Book Aimed at Salvaging the Estate Tax Doesn't Convince
March 5, 2003
Congress last year agreed to phase out the estate tax through 2010. But thanks to bizarre Senate budget rules, the tax is due to spring forth again in 2011 -- just as though nothing had ever happened.
A few people see merit in the estate tax and want to see it preserved, including William H. Gates Sr., father of the founder of Microsoft, and Chuck Collins, who runs small left-wing organizations such as Responsible Wealth.
These two gentlemen were among a group of millionaires and billionaires who signed a full-page ad which appeared in the New York Times in February urging Congress to retain the estate tax. They also co-authored a new book, "Wealth and Our Commonwealth" from Beacon Press, which aims to frustrate efforts to make the repeal permanent.
Critics say the authors fail in their attempts for a variety of reasons:
- At the book's core is the contention that the estate tax is needed to combat a growing inequality of wealth -- but they don't explain why inequality per se is bad, or how the estate tax dampens it.
- Even the authors concede that wealth inequality grew sharply at a time when the estate tax reached confiscatory levels.
- They make no effort to understand why 70 percent of Americans routinely tell pollsters that they favor abolition of the tax -- no doubt because they see it as violating a principle of justice: the right to keep what you have earned and distribute it after death as you choose.
There are, however, strong arguments in favor of abolishing the estate tax far beyond the straw men that the authors rail against.
- It raises little, if any, revenue.
- It does nothing to equalize wealth and imposes large dead-weight costs on the economy, as taxpayers spend money trying to avoid it.
- The very wealthy can afford to fight it and successfully avoid it, but farmers and small businessmen cannot afford to, so the burden falls more heavily on them.
Source: Bruce Bartlett (National Center for Policy Analysis), "Taxed to Death -- and Beyond," Wall Street Journal, March 4, 2003.
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