"Every Darn Penny": The GOP's Philosophy on Death and Taxes

Republican Senator Charles Grassley tells the Des Moines Register his party's plan for deep tax cuts to the rich "recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it's on booze or women or movies."

Perhaps Sen. Grassley is replaying an old record from his youth. "Cigarettes, whiskey, and wild wild women," sang the Sons of the Pioneers in 1947. "They'll drive you crazy, they'll drive you insane."

So much for that newfound Republican populism we've been hearing so much about. So why, Senator Grassley, can't we all just be rich, like you?

Every Darn Penny

Working people don't have much to spend on entertainment nowadays, because it takes "every darn penny they have" just to survive. A recent survey found that 78 percent of Americans say they're living from paycheck to paycheck.

More than one-third said they "sometimes" lived paycheck to paycheck, 17 percent said that "usually" did, and 23 percent - one in four - said they "always" struggled to make it from one payday to the next.

The CareerBuilder survey also found that "a quarter of workers (25 percent) have not been able to make ends meet every month in the last year, and 20 percent have missed payment on some smaller bills."

In a related finding, a Federal Reserve survey from 2015 found that nearly half of all Americans said they would be unable to come up with $400 in cash to cover an emergency expense. As NBC News reports, these levels of financial insecurity can be harmful to a person's health.

Making Inequality Worse

It's not likely to get better any time soon. As the Pew Research Center found last year, the middle class is steadily disappearing all across the United States. And inequality will get worse under the tax plan Grassley promotes (1).

Economist Lilly Batchelder summarized that plan's impact succinctly in a recent interview with Dylan Scott and Alvin Chang:

The bill is investing heavily in the wealthy and their children -- by boosting the value of their stock portfolios, creating new loopholes for them to avoid tax on their labor income, and cutting taxes on massive inheritances. At the same time, it leaves low- and middle-income workers with even fewer resources to invest in their children, and increases the number of Americans without health insurance.

As Scott and Chang note, this bill "would make America's income inequality worse. Maybe a lot worse ..."

Frugality, Savings, and Investment

Grassley's tin-eared comments sparked widespread outrage, and his attempts to contain the blowback didn't improve matters. He said his remark had been "taken out of context," adding that he was seeking "a tax code that doesn't penalize frugality, saving and investment."

But the estate tax only applies to assets greater than $5.5 million for individuals and $11 million for married couples. Even Grassley, a multi-millionaire who has held public office since 1959 yet likes to call himself a farmer, would dodge the tax. The only way it might imaginably affect his heirs, he told NPR, is if he and his wife were to die on the same day.

Estates of the size amassed by the Grassleys are rarely the result of "frugality, saving and investment." Increasingly they're likely to be the result of inherited wealth that's been passed through multiple generations.

Grassley waxed lyrical about "parents saving for their children's college education or working families investing and saving for their retirement." But estates of $5.5 million or $11 million are not produced by "working families."

At last reporting, the median household income in the United States was $59,000. It would take the typical couple more than 186 years to save enough to subject their heirs to any estate tax, even if they didn't spend a penny of their earnings.

Philosophy Class

When Grassley evoked a "hundred-thousand-dollar income for two people" to NPR as a reason to support repealing the estate tax, the interviewer pointed out that "very, very few couples" in that category would ever leave estates large enough to be taxed. That led to this howler.

Listen, in no way is my statement meant to dispute the statistics you gave me. I'm giving you a philosophical reason for recognizing savings versus those who want to live high on the hog and not save anything or invest in the commodities.

"High on the hog"? There he goes again, claiming that struggling families fritter away their money watching those darned moving pictures.

But when you get frustrated with the GOP's tin ear, remember Grassley's advice, the one thing he said that may be true. Republicans aren't lying when they say they believe their tax breaks for the ultra-rich and cuts to essential services are in the interest of working families. It's their philosophy to reward those who need it least.

Live and Let Die

In another recent interview, Grassley repeated the Republican canard that income is taxed twice under the estate tax. This is nonsense. Yes, it's possible that the deceased's income was taxed, although wealthy people have access to a lot of tax avoidance techniques. But that income is not taxed a second time.

It is the heirs' income that is taxed after death, not that of the person leaving the inheritance. In this sense, an inheritance is no different than any other income - a plumber's fee, for example.

I pay income tax on my earnings. When I hire a plumber, she pays income tax on what I pay her. That money isn't "taxed twice," because a different person receives it each time.

Rep. David Young, an Iowa Republican, repeated another often-repeated GOP misstatement when he insisted that "death should not be a taxable event." It isn't. Neither the death nor the deceased are being taxed. The "taxable event" is the receipt of $5.5 million or $11 million by the heirs.

Sen. Grassley and his colleagues are likely to win the battle, but they may very well lose the war. It looks like they'll pass their tax bill. But, despite all their focus-group tested talking points, the GOP is losing this debate in the public's eyes.

The Republican tax bill remains extremely unpopular, according to current polls. Unless they can distract the public with other issues, they may pay a steep political price for it.

Apparently, voters know when Republicans are lying - excuse me, when they're being philosophical - about taxes.