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Opinion
 On the Repeal of the Estate Tax...
Congress has given us
estate tax repeal - or has it? A repeal with a "sunset," automatically
giving the tax new life? Oh what a tangled web we weave....
It has been said (Bernard
Berenson) that
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"Governments last
as long as the under-taxed can defend themselves against the over-taxed."
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It has also been said
(Jean Baptiste Colbert) that
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"The art of
taxation consists in so plucking the goose as to get the most feathers with
the least hissing." |
Patrick Henry once said:
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"To erect and concentrate and perpetuate a large monied interest
... must in the course of human events produce one or other of two evils,
the prostration of agriculture at the feet of commerce, or a change in the
present form of federal government, fatal to the existence of American
liberty." |
I believe folks haven't really thought through the issue. They holler that it is "unfair" to tax something that has
already been taxed. But these same people readily accept sales taxes, use
taxes, "sin" taxes, luxury taxes, alcohol taxes, wagering taxes,
business taxes, property taxes, documentary transfer taxes, user fees for public facilities,
parking meters, excise taxes, gasoline taxes (including "gas guzzler"
taxes), utility taxes, and on and on and on. We face multiple layers of tax
every day of our lives and think little of it. The issue isn't how many taxes but
how much, from whom, and how collected.
The fact is, we've had an estate tax since 1916, and folks have been planning
for it for generations. It is one of a very few taxes that you can delay
paying until you die - in fact, you may delay paying it until you and your
spouse both die. When someone says the estate tax is unfair because
you've already been taxed, that's just plain baloney. The tax just didn't
come due until you were dead and buried. Would you prefer to have the tax
come due every year instead? (That's called a "property tax.")
The "how much" issue isn't whether a single type of tax should be repealed, but how much tax is needed to sustain our
government. Here there are, and probably always will be, legitimate differences of
opinion. But assuming that government needs some given amount of tax revenue to sustain itself, that tax will need to be raised someplace.
If it isn't raised with estate tax, it will need to be raised elsewhere - perhaps an increase in (or a delay in reduction of) income taxes.
Ask most people which tax they would rather pay - a tax that they pay now, while they are alive, or one that's payable only after they and their
spouses are dead and gone - and the question isn't even close. A tax that requires one return in a
lifetime (if that), or one that requires returns every year (or, as is
the case with payroll taxes, every payday).....? Is there much question why the death tax has been with civilized societies so long?
We are reminded that with the deaths of the baby boomers, trillions of dollars of wealth will be passing from that generation to the next.
Never before has there been so much wealth passing. Is this the time to do away with this source of tax revenue?
Many say the tax is unfair because it hits "mom and pop" businesses. There have always been provisions for estate tax relief for "mom and
pop" businesses and farmers. (These are perhaps some of the most complex provisions of the law, but they are there nevertheless.)
And there must be a place where you leave the realm of "mom and pop" and enter the realm of the tycoon. This isn't a matter of doing away with
the tax, but finding that place where you are no longer to be pitied but envied.
Perhaps the current "tax free" level of $1,000,000 isn't high enough - perhaps $100,000,000 is too high. These numbers are open to
debate. But if you are taxing only a very small minority of citizens, the "mom and pop" argument fades away.
Now focus on the "from whom" and "how collected" issues. I would submit that the "how collected" issue favors the estate tax, if only for the
reason that it is done only once. As with all questions of taxation, "from whom"
is ultimately the tough, philosophical issue that must be debated and resolved.
The easy answer is "not me."
Focus on the term
"entitlements." What comes to mind? Is it Social
Security? Aid to Families with Dependent Children? Property
rights? Are any of these things innate or guaranteed? Does history
confirm your belief? If you conclude that none of these things is innate
or guaranteed, move on to the tougher questions - what is "best" for
us and why? Do we use taxation as a tool to achieve these goals? Who
pays? If your answer is still, "not me," then who is it?
Do we use the force of government to exact the price, or do we rely upon
societal pressure and benevolence? What should be the measure of the
amount of tax to be collected from each person?
Comprehensive tax reform, of
which I am a strong advocate, does not involve easy answers. What is the
result of the repeal of the estate tax? Are we ready to accept that
result?
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