The Estate Tax is Good

I don’t often agree with Sebastian Mallaby, but in today’s Washington Post, his column about the estate tax is reasonable, forceful, and correct:

If the abolitionists succeed, some other tax will eventually be raised to make up for the lost revenue. So which tax does Congress favor? The income tax, which discourages work? A consumption tax, which hits the poor hardest? The payroll tax, which is both anti-work and anti-poor? Really, which other tax out there is better?

The whole thing is worth reading, particularly if you are someone who:

  1. Is in favor of repealing the estate tax
  2. Has less than $2,000,000

The United States should be a place where individuals can work to make a better life for themselves, not a place where an established aristocracy should control most of the capital, in perpetuity. The estate tax is progressive and beneficial, and its repeal would be, well, stupid.

8 Replies to “The Estate Tax is Good”

  1. Mallaby’s argument rests on the notion that the government cannot possibly make due with less money – a zero sum game. If they lose revenue here, they must make up revenue there. I cannot disagree that the most likely outcome is that the government will indeed have to make up for the revenue somehow, because in reality they cannot make due with less money. However, I despise that notion. For some reason, our government cannot make due with less money, but yet they expect that I can and must. I suggest that the government do what the rest of its citizens must do when faced with just such a situation – Make the necessary cuts in spending. The very notion that our government cannot cut spending is offensive to me.
    Now, to address Mallaby’s basic premise of why cut the estate tax because it gives the government money and only really screws the very rich. Mallaby’s argument is basically that because the rich have so much money, it is okay to stick it to them. He calls eliminating the estate tax dumb because it only screws such a small group of people and they are rich, so it’s okay. How about eliminating the tax because it is immoral and unjust? Taking peoples’ property (their money) simply because they have a lot of it to redistribute it to others is simply immoral. Just because some folks don’t like the idea that rich people can pass on their wealth to their children doesn’t in any way justify such a tax. Nor does saying that this stolen money pays for poor people’s services justify the tax. Talking about the wage gap and the establishment of a permanent wealthy class doesn’t justify the tax. It may make some folks feel better to stick it to those who have money (and I am not one of those people), but it doesn’t justify the tax.

  2. Harry,

    There are two ways to look at the government’s inability to cut spending: idealistically, and realistically. Now, idealistically speaking, the government certainly ought to be able to cut spending to maximize efficiency. I happen to believe that the government would be good at doing some large tasks for its citizens, like road building, defense, and social welfare. You might disagree with those choices, and set different priorities. Either way, the government should spend the least amount of money possible to achieve its goals.

    Realistically, however, that is not likely. It is especially pernicious for the government to cut taxes without any intention of cutting spending, as is the case here. Until they can convince me that the budget can be balanced with this tax cut included, I will remain opposed to it.

    As for your immorality argument, I disagree with you entirely. A wealthy individual’s fortune was not solely a result of their individual initiative and talent, although these are likely to have been factors. The medium in which the individual’s success occurred was established and maintained by the government. Laws, banks, commerce infrastructure, and hundreds of other factors contributed to that success. When someone has accumulated an extremely large sum in that environment, it is perfectly fair for them to be taxed on it.

    Not to mention that the wealthy person, being dead, is not getting screwed at all. The estate tax only comes into play with estates valued above $2,000,000. That’s not really screwing anyone.

