Senator Chuck Grassley was talking the other day about the new tax bill. Senator Grassley is an 84-year- old Republican. He has been in Congress 42 years. He graduated from Iowa State Teachers College with a masters in 1956. From 1959 to 1975 he was in the Iowa House of Reps. The latter year he was elected to Congress. His net worth is around 3 million which is not too far out of line for a guy of his age who has had a steady job and avoided women, booze and movies.
Right now the federal estate tax will exempt from taxation estates with a value of over 5.5 million dollars. Ma taxes estates with a value of over 1 million. The new federal tax bill will increase the exemption to those earning over 10 million dollars.
The tax rate on the estates that exceed those figures is 40%. So roughly after the new tax bill if you leave an estate of 20 million dollars the amount your heirs will receive tax-free is 16 million dollars. Grassley wants to do away with the tax totally.
He explained: “I think not having the estate tax recognizes the people that are investing. As opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies.”
He’d later explain that: “My point regarding the estate tax, which has been taken out of context, is that the government shouldn’t seize the fruits of someone’s lifetime of labor after they die” I wonder how many people end up with over ten million dollars after a lifetime of labor. And it seems the government is hardly seizing the fruits of their labor leaving them take ten million dollars tax-free and the rest after taking only a portion of it in taxes. The estate tax doesn’t take the whole estate.
Grassley went on “The question is one of basic fairness, and working to create a tax code that doesn’t penalize frugality, saving and investment.” Hardly is leaving ten million untaxed penalizing that. And I’d suggest few get ten million by frugality, saving and investing.
Now here’s the kicker. He added: “That’s as true for family farmers who have to break up their operations to pay the IRS following the death of a loved one as it is for parents saving for their children’s college education or working families investing and saving for their retirement.” Parents with more than ten million dollars are not saving for college education nor are working families investing that type of money. As for true family farms, I suggest not many are valued at more than ten million and of those that are the law could be written to protect them and not the people who get no closer to a farm than the farmer’s stand in Whole Foods.
Grassley’s later explanation came after a great negative feedback on his first statement suggesting two classes of people: those that invest and those others that “are just spending every darn penny they have, whether it’s on booze or women or movies.” Many resented the out of touch observation that you would have had more than ten million dollars in your estate if you had not wasted it on booze, women and movies.
In 2017 it is projected that 2.7 million will die and of that amount only 1 in 487 will pay any estate tax with the present 5.5 million dollar exemption. Under the new tax bill that number will fall. Right now two-tenths of 1% are taxed the other 99.795% of Americans in Grassley’s view have waste their money. But we know that is false but what is true is that the super rich support Grassley and he wants to pay them back.
Another aspect of Grassley’s comment does a great disservice to women. He talked about them as if they were a commodity like booze and movies, something to be bought on the market place. Beyond that it seems the only constituency he is concerned about is men. Surely he’s not suggesting that women are wasting their money on women. But no matter how you slice his original statement and subsequent explanation it is clear Grassley has little concern for the average American nor does the new tax bill.
Thinking of this I though that perhaps Grassley is confused and has mixed up in his mind the statement of a great Irish football (soccer) player who earned huge amounts of money over his career. It turned out after not too many years he was broke. “Mike,” one of his friends asked him one day. “Whatever did you do with all the money you earned.” Mike replied, “Sammy, my friend, I spent about ninety-five percent of it on booze and women. As for the other five percent, I’m sorry to think that I wasted it.”