US Features
US Senate debates controversial abolition of inheritance tax
By Laszlo Trankovits
Jun 8, 2006, 19:00 GMT

Washington - When they saw television pictures of desperate refugees fleeing New Orleans in the aftermath of Hurricane Katrina, the senators drew back from debating a measure to abolish inheritance tax in the United States.

The legislators deemed discussion of the topic in September last year as marking too great a contrast to the drawn-out suffering at the mouth of the Mississippi being played out before the eyes of the nation.

But Katrina has receded from memory and the Senate is set this week to pass a law for which the families of 18 billionaires have lobbied intensively for years, according to media reports.

At stake is the huge sum of 778 billion dollars over 10 years that the state would lose in taxes. Only around 0.5 per cent of Americans making up the rich and super-rich would benefit.

The heated debate has trained a spotlight on the growing economic contraditions in the world\'s richest country, a country that continues to cherish the illusion of a classless society.

In reality doubts are growing. The rich are getting richer.

Even if millions of new jobs have been created, middle-class wealth has grown only slowly, while society\'s less fortunate have been marking time.

The more than 2 million millionaires in the US are among the most faithful supporters of President George W. Bush, and not without reason.

The Republicans have, in the view of the Democrats, contributed to a growing social divide, through their radical tax cuts. Inheritance tax has also largely been eliminated up to 2010.

According to a survey by the Brookings Institute, inheritance taxes are payable in only one out of every 200 deaths.

Now, after the House of Representatives has passed the permanent abolition of the tax, the Senate is to debate the issue.

Conservatives reject inheritance taxes as unjust \'death taxes.\'

\'The government is taking almost half of everything that families have worked for and saved their whole lives,\' says Senator Jon Kyl, pointing to the highest rate of 46 per cent.

But he knows that estates valued at up to 2 million dollars - 4 million in the case of couples - are not affected.

Liberals and those on the political left are outraged.

Senator Tom Harkin refers to \'tax gifts to the millionaires, while there are deep cuts for society\'s weakest.\'

For years the number of people in need has been rising while funds for food vouches and health care have been cut in the face of rising budgetary deficits and war expenditure.

Hollywood star Paul Newman has called inheritance taxes \'sensible and appropriate\' compensation for the acquisition of wealth that the US has made possible.

Farmers\' associations and family businesses have contradicted the argument that the taxes threaten the very existence of small businesses.

Bush and the members of his cabinet alone would gain at least 91 million dollars from the abolition of the taxes, according to the calculations of the Democrats\' Progress Report.

Bush and his supporters on the right argue that their tax cutting policies have facilitated the longest economic boom in US history.

They cite the record number of US home owners and unemployment below 5 per cent as evidence of the efficiency of these economic policies.

And they maintain that the American Dream of making it from dishwasher to millionaire is more relevant than ever.

The careers of Microsoft founders Bill Gates and Paul Allen, who have become the richest people in the world within 30 years, are proof of this, they say, pointing also to the undiminished yearning of millions around the world to seek their fortunes in the US.