Republicans scored a rhetorical coup some years ago by labeling the estate tax a “death tax.” They built upon that coup with a subsequent claim that small businesses were the real victims of the tax. An effort permanently to abolish estate and gift taxes, supported by Maine’s two Republican senators, recently stalled. Nonetheless, Republicans promise to keep the issue alive this fall. If they are successful, they will have achieved far more than a tax change. Outright repeal will constitute a threat to major instruments of progressive social policy and even to democracy itself.

Progressives have properly pointed out that repeal of the estate tax would provide an enormous windfall for the rich. Under current law, fewer than two percent of all estates face any Federal taxation. The law also already makes several special provisions for farms and small businesses. In addition, House Democrats, including Tom Allen, have proposed other carefully targeted reforms. These would make it even easier to inherit farms and small businesses without simultaneously extending largess to holders of vast corporate portfolios.

It is one of the great ironies of U.S. social policy that conservatives ride the small business mantra in their assault on the estate tax. Americans have long feared concentrations of corporate wealth and power not merely because they could limit competition but also because they constituted a threat to democracy itself. Now, in the name of small business, conservatives are proposing tax law changes that would make even more immense concentrations of economic power all the more likely.

There is a basic difference between providing one’s heirs the opportunity to live a comfortable life and bequeathing them vastly disproportionate economic and political power. Even under current law, a hypothetical citizen with ten million in assets could still leave his two children more than two million dollars apiece. Invested even in bonds, such assets could guarantee each child nearly a hundred thousand dollars a year for life. Even vast estates still face a top marginal rate of only 55 percent.

With estate tax repeal, a few heirs will gain not only the possibility of a comfortable life without work but also the opportunity to control fortunes so extensive that they can disproportionately shape our media, economics, and politics. If conservative can call estate taxes the death tax, I suggest progressives re-label the measure a plutocracy tax.

Progressives have correctly pointed to the fiscal consequences of estate tax repeal. Once full repeal goes into effect, the Treasury will lose about 60 billion a year. Less widely noted is the ways this proposal fits into the evolution of our whole tax system, a point fully elaborated by the Center on Budget and Policy Priorities. With both estate and gift taxes eliminated, the wealthy can shift highly appreciated assets like stocks to their children. They can then sell those shares in the name of their children, whose tax rates are usually lower, and thus reduce the family’s capital gains taxes. Since fewer revenues will be derived from taxes on income, gifts, and estates, federal revenues will shrink. In addition, the incidence of federal taxation will become ever less progressive. Once the net burden of all taxes, including state and local, is calculated, our tax system as a whole will become regressive.

The damage from estate tax repeal does not stop with Washington. Maine, like 34 other states, ties its own estate taxation to the federal tax. Current estimates are that Maine would sustain a $45 million hit from full repeal.

Can states pick up the slack? Unfortunately, it is more likely that the pressure to cut public services will grow. The wealthy have less need for them and the poor and working-class citizens can’t afford to pay for them. As the quality of poorly funded public services diminishes, the push to reduce them further only grows.

Recent town meetings here in Maine provide an ample illustration of the effects of tax and spending cuts by higher levels of government. State government has provided a diminishing percentage of school funding. Schools increasingly depend on regressive local property taxes. Maine towns must choose between the Scylla of reduced school funding and the Charybdis of inordinate tax burdens on their working class citizens. Schools are gradually losing in this process. Nonetheless, state governments are reluctant to increase progressive taxes on incomes or business services for fear of losing businesses that can cross state borders even more easily than they flee the country.

The estate tax raises two fundamental issues of public philosophy. Are vast disparities in income and wealth a threat to democracy? Does a healthy democracy and even a thriving market depend on a range of generous public services, including schools, transit, public health, and basic research? If the answer to these questions is yes, retention of an estate tax is an imperative.

John Buell is a political economist who lives in Southwest Harbor. Readers wishing to contact him may e-mail messages to jbuell@acadia.net.