priorities has more on why Graham's statements about the estate tax are ridiculous. It doesn't need to be fixed so that it doesn't "devastate family farms". It didn't do that before and won't after it is reinstated next year.
First, there is overwhelming evidence that the estate tax does not pose a significant problem for farmers. The Urban Institute-Brookings Institution Tax Policy Center estimates that fewer than 110 small-farm estates in the entire nation would likely face the tax in 2011 if Congress reinstated the tax at its 2009 levels, as President Obama has proposed. Moreover, estate tax opponents have not been able to produce a single case in which a family farm had to be sold to pay the tax, even before the 2001 tax law began phasing down the tax significantly. [...]
In fact, the vast majority of small-farm estates already are exempt from the estate tax under the 2009 rules. The TaxPolicyCenter estimates that only 110 small-farm and small-business estates nationwide will owe any estate tax in 2011 if the 2009 estate tax levels are reinstated. Since that figure also includes small business estates that are not farms, this means that fewer than 110 small-farm estates are likely to face the estate tax in 2011 if the 2009 rules are reinstated.
Moreover, this handful of taxable small-farm and small-business estates would owe only 11.3 percent of the estate’s value in tax, on average, according to the Tax Policy Center — well below the average effective tax rate of 18.9 percent for all taxable estates (and far below the top marginal rate for the estate tax of 45 percent under the 2009 rules). One reason for the low effective tax rate is that the first $3.5 million of any estate (effectively $7 million for a couple) is entirely exempt from estate tax, and this large exemption generally protects a significant share of the value of small-business and small-farm estates from the tax. In addition, a number of special estate tax provisions targeted to small-business and small-farm estates (see page 4 for details) allow them to significantly reduce the amount of tax they owe, effectively increasing the exemption to $9 million per farming couple. Read on...