Republicans seeking to repeal the estate tax have rolled out the endorsements of black business advocates who argue the levy is especially painful for minority entrepreneurs.
Harry Alford of the National Black Chamber of Commerce and Robert Johnson, the founder of Black Entertainment Television (BET), separately argued in recent days that the estate tax is an especially bitter pill for minority business owners, many of whom only started getting successful in the last half-century or so.
“Full repeal of the estate tax would allow African Americans to pass the full fruits of their business success to the next generation and thereby laying the foundation for a permanent minority ownership class that can contribute to the economic growth and development of the United States economy,” Johnson, whose worth has been estimated at more than half a billion dollars, wrote to the House Ways and Means Committee last week.
Alford added in an op-ed for The Hill that black business owners are far more wary of the estate tax than entrepreneurs in general, making the case that what opponents dub the “death tax” puts pressure on minority-owned companies to sell at a discount price.
“It’s a legacy-killer,” Alford added in an interview with The Hill.
“People in those districts are the first to cry foul when businesses move away,” he said regarding lawmakers who propose expanding the estate tax. “They need to take Business 101.”
After a heated debate, the Ways and Means Committee passed a measure repealing the estate tax Wednesday on a party-line vote, the tax-writing panel’s first such vote in roughly a decade.
Chairman Paul Ryan’s office circulated Alford and Johnson’s comments hours before the committee considered the estate tax repeal measure. During the markup, Rep. Kevin Brady (R-Texas), the chief sponsor of the proposal, cited a study asserting that the estate tax could erase up to a quarter-trillion dollars’ worth of African-American wealth in the first half of the 21st century.
“This tax doesn’t just hit the big guy. It hits the little guy — like the small business and the family farm,” Ryan (R-Wis.) said during Wednesday’s markup.
Top Republicans in both chambers, along with their allies in the farming and business communities, have long pushed to roll back the estate tax. Rep. Sanford Bishop (Ga.), a member of the Congressional Black Caucus, is the only Democrat among the roughly 120 House members to back the current repeal proposal.
But those efforts to get rid of the estate tax are likely to fall short, at least until President Obama leaves office in 2017. Obama and most congressional Democrats would prefer to expand the current parameters of the estate tax, underscoring that there is significant support among minority policy-makers for increasing the amount of revenue collected through the tax.
Democrats on the Ways and Means Committee on Wednesday also blasted the current proposal to repeal the estate tax as a handout to the richest of the rich, a $269 billion tax cut over a decade that would help no more than 5,500 families in any given year.
“All of those taxpayers would fill less a tenth of the seats at Lambeau Field,” Rep. Sandy Levin (D-Mich.) said Wednesday, referring to the home of Ryan’s beloved Green Bay Packers.
The estate tax currently has a permanent top rate of 40 percent that was put into place by the “fiscal cliff” deal signed early in 2013. The exemptions for the estate tax, which are indexed for inflation, currently stand at $5.43 million for individuals and $10.86 million for married couples.
The Congressional Black Caucus, which saw its budget voted down on Wednesday, proposed returning the estate tax to a 45 percent top rate with a $3.5 million exemption for individuals in its fiscal framework. That would raise roughly $135 billion over a decade, as part of a budget the CBC says “protects and enhances the social safety net that continues to save millions from the ravages of poverty.”
At Wednesday’s session, Rep. Jim McDermott (D-Wash.) suggested that Republicans were using the support of Alford and Johnson to make what he called a “massive unfunded tax break” for the wealthy more palatable.
Johnson, who gave most of his political contributions to Democrats in the last election cycle, has been working to get rid of the estate tax for years, with his efforts applauded by then-President George W. Bush in 2006.
Alford labels himself a pro-business independent. But he also has sparred with Democrats such as Sen. Barbara Boxer (Calif.) and is on the board of the U.S. Chamber of Commerce, which also is pushing to repeal the estate tax.
Levin and other Democrats added Wednesday that it’s hard to square recent comments from Republicans that they want to battle income inequality with the GOP push to roll back a tax that the Joint Committee on Taxation said hit roughly 0.2 percent of estates in 2013.
Democrats have long insisted that incentives like the earned income tax credit do far more to help working families than proposals like repealing the estate tax.
Liberals also point to the House GOP budget, which passed Wednesday and would reduce spending for safety net programs like Medicare, Medicaid and food stamps.
On top of that, the budget calls for overhauling the tax code without adding to the deficit, something Harry Stein of the Center for American Progress said would be difficult to do while repealing the estate tax.
“It’s hard to imagine how to do that without raising taxes on less wealthy people,” Stein said. “You’re hearing all this rhetoric about rising inequality. But when you look at their budget, it comes off as just rhetoric.”