The estate tax is one of those taxes you hear about a lot, but probably won’t ever have to pay, unless your family is fabulously wealthy. Even then, there are ways around it, and the people that most likely have to deal with it have the money to hire lawyers and planners to help minimize the exposure to the tax.
Nonetheless, this is an issue that has captured the talking-points of Republicans and some Democrats since the dawn of the Republican Revolution. Citing the harm that could befall family farms and others, the specter of the estate tax has been used as a means to scare the dickens out of people that will most likely never have to deal with it.
A quick look at the rules and regulations regarding the inheritance tax, as it is called in Tennessee, shows a graduated rate for estates of $1,000,000 and above. Basically, anything over $1.5m and you’re paying around 10% on the inheritance over $1,000,000. If you inherit an estate, in full or part, that is worth less than $1,000,000, you owe nothing in both state and federal estate taxes (though you may still have to file to prove that, consult a tax attorney to be sure).
That sounds like a lot of money, but the reality is, if your parent’s estate is worth $2m, and you have a sibling, you’re in the clear up to $2,040,000. You can do the math from there to see how many brothers, sisters, cousins, and ne’er-do-well hangers on you might need to avoid this tax depending on the size of your family’s estate.
One thing that no one really talks about is how many people the estate tax really impacts. I mean, we’ve been hearing about this thing for so long, and with such vitriol, that one might think its a whole bunch of people.
So I decided to call up the TN Dept. of Revenue and ask them just how many people actually pay the tax every year for the past three fiscal years. The individual on the other side of the phone didn’t have an immediate answer, so I gave him my email address and a couple of hours later, I had an answer.
The verdict: less than 1000 each year, or about .01% of the 6.8 million people in Tennessee every year.
Here’s how it breaks down.
|Average per Filer
The long hard reality is that people don’t pay anything on the first $1,000,000 they inherit. So if the average is about $112,000 per filer, each year, then these folks are inheriting more than $2.1 million dollars, which means they’re really only paying about 5% or less of their total inheritance in state taxes.
But we’re looking at the average here, when in reality we should probably be looking at the median. I didn’t ask what the median was. I’ll leave that up to some intrepid reporter that’s actually getting paid to research this stuff, but I’m pretty sure the median is going to be a lot less than this $112,000, with a few, very fortunate souls skewing the average with very large inheritances.
So who is really paying the tax…I mean, the bulk of it. Folks inheriting a whole lot more than most of us will ever make, see, or have any kind of access to.
This is billed as tax relief, and I suppose it is, on some level. But this is not the kind of tax relief that’s going to impact…well…anyone but the 1000 or less most fortunate people in Tennessee.
So, is this really tax relief? No, this is wealth relief.
What am I talking about? The growing number of investigations concerning divisions of the City of Memphis government.
The long hard truth is there will probably be even more investigations in the coming months.
It would be easy to simply dismiss these developments as confirmation of a lot of long-held assumptions about City government, but there is something very positive in all the negative attention. While concerning, these investigations are a good thing for the city. They represent an opportunity to root out problems and bring a level of accountability to City government that many people have been longing for for decades.
But its also more than that. This is a reset opportunity. This is a chance for the administration to put policy in place that helps build trust with some of Memphis’ greatest detractors. Its a chance for the City to lead the way and surpass County transparency, which is not nearly as strong as some would have you think.
This also represents an opportunity for the City Council to assert itself by expanding its proper role as a check on the current and future administrations. I’ve believed for some time that the City Council should demand a greater level of detail from City divisions to better understand both the challenges faced by those divisions and areas of unnecessary duplication and/or waste. While the City Council cannot mandate changes in the administration, it can use its role in the budgetary process to push the administration in directions it sees necessary, and use this information to assist public understanding.
Both the City Council and the Administration can use this opportunity start re-writing the city’s story. For as long as I can remember, the narrative about Memphis has been one of crime, poverty, and corruption. No city can grow and thrive under these conditions. While City Government may not have the resources available on its own to deal with all three, crafting a narrative of self-evaluation and corruption busting is one of the first steps in rehabilitating an image, both inside and outside of Memphis, about our community.
