House GOP Votes to Take Food From the Mouths of Hungry Children to Give Huge Tax Break to Children of Multi-Millionaires -- Really?

04/21/2015 07:57 am ET | Updated Jun 21, 2015
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Last week the House Republicans took an amazing vote. They literally voted to take food from the mouths of hungry children in order to give a huge tax break to children who were born with a silver spoon in theirs -- the sons and daughters of multi-millionaires.

I am not exaggerating. The GOP voted to eliminate the estate tax. But the estate tax only applies to estates larger than $5.4 million for an individual and $10.9 million for couples. Eliminating the estate tax would benefit only 5,500 families in America (.02 percent of the population). And 75 percent of the benefits would flow to children who inherit estates of $20 million or more.

And some of those are huge fortunes. Eight Americans earned $10 billion in income in 2013 alone. That's enough income to pay 200,000 average American workers.

Forbes Magazine estimates the total net worth of the world's billionaires at $7.05 trillion dollars -- an average of $3.56 billion. Fifty-seven of them are from the United States.

Two of those, Charles and David Koch -- who inherited their initial fortunes -- are worth a combined total over $80 billion. You can see why they want to eliminate the estate tax.

The GOP took this vote only weeks after passing a budget that cut SNAP -- the Supplemental Nutrition Assistance Program -- by 34 percent or almost $125 billion -- even though there is a crying need for nutrition assistance, especially among children. In fact, almost 16 million kids live in families that are officially categorized as food "insecure" -- that's 19.5 percent of all households with children. It's even more (20.9 percent) for families with children under six.

That's right, the GOP voted to allow more kids to go to bed hungry at the very same time it acted to spend $270 billion in order to increase the inheritances of the children of the super-rich. Not exactly the version of right and wrong you were taught in Sunday school.

The idea that helpless children should be left to go hungry so children of the wealthiest among us could have even more expensive playthings -- more junkets to the South of France -- more $5,000 designer blouses -- more $25 million dollar penthouses overlooking Central Park -- is simply immoral.

Wouldn't want to deprive the children of the super-rich of their ability to buy a Richard Mille RM-19-02 Tourbillion Fleur, limited edition wristwatch that sells for a mere $1,090,000. After all, who wants a watch that's not surrounded by 30 diamonds? Hard to do without a watch that every hour "rhymically opens its white-gold petals, a stamen of bling rising out to mimic the flower's pollination." And you thought a $10,000 Rolex was the height of extravagance.

Can't imagine living without that little get-away place in Kiawah Island, South Carolina that sells for only $20 million.

Or there is the must-have "American Pie" original manuscript that Christie's estimates will draw somewhere between a million and $1.5 million at auction this month -- have to have a little spare pocket change so that can be displayed in the front hall.

And while we're buying things at auction, Sotheby's is offering one of only six 100-carat diamonds ever to go under the gavel -- a beautiful South African emerald-cut stone that it calls the definition of "flawless" -- estimated selling price $19-$25 million. Wouldn't want to deny some young debutante the thrill of stunning the crowd with that bobble at her "coming out."

And you certainly wouldn't want anyone who had become so accustomed to the finer things as they grew up the ability to stay in the best $5,000 a night hotel suite when they fly over to Paris for the weekend on the family jet after mom and dad have departed this world.

Far better that other children go to school without breakfast -- or have to skip a meal every day or so.

And if it's so important that every kid gets a meal, why not let ordinary working people pay for it with higher sales taxes or something else that doesn't cut into the lifestyles of the rich and famous? You know, the same working people who make as much in a year as many corporate CEOs make in two hours.

Of course if we really wanted to reduce the amount government spends on programs like SNAP -- formerly food stamps -- the best way would be to raise the minimum wage. Fifteen dollars an hour would be a good start.

Forty-two percent of Americans make less than $15 per hour. And a recent study shows that $153 billion in federal benefits are spent to subsidize the incomes of those hard working Americans. That's money that in effect goes to subsidize the companies that employ them --- taxpayer subsidies for companies like Walmart and McDonald's.

Those people work hard for a living and should be paid a living wage by their employers.

The people who would benefit from eliminating the estate tax did nothing whatsoever to earn their inheritance, except "pick" the right parents. No hard work there. Frankly, many have been spoiled rotten since birth and never put in a honest day's work in their lives. They had all of the advantages of connections and money. Many were given the ability to go the best schools. Some benefited by being "legacies" or the kids of big donors -- so they got into the best colleges (affirmative action for the very rich).

