Monday, September 05, 2005


Lying Knave Watch

TaxProf reports that, an "American Shareholders Association study released Friday claims that Death Tax Repeal Will Have No Impact on Budget Deficit:
'ASA has uncovered new information from the Congressional Budget Office (CBO) which demonstrates that Death Tax repeal will be revenue neutral over the next ten years without taking into consideration any effect of higher levels of economic growth stemming from the tax cut.'"
Well, not really.

The ASA argument, breathlessly reported in two pages here, is as follows:
  1. The CBO report on the cost of the repeal of the estate tax underestimates the growth in the economy over the next ten years ("CBO assumes over the next 10 years, real GDP growth will average 2.98 percent. The CBO forecast encompasses a 3.7 percent estimate for 2006 and then averages 2.9 percent from 2007-2015. This 2.98 percent forecast is an underestimation of historical averages and a 1 percent increase of GDP over tenyears is more than plausible.")

  2. Because the total tax intake (using the ASA's assumptions, of course) will approximately equal the tax loss due to the repeal of the estate tax, the estimate of the cost of the tax loss from the repeal of the estate is too high ("Matching up the CBO Death Tax repeal score with the underestimation of GDP growth reveals a small revenue loss of $9 billion over 10 years.")
The people who drafted this nonsense are either (a) disingenuous, (b) hopelessly stupid, (c) mendacious liars, or (d) all of the above.

Just because total tax revenues are underestimated due to a low assumption as to economic growth does not mean that the revenue loss due to the repeal of the estate tax is understated. All that it means is that the revenue loss due to the repeal of the estate tax will, if ASA's assumptions hold, be made up by other sorts of taxes. Since the estate tax falls on the very wealthy and, in fact, primarily on the very, very, very wealthy, and other taxes are either only mildly progressive or actually regressive, the ASA's argument is really as follows:
The CBO is wrong in its estimates, because the revenue loss due to the repeal of a tax on people of great wealth will be made up by an increase in taxes on everyone else.
Which, of course, brings us to the question of who is the ASA? On its face, it would seem to be sort of a grassroots organization of individuals who own publicly traded stocks. It's not. The ASA is s apparently a front for Grover Norquist. See here.

Norquist's principal front organization is "Americans for Tax Reform Foundation" which is primarily supported by the Scaifes (through the Sarah Scaife Foundation and the Carthage Foundation), the Olin's (through the John Olin Foundation), the Waltons (through the Walton Family Foundation), and the Randolph Foundation (funded by a trust established by the guy who invented Vicks Vaporub). See here. ASA is simply another front organization that is part of the ATR family.

In other words, the ASA "study" is yet another hack job from the usual knaves.

1 comment:

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