"Responsible Wealth" Claims Estate Tax Is Fair
February 21, 2001
A group of billionaires calling themselves "Responsible Wealth" recently made news by opposing repeal of the death tax. They argue untaxed inheritances lead to an aristocracy of wealth and that the rich won't contribute to charities unless the tax code forces them to do so.
Today, Wall Street Journal columnist Holman W. Jenkins Jr. addresses the "aristocracy of wealth" theory, arguing that:
- Growth depends upon capital; but as Nobel winner Franco Modigliani once estimated, only about 20 percent of the capital stock comes from bequests -- while the estate tax turns savings into government spending, reducing the total supply of capital.
- The estate tax does more to reduce the options of upper-middle class people than it does to trim the number of indolent heirs of the super-rich.
In another article, Hilton Kramer of the New Criterion says that one of the many irresponsible claims made by the Responsible Wealth lobby is that people of great wealth will cease to make charitable contributions if the estate tax is eliminated.
- But before the estate tax, wealthy individuals such as Andrew Mellon and Henry Clay Frick created and supported great cultural and educational institutions.
- A survey by sociologist Paul G. Shervich found people with assets of $5 million or more would increase their charitable bequests by 63 percent if the estate tax were eliminated.
Kramer says assertions by the Responsible Wealth lobby that elimination of the estate tax will result in "cutting Social Security, Medicare, environmental protection, and other government programs" is an attempt to create a climate of fear and is pure demagoguery.
Sources: Holman W. Jenkins Jr., "Let's Have More Heirs and Heiresses;" and Hilton Kramer (New Criterion), "Charity Doesn't Depend on the Tax Code;" both in Wall Street Journal, February 21, 2001.
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