The GOP voted to hand over millions to the likes of Paris Hilton -- and Hilton's brother, Conrad. According to Salon, Conrad was recently arrested for assaulting flight attendants in what it called "an epic air rage tantrum." The London Daily Telegraph wrote that, according to an affidavit, witnesses said he reportedly announced "I could have you fired in five minutes. I know your boss. My father will pay this out. He has done it before. Dad paid $300,000 last time." In the course of the rage he was reported to have said: " I will f_cking own anyone on this flight; they are f_cking peasants."

Clearly the GOP has it's priorities straight: cut food for hungry kids to give guys like Conrad Hilton a gigantic tax break. Really?

The estate tax has been used in many western nations for the last two centuries -- both to raise revenue and because it discourages the creation of a permanent aristocracy. The essence of Jeffersonian democracy was the notion that society should be a meritocracy -- where your success is based on what you could do, not the accident of your birth.

In much of Europe when America was founded, the opposite was true. In his extraordinary book "Capital in the 21st Century," Thomas Piketty documents how a much higher percentage of late 18th and early 19th century European wealth resulted from inheritance than from work or individual effort. Not so in early 19th Century America.

According to Piketty, in 19th Century Europe:

... the lifetime resources available to the wealthiest 1 percent of heirs... were 25-30 times greater than the resources of the lower class. In other words, a person could afford to pay a staff of 25-30 domestic servants throughout his life.

He or she could, in other words, consume the labor of 25-30 other people in the society.

At the same time the, resources afforded the top 1 percent of earned incomes (in jobs such as judge, prosecutor, or attorney....) were about 10 times the resources of the lower class.

So he or she could consume the labor of only 10 other people in the society.

Much better to be born well, or marry well, than to go get educated, create a new innovation, or be productive doing anything. Things got even worse in the Belle Epoque of late 19th Century Europe. And things in America changed too, so that by the Gilded Age, America was fast losing its meritocratic advantage.

The upheaval of the Great Depression and World War II changed all of that. In the Post-War years the primary source of income for the top percentile was work, not inheritance -- both in Europe and the United States. This was a cause and a result of the major reduction of income and wealth inequality over that period.

But since the 1970's the importance of inherited wealth is once again on the rise. Once again, this is both a cause and an effect of a massive increase in the concentration of wealth. But the importance of inherited wealth -- and the reduced importance of meritocracy -- run directly contrary to the underlying values of the United States, and to our vibrancy, creativity and long-term economic vitality.

Of course economies stagnate if productivity increases faster than the wages of the consumers, since consumers must have money in their pockets to buy the increased products they themselves produce. Former Presidential economic adviser Larry Summers estimates in a study that if the distribution of income were the same as it was in 1979, the bottom 80 percent of the population would have an additional trillion dollars -- or $11,000 per family -- to spend each year. That consumer demand would create one hell of a lot of new jobs.

But it is also true that when inherited wealth dominates earned wealth, the incentives of the society shift.

The Estate Tax was first passed in the United States to generate revenue in a progressive fashion, to prevent increased concentration of wealth over generations, and to impede the development of an aristocracies like those that stifled meritocratic development in Europe.

Progressive taxes, as Piketty points out:

.... offered a way of limiting the inequalities produced by industrial capitalism while maintaining respect for private property and the forces of competition.

In fact Piketty's exhaustive economic analysis concludes with the view that:

To regulate the globalized patrimonial capitalism of the twenty-first century, rethinking the twenty-first century fiscal and social model and adapting it to today's world will not be enough.... The ideal tool would be a progressive global tax on capital, coupled with a very high level of international financial transparency. Such a tax would provide a way to avoid the endless inequalitarian spiral and to control the worrisome dynamics of global capital concentration. Whatever tools and regulations are actually decided on need to be measured against this ideal.

In other words, Piketty argues convincingly, that from an economic point of view, we need additional taxes on capital like the estate tax -- not less. In fact, he believes we need international agreements that agree on new taxes on capital the same way we currently negotiate trading rules. And, he suggests, a good place for the world to start would be taxes on capital in big economic blocks like the Euro-zone, South America and the United States.

Not only that, we need to get our priorities straight. Time to make sure that every child in America has enough to eat before we pad the pocketbooks of the sons and daughters of a tiny group of multi-millionaires.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on He is a partner in Democracy Partners and a Senior Strategist for Americans United for Change. Follow him on Twitter @rbcreamer.