  3. While I cannot argue with you when you say that realistically, the government doesn’t balance its books and feels no compunction to do so, I will never accept it as unavoidable. Government derives its just powers from the people. I cannot imagine that the governed ever consented for its government to spend like drunken sailors (again, my apologies to drunken sailors) without any sort of accountability. If I had the power and audacity that the government has, whenever I couldn’t afford something, I would just go back to my house and print more money on my printing press or take it from my neighbor. That is, in essence, what our government does. Now, they do try to make up the shortfalls in their spending orgy by confiscating the money of its citizens. Again, that would be like me going to my neighbors and at gunpoint forcing them to give me money to pay for my new car that I just bought but cannot afford. That is unjust. Just like it is unjust for the government to do the same thing. Trying to justify it in any way is nothing more than sophistry. I do disagree with you on who should be building roads, providing social welfare, and providing defense, but that is a different debate.
    Nevertheless, if I use the logic of your argument, I can justify the state completely controlling the lives of those living on welfare, in public housing, all government employees, rich people, poor people, middle class, lower class, tall people, short people, old people, young people . . . you get my point. “The medium in which [any] individual’s success occur[s] [is] established and maintained by the government” does it not? Everyone lives by laws, uses banks, the infrastructure, etc. do they not? So by your argument, the government is justified to take back any of that money upon death. You say that when someone has accumulated an “extremely large sum in that environment, it is perfectly fair for them to be taxed on it.” Is it then also fair for the government to tax someone who has not accumulated an extremely large sum of in that environment (like someone who has a $100k estate)? Why the difference? It seems to me that your argument is nothing more than your personal feeling that because someone is rich, it is okay to take some of that money and give it to other people.

  4. When I see the results of not taking rich people’s money at death – Ted Kennedy, Jay Rockefeller and the Ford Foundation – part of me becomes sympathetic to the arguments about the need for an Estate Tax….but since the Estate Tax didn’t prevent those examples from wreaking their havoc on the rest of us, I say get rid of it.

    For many people, the opportunity to leave their family in better position than they were in is a motivating goal and one we should not discourage. Additionally, the private cost of the tax – the money, time and energy spent in trying to negate it, while making perfect economic sense for the families involved, – is waste of resource for us as a whole.

    But mine is not a closed mind – when I see the likes of Teresa Heinz Kerry and the Kennedy Clan giving up their inherited, never-worked-a-minute-for millions as a gesture that maybe families shouldn’t be able to accumulate great wealth and besides the government will probably spend it wiser than we could – well, then, I’ll be glad to revisit the matter

  5. If an inventory could be taken of all the problems in which the nation was immersed both domestically and globallly, it would be difficult not to conclude that the American people face an imperiled future. Not all but much of the reason for what appears to be the nation’s free fall is a capitalist system that no longer serves society as much as exploits it, often egregiously. Those at the center of it’s power have little compunction about putting their largely greed driven ambitions above the larger needs of the sociey they owe but seldom give their unqualified allegiance. Greed has thus become the nation’s curse and the cause of it turning away from it’s democratic ideals and religious values. America has become a society more about making wealth than better lives for people. Tainted by money interests the political process fails to assure the American people the leadership of the nation is being entrusted to the most capable hands in all of it’s human resources. Too often overlooked, it is governement not business that serves the nation’s vital interests, something made clear in the historic text of the constitution. It is government then not business that should attract the best and brightest of Americans to it’s ranks. The fact the nation has not been staffed by the most talented of Americans, has put it gravely at risk in what has become an increasingly dangerous and uncertain world. The nation has already paid a heavy price for this neglect.

  6. Maryland,

    “Besides the government will probably spend it wiser than we could?” It took me five minutes to stop laughing after that one. That was a good one. That was tears-in-my-eyes funny. That funny joke aside, can you please explain to me upon what principle do you believe that the government is entitled to that money at all? Is it the principle of – They are rich; I am not, so I like that the government can take their money and give it to me? Think about it – If you work to earn the money to buy a boat, pay all of the taxes associated with buying it, and then when you die the government is entitled to more of it? That is a most offensive concept. I just cannot begin to understand, what upon dying, gives the government claim to your stuff. Why does the government want money? Is it to spend in accordance with the very strict guidelines explicit in the U.S. Constitution? I would argue that the answer is a most definite NO. They want money to spend on things that help them (individual politicians) get re-elected. Taking money from rich people when they die is just another way for them to get more money without too much opposition. By evidence in just this small discussion online, we can see that many people are all for the govt. taking money from rich people. It doesn’t make it right.

  7. uhh Harry – please re-read my post. I am against the Estate Tax, the line about the govt. spending it better “than we could” was meant to be part of the rationale for Heinz & the Kennedys giving up their wealth

Comments are closed.