Thoughts on the Estate Tax debate

In no particular order:

1. I hate “class warfare” rhetoric. Not only is it almost as damaging to the social fabric as, well, class warfare itself, but it quickly descends to something that ought to be covered under Godwin’s Law. Maybe it’s because, by many measures, I’m fairly well off, but I find generic arguments about how “the rich” are out to screw everyone else (or, from the other side, how “the poor” are out to do the same) to be facile and insulting, and enough to make me consider the contrary position far more favorably than it may merit on its own.
2. That said, I think some rich are out to make themselves richer, even at the expense of others. (Some poor and some middle-class are out for the same, so it’s not exactly a basis for moral high ground.)

3. Reframing the debate as being over the “Death Tax” doesn’t sway me. In fact, that sort of rhetoric turns me off.

4. Cutting large sums of taxes at a time of rising deficits seems pretty goofy to me. It seems goofier when the taxes in question aren’t exactly serving as a huge drain on productivity or investment.

5. Despite valiant efforts by the GOP to paint this as a way to save the family farm or to keep Aunt Suzie from having to sell the business that Uncle Frim built, the number of people this will actually affect was tiny before the tax was tinkered with by Congress, and it’s even tinier now. The money involved may be huge, but the estate tax is not a dagger in the heart of Middle America — it’s an irksome annoyance to the super-rich.

   And those misleading efforts just make me want to reject the GOP position regardless of its merits. Nice going, guys.

6. Estate taxes are, essentially, a second tax on wealth (hence the vague applicability of the term “death tax”). You could argue