are raising taxes 2 years from now in the midst of a Presidential campaign, when President Obama, if he is the Democratic candidate, says: Do not worry, I am going to oppose these extensions of tax breaks for the rich, his credibility has been severely damaged, and the American people know it. Can they trust him? That is what he told them then. That is what he will tell them in 2 years. Is he going to be believed? I do not think so. So these tax breaks, while ostensibly for 2 years may, in fact, be for a lot longer than that.
I would also say that while we have talked about—primarily the discussion has centered around extending the tax breaks, personal income tax breaks to the very rich, there are other tax breaks in this proposal which are equally odious.
What this agreement between the President and the Republican leadership does is it extends the Bush era 15percent tax rates on capital gains and dividends, meaning that those people who make their living off of their investments will continue to pay a substantially lower tax rate than firemen, teachers, and nurses.
Think about that. You are a big-time investor. You make most of your income off of capital gains or dividends, and you are paying a 15-percent tax rate. But if you are a worker doing something with your hands or you are a teacher or a fireman or you are a cop or nurse, a doctor, you are paying tax rates that are higher than that. We are extending those 15-percent tax rates on capital gains and dividends.
Then, on top of that, this agreement includes a horrendous proposal regarding the estate tax. The estate tax was enacted in 1916, and it was a proposal strongly supported by Teddy Roosevelt, who believed very strongly that it was not healthy for America to have an ongoing and evolving concentration of ownership. Here is what Teddy Roosevelt said in 1910:
The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which is not for the general welfare that they should hold or exercise . . . No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar's worth of service rendered—not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is passed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective—a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.
How is that? One hundred years ago. That is what he said. I would say he got it right when he said that. It is even more true today, hence the estate tax.
Unfortunately, under the agreement reached by the President and the Republicans, the estate tax rate, which was 55 percent under President Clinton when the economy, by the way, was a heck of a lot stronger than it is today, will decline to 35 percent with an exemption on the first $5 million of an individual's estate and $10 million for a couple.
I made this point earlier, but I think it has got to be made over and over. Our Republican friends have renamed the estate tax the death tax. The implication of what they are saying, and what many Americans believe, is that if I have $100,000 in the bank or $50,000 in the bank and I die, my kids are going to have to pay a heavy estate tax on what I left them. But that is absolutely and categorically not the case. The estate tax applies only to the top three-tenths of 1 percent. This is not a tax on the rich. This is a tax on the very, very, very rich. And under this proposal, which benefits only the top three-tenths of 1 percent, the President and the Republicans agreed to lower the tax rate on the estate tax to 35 percent, with an exemption on the first $5 million.
That is wrong. Let me give you an example of who the folks are who will benefit from doing this. Many of my Republican colleagues have been pushing very hard, not just to lower the tax rate—by the way, this 35 percent is lower, I think, than they ever dreamed they would get, with a $5 million exemption, but what they wanted ultimately, and I suspect will continue to fight for, is the complete repeal of the estate tax.
To give one example—and I don't mean to pick on the Walton family, but just as a flesh-and-blood example—Sam Walton's family, the heirs to the Walmart fortune, are worth, give or take, $86 billion. That is a lot of money. The Walton family would receive an estimated $32.7 billion tax break if the estate tax was completely repealed. Does anybody in their right mind believe that when this country has a national debt of $13.7 trillion and when we have the highest rate of childhood poverty in the industrialized world and our unemployment rate is 9.8 percent, can anybody for one second fathom Members of the Senate saying they want to give a $32 billion tax break to one family?
In terms of the estate tax, what we have done is made it even more regressive. We have given substantial help to exactly the people who need it the least. That is not what we should be doing. Our job—and I know it is a radical idea—should be to represent the vast majority of the people, the middle class, the working families, and not just the top 1 or 2 percent. This proposal, this lowering of the estate tax, which will cost our government substantial sums of money because the revenue is not going to come in, will benefit only the top three-tenths of 1 percent.
Again, if some of my Republican colleagues are successful in their desire— and they are moving down the path—if we repeal the estate tax entirely, which is what they want to do—it is hard to believe, and some of the listeners out there think I am kidding, but I am deadly serious—it will drive up the national debt by $1 trillion over a 10-year period. Lowering the estate tax rate and raising the exemption is clearly an onerous provision.
It is not only the Walton family of Walmart who will benefit. According to Forbes magazine, there are 403 billionaires living in this country with a combined net worth of $1.3 trillion. That is not shabby. That is pretty good. Anyone lucky enough to inherit this extraordinary wealth would benefit the most from repealing the estate tax.
As Robert Frank wrote in his book "Richistan":
The wealthiest people in this country accumulated so much wealth that they have been competing to see who could own the largest private yacht, who could own the most private jets, who could own the most expensive cars, jewelry, artwork, et cetera. In 1997, for example, Leslie Wexner, chairman of Limited Brands, the company that owns Victoria's Secret—
And none of us know what Victoria's Secret is—
paid a German shipmaker to build what was then the largest private yacht in the United States. It is called The Limitless.
There is a photo. It is a nice boat. It stretches 315 feet and has 3,000 square feet of teakwood and a gym.
According to Forbes magazine, Mr. Wexner is one of the wealthiest 400 people in this country, worth an estimated $2.3 billion. Permanently repealing the estate tax would allow Mr. Wexner's two children to inherit all of his wealth without paying a nickel to help this country deal with the enormous problems we have.
I wish Mr. Wexner—I don't know him; I hope he is alive and well—a long life. But I believe strongly that in this country, if we are going to see the middle class survive and our kids do well, we cannot repeal the estate tax and we cannot lower estate tax rates.
I wish to address another issue which I talked about earlier. I think there is some misunderstanding. The Presiding Officer raised this issue at a recent meeting we had. All over the country, people say: Isn't it great that we are going to lower the payroll tax on workers? We are going to go from 6.2 percent, which workers now pay, down to 4.2 percent. People are going to have more money in their pocket, which certainly is a good thing. It is going to cost $120 billion in Social Security payroll taxes.
Here is the point. Yes, we do want to put more money in workers' pockets. That is why many of us in the stimulus package supported a $400-a-year tax break for virtually every worker in America. That is what we said. We
