By Cyril Baumgartner

Island Forum

An audit of the federal government for 2004 shows that it spent $750,000 per minute more than it collected in taxes.

The estimated worth of all Americans is $47 trillion. To fully repay all those unfunded $750,000 minutes, every American would have to fork over 90 percent of his net worth.

Each American’s share is around $142,000. For Americans working full time, the share is $350,000. The average family income in the U.S. is $42,000.

How do we save our grandchildren from being indebted to other nations, from whom we are borrowing to pay for the $750,000 minutes, which our grandchildren must repay?

We should retain the estate tax, which is scheduled to expire in 2010, in accordance with tax reform legislation passed and signed into law in 2001.

The estate tax affects 2 percent of Americans. It is the most progressive part of the American tax system. Its purpose was to ensure that if the wealthy few did not bequeath their wealth to charity, it should not pass directly to their heirs but should be taxed.

For more than 100 years, Americans generally supported the idea that unearned wealth passed between generations, creating pockets of aristocratic privilege, was not part of the American dream.

The estate tax took from the few rich to relieve the burden of the many poor. It made good sense and the assumption was that it would last forever. But in the tax debate of 2000 and 2001, a coalition formed that successfully undermined that assumption. The estate tax will expire in 2010.

How did it happen? Time/CNN did a poll in 2000, which revealed that a stunning 39 percent of Americans naively believed they either were in the wealthiest one percent or soon would be. The average family income in that year was $42,000.

This erroneous estimation of wealth led to the belief that the estate tax was essentially unfair, and that it should not to apply to anyone. The estate tax opponents then said that it stifled wealth creation and that it was simply unjust.

Then it was re-christened the “death tax,” which was another stunningly successful tactic. It created the image of a ghoulish IRS hovering over the beds of every dying American, waiting to pounce on them when they were most vulnerable. It did not matter that the estate tax did not affect any individual estate less than $650,000 or a couple with an estate of less than $1.3 million. Calling it the “death tax” meant it affected everybody.

Estate tax opponents charged that the estate tax was immoral and likened it to the Holocaust. They said, “Well, it’s only 2 percent — not you, but are you saying it’s okay to loot some minority? That’s Holocaust morality.” It was a another stunningly successful tactic.

Opponents also said it was discriminatory. The estate tax was portrayed as persecuting minorities, who had already overcome discrimination and prejudice in the pursuit of accumulating their wealth. African-American billionaire Bob Johnson ran a series of newspaper ads depicting it as an attack on “the entire black community.”

The good news is that the repeal itself expires in 2011. However, legislation to repeal it permanently has been introduced in Congress. Well-informed Americans should instruct Congress to reject this legislation.

The estate tax must be retained with a $5 million exemption, which is fair and which will help restore fiscal health and sanity to our nation.

C. F. Baumgartner is a Mercer Island resident and frequent contributor to the Island Forum.