By John Brummett

U.S. Sen. Blanche Lincoln said I knew better than that.

I’d merely wondered whether she pushed a reduction in estate taxes to save millions for her richest constituents, the Arkansas Waltons, with whom she’s long been tight.

These “gazillionaires,” as she called them, don’t give a hoot about a marginal reduction in inheritance taxes, she argued. She said they’ve already attended to orderly reduction and protection of their inheritances with expert estate planning.

Indeed, an advocacy group that the Waltons help finance has fought to eliminate estates taxes, not reduce them.

Lincoln said she joined Republican Sen. John Kyl of Arizona in getting this amendment on the budget bill to help small businesses and family farmers in Arkansas. She said these folks provide jobs and commerce and that they need a little break themselves amid all these gargantuan bailouts of corporate honchos and high-financiers.

By a 51-to-48 vote on which nine other Democratic senators, including Mark Pryor, joined Republicans in voting her way, Lincoln passed this amendment to raise the exemption on taxable estates from the $3.5 million that President Obama sought to $5 million. And her amendment would tax any amount over $5 million at 35 percent, not any amount over $3.5 million at 45 percent, as Obama wants and as his budget assumes.

She told me that 35 percent isn’t small change.

They say this will take $260 billion out of Obama’s budget over 10 years. Critics say, sometimes angrily, that it thus runs up the already oppressive deficit and debt merely to put more money into the pockets of the heirs of the nation’s tip-top richest, meaning .02 percent of estates.

The number crunchers at the Tax Policy Center, a joint effort of the Urban Institute and the Brookings Institution, estimate that only about 100 family farm or small business estates nationwide would owe the tax each year as proposed by Obama. They estimate that Lincoln’s amendment would drop that number to 40.

Harry Reid, The New York Times editorial page and liberal bloggers all over the country are scoffing at the notion that Lincoln went to bat for those 60 farmers a year, maybe a couple of whom would be in Arkansas, instead of the Wal-Mart heirs and the super rich.

I asked the senator if she actually knew anyone whose estate situations are such that, in the event of patriarchal or matriarchal death, they would benefit by falling into the gap between Obama’s excluded amount and hers.

“Of course,” she said.

I didn’t ask for names. Perhaps I should have. But I assumed she wouldn’t want to inject constituents into a public debate, and, anyway, she can’t say, or wouldn’t want to speculate on, who’s going to die.

I know this: Lincoln comes from a family farm and from folks with a long heritage in East Arkansas farming. And I know this: Her connection with those people and sensitivity to their interests sustains her politically.

And I also know this: Any Democrat wanting to win a statewide Arkansas election needs farmer backing.

All of that is to suggest the odd possibility that she is telling the truth about her motivation. It may well be that Blanche is intending to help people whose numbers may be scant but whose cultural and political influence on her is substantial, even, you might say, inordinate.

It may be that there are but 60 farm estates a year nationwide benefiting from her amendment. But a couple or more of those are bound to be in Arkansas, and they’ll probably have four or five kids between them.

Saving thousands of dollars in taxes for a half-dozen farm or small business heirs each year in Arkansas is perhaps what Lincoln genuinely seeks to do.

She was telling me about farmers who are making less money because costs of operation are going up even as the value of their assets — on which heirs would have to pay taxes — remains solid, mostly because the price of farmland is not going down.

So Daddy dies and his three kids inherit vast farm acreage that burdens them with high and rising costs and, on top of that, federal and state estate taxes on assets valued all out of proportion to the income the land generates.

I think this concern is stronger than the reality. The worry about estate taxes on family farms is almost a rural myth.

Remember that you pay no estate tax at all unless you’re into the millions and then only on the amount in excess of the exempted millions. So let’s say Lincoln’s $5 million exemption survives in the House, which it almost surely won’t. Then let’s say an estate is worth $5 million dollars plus a hundred dollars. The estate would pay $35 in federal estate taxes, meaning 35 percent of the hundred dollars over $5 million.

People as rich as the Waltons would pay a lot more than that. But they’d save a lot more, too, in Lincoln’s plan as compared to Obama’s. But those savings are “a drop in the bucket” to them, Blanche says.

Do I indeed know better, as she says? Actually, I was just asking. And now all of us have her explanation.
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John Brummett is a columnist for the Arkansas News Bureau in Little Rock. His e-mail address is jbrummett@arkansasnews.com; his telephone number is (501) 374-0699.