Ask for the Whole Loaf, You Might Get It
January 22, 2003
Debating estate tax repeal with Bill Gates Sr. brought home to Bruce Bartlett the truth that if you ask for a full loaf you may get half; but if you start asking for half a loaf, you may end up with nothing.
It applies both to the estate tax and the elimination of taxes on corporate dividends.
Gates has coauthored a book on why the estate tax should be kept and not abolished in 2010 as current law dictates.
- Gates argues that the wealthy benefit from stable government that keeps the peace, enforces contracts, trains the workers that business needs, and conducts much basic research that has given rise to great fortunes.
- Therefore, the wealthy should give something back to society when they are gone.
- Anyway, giving a lot of money to your children often ruins their lives and the government needs the revenue.
Gates concedes the need for estate tax reform -- he admits that the previous $600,000 exemption level was much too low. He says we should exempt $7 million of an estate, but tax the balance.
Had estate tax supporters proposed that several years ago, they might have preserved the estate tax. But it has been repealed. Because of a Senate rule, tax cuts could only be enacted for 10 years, and the estate tax comes back in 2011, after ceasing to exist for just one year.
Estate tax supporters hope to convince Congress not to extend repeal beyond 2010, but permanent repeal is more likely because the repealers demanded the whole loaf.
Similarly, President Bush's decision to seek elimination of taxes on corporate dividends instead of a 50 percent exclusion changed the tax cut debate. Some sort of dividend relief appears inevitable, even if total elimination is not achieved.
Source: Bruce Bartlett (senior fellow,) National Center for Policy Analysis, January 22, 2003.
Browse more articles on Tax and Spending Issues