Its easy to focus on the negative: reports of corruption, crime, blight, poverty, and coverups. But for each division that is cleaned up, each bad guy that is caught, each neighborhood that gets a problem property dealt with, and every other problem that is dealt with head on, what we often forget is that the resolution of these issues ultimately represent net positives.
To restore faith, we not only have to continue tackling these problems head on, but start telling the story of successes. The simple truth is that for every story you hear about anything bad happening in the city, county, state, or nation, there are 20 good stories you NEVER hear about. Its hard to remember that in the barrage of “bad news”, but its important to try. Its even more important for the powers that be to tell those stories, when they can, to help restore faith.
You can do very little with faith, but you can do nothing without it. – Samuel Butler
The process at the state level has been shrouded in mystery. Maps weren’t released to the public until a week before session and they’ve been pretty well rammed through both legislative bodies. Overall, while the state process has been about as transparent as a slab of concrete and rife with a bad aftertaste of blind self-interest trumping leadership.
By contrast, the process at the County level has been pretty out in the open. There are more plans than you can shake a stick at here in Shelby County, and all of them can be found here as well as their supporting documents. That doesn’t mean it’s been all roses.
Thursday it was reported that an Arlington Chamber of Commerce meeting turned into a rumble between competing sides of the redistricting battle here in the County. Last night, Terry Roland’s community meeting in Collierville was hijacked resulting in a police visit to the event.
With all the shenanigans surrounding the issue, it would seem that today’s meeting of the County Commission would have the potential to be a barn burner, something confirmed on twitter yesterday by Commissioner Chris Thomas to Lauren Lee of Fox 13.
No one knows what Thomas, et. al. have up their sleeve, but this kind of confidence can only come from coordinating with other elected officials, which just may be a violation of those Sunshine Laws the TN House has decided not to mess with this year.
On the Issue
While the issue of redistricting in the County Government could be framed as an intellectual debate over single-member versus multi-member districts, the reality is this all comes down to ideology. Commissioners Thomas, Bunker, Taylor and Shafer want to ensure that there are six safe Republican seats on the Commission. Mind you “safe” means 60% or more. The easiest way to do that is to make huge districts that pack all the Democrats they can into two-three member districts, and all the Republicans they can into two other three member districts. The final district would be what it would be. Voila! a 7-6 split on party and most likely racial lines.
Now, this only seems fair to the side that’s getting disproportionately more than they deserve. In committee discussions from December, Bunker, Thomas and Taylor all spoke of their concerns about the County Commission becoming 8-5 or worse, 9-4 based on partisanship. Oh the humanity!
Breaking Down Partisanship
I decided to look at some election results. All of these are general elections and can be found at the TN Secretary of State website.
What does this tell us? Shelby County votes Democratic more often than not, surprise, surprise. There is only one instance when Republicans outperformed Democrats in Shelby Co. in the past five November elections, Sen. Lamar Alexander, in 2008.
Taken all together, Shelby County consistently votes about 60.6% Democratic, which translates to 7.88 members of the County Commission.
This is why Taylor, Bunker, Shafer, and Thomas are concerned. This is why they’re asking for 60% majorities in Republican districts by partisanship. This is why they want huge districts. Its easier for a powerful minority to neutralize the majority that way.
African-Americans have dealt with this kind of chicanery since the end of the Civil War. Now, thanks to the Voting Rights Act and several court cases, African-Americans MUST be represented in proportion to their population. Partisanship is not protected, and these four Republicans know they will be rewarded by members of their party for artificially maintaining a 7-6 balance.
What About the Other Three?
Of course, this opens up the question of why Commissioners Brooks, Burgess and Ford, all Democrats, support a plan that would artificially prop up a fledgling Republican minority.
Brooks, who is term-limited, has indicated she would like to see voter outreach and education if the districts are changed to single member districts. Seems simple enough. Maybe someone should offer that.
Burgess has been relatively silent on the issue. I wouldn’t want to opine about his motivations without further information.
Ford, the maker of the motion, with the blessing and assistance of Interim Commissioner Brent Taylor and GOP redistricting guru John Ryder, has been very clear. He has future ambitions. Just days after getting elected in an unopposed August General election, Ford indicated that he would like, someday, to be Mayor.
There’s nothing wrong with ambition. Truth is, ambition can be a motivator that drives people to do more and better than they might do otherwise. We should want driven representatives who use their office to prove their worth and build a name for themselves by representing their constituents in a way that makes everyone want to be represented by them.
But there’s also a downside to ambition. The downside is individuals can work to game the system for short-term gains or worse, lose sight of what they’re supposed to be doing in the name of blind self-interest.
I don’t know that this is what’s motivating Ford, but he has communicated no real rationale for his position other than he doesn’t want the status quo to change and he wants his shot at incumbency protection.
Ahh, more altruism.
It’s About Representing the People that are There Not Protecting Your Incumbency
The original idea about the Census, reapportionment, and redistricting was to ensure that states were getting the representation in the Federal government that their populations deserved. The process has always been political, so lets not fool ourselves.
But in addition it should be about the legislative body that results sharing common interests with the communities they represent. That’s the danger of packing, stacking, and gerrymandering; the people aren’t represented as well as they could be.
My inner optimist wants it to be about actually representing the people, which is one of the reasons I support single member districts. In fact, for the entirety of my time writing at this blog I have advocated for smaller, more direct representation in local government. I have argued that we should have more direct representation in Shelby County than we do in Nashville (we don’t by the way), and that districts should be a collection of neighborhoods rather than these behemoths that cover nearly one-quarter of the population of the County.
Regardless of your partisan leanings, this is something we all should want. Folks in Whitehaven have decidely different challenges facing their communities than those near Riverdale. Folks in Midtown have a different perspective than those in Germantown. Yet, each of these pairings fall into districts that include each other. Downtown is different from Raleigh/Frayser and Millington is different from Collierville. Again, those areas are paired for partisan considerations only, not actual governing from those communities and for those communities.
This is what should be one of the key considerations in the redistricting process. Right now, we have members who are more concerned with maintaining artificial partisan counts and ensuring their incumbency. Truth be told, if you’re doing your job, incumbency isn’t something you will have to worry about.
Making Better Government
If we want a better, more responsive legislative body in the Shelby County Commission, we should demand that the districts be smaller, and closer to the people. Its not about making districts that are easier to run for, its about representing the people the best way possible. Maybe some believe these huge three member districts are better because they ensure that someone is responsive if you get a deadbeat. Well, if you do get a deadbeat, other members of the body shouldn’t be put in the position of covering for him/her thus obscuring reality to the people they are tasked with representing. If they’re bad at their job, their bosses, the voters, should know so they don’t make the same mistake twice.It should also be about serving communities.
The map to the left shows the current districts and where the members live. Note, the areas where there isn’t a member for miles.
Collierville, Raleigh/Frayser, the Summer Corridor, Bartlett, the list goes on.
Single member districts would give these communities a better chance of having more direct representation in County government.
I keep hearing that no one cares about this stuff, but if you’re irritated with the way the County Commission, or the City Council for that matter, deals with issues… If you feel that your area is getting the shaft, if you wish you were represented by someone within a 4 mile radius, maybe you should consider advocating for single member districts.
I don’t know many people who think the Commission is consistently working in the best interests of the County. Part of that has to do with the way the districts are drawn, because that affects who runs and how close to you they live. The other part, well that’s up to the voters. But we’ll never get there if we just decide to tune out and let whatever is going to happen happen.
You have a voice outside of the ballot box. If you think the current system stinks, I think its time you used it. You can find your County Commissioners here or just email them all at once using this link.
Also, post about this on your Facebook page, and make sure to tag them in your post. Maybe they’ll get the message.
An interesting exchange on the floor of the Tennessee State House today. Democrats introduced a number of amendments to the House Redistricting plan, all of which were placed on the table by the Republican majority; effectively killed.
By all accounts, this amendment would have been tabled by the Republicans as well, but that’s not exactly how it worked out.
Here’s the floor debate.
You’ll note, at the end of the video Minority Leader Fitzhugh rightly tried to go into caucus to talk this out. It’s not really good form to send a fellow caucus member’s amendment to the table, especially when its likely to be tabled by the opposing side in the first place.
I understand the emotional nature of the redistricting process, but that shouldn’t trump the desire to maintain the long-term working relationship between caucus members. Rep. Parkinson may find he needs a friendly vote in the future that should be a gimmie, but might not be thanks to this action.
Ed. Note: No one has mentioned anything about withholding votes or not supporting someone’s legislation or anything like that. This is based on what I’ve observed from years of watching the legislative process across Federal, State and Local governments. Legislators have long memories and just like regular people, can hold grudges. Contrary to popular belief, they are only human.
Romney, who has been featured in a hit piece produced by Newt Gingrich’s “Winning Our Future” SuperPAC, which has, perhaps, done the 2012 Obama election team the biggest favor ever. It clearly draws a distinction between what some on the left have called an indistinguishable difference between Romney and Obama. Obama never made millions of dollars from auctioning off American jobs for fun and profit.
But the endorsement by Haslam isn’t surprising at all. Both men grew up sucking on the same brand of silver spoons. Neither have really ever held a job they didn’t either buy, or their daddies didn’t help them get. Both of them have benefitted from a corporate welfare system, established 40 years ago by the Nixon Administration and advanced by every administration since, that values the value of wealthy people over the value of hard work.
If you want to understand why things are the way they are, start looking right there, at the shift in our value system at the highest levels.
This morning, the Washington Post is examining Romney’s gospel of “Creative Destruction”. Here’s a couple of quotes from the article:
But like Romney’s work on all the businesses Bain invested in, the primary goal with these companies wasn’t job creation but making them more profitable and valuable. This meant embracing aspects of capitalism that have unsettled some Americans: laying off workers when necessary, expanding overseas to chase profits and paying top executives significantly more than employees on lower rungs.
But some private-equity experts think the link between Bain’s deals and jobs is more tenuous.
“I’ve got a lot of admiration for Bain Capital, but jobs were the byproduct of the mission, not the product,” said Howard Anderson, a senior lecturer at MIT’s Sloan School of Management. “The product was to increase wealth, and in some cases it meant expanding the company. In some cases it meant contracting the company.”
Make no mistake about it, Romney’s creative math that shows 100,000 jobs created during his tenure at Bain completely ignores the jobs that were lost to his “creative destruction”. I’m sure, as is testified by the folks featured in Newt’s 30 min. movie, that the people who fell victim to this “creativity” feel like their lives were “destroyed”, at least for a short time.
As the Christian Science Monitor rightly points out:
Gingrich, Perry, and others are putting particular focus on the people who lost their jobs as a result of Romney’s Bain Capital. Gingrich’s Super PAC will be running $3.5 million of ads featuring emotional interviews with some of them.
But what, exactly, are Romney’s opponents proposing to do about layoffs that harm so many people? Millions of Americans have lost their jobs over the last four years – and as a result have often lost their health insurance, their homes, and their savings.
Are Gingrich, Perry, and others proposing to expand health insurance coverage for jobless Americans and their families? All I hear from the Republicans is their determination to repeal the law that President Obama championed – which still leaves millions of Americans uninsured. Do Romney’s opponents have plans to keep people in their homes even when they’ve lost their jobs and can’t pay their mortgages? No. Do they propose expanding unemployment insurance? If memory serves, most of them were opposed to the last extension.
I’m all in favor of reforming capitalism, but you’ll permit me some skepticism when it comes to criticisms of Bain Capital coming from Romney’s Republican opponents. None of these Republican candidates has exactly distinguished himself with new ideas for giving Americans more economic security. To the contrary — until the assault on Romney and Bain Capital — every one of them has been a cheerleader for financial capitalism of the most brutal sort.
The point is, don’t be fooled by Republicans who are currently engaged in attacking Mitt Romney as proponents for rebuilding the diminishing middle class. These attacks are more focused on the self-interest of the attackers…getting elected, than some ideological difference between Romney, Newt, and Perry.
Eventually, Democrats will join the fray in attacking Romney for his exploitation of both American workers and overseas tax havens that have become the rule rather than the exception for amassing great wealth while avoiding taxation. And while there are plenty on the Democratic side that are culpable for the changes in the tax code and regulations that made all this possible, it was driven, from the get go, by the Republican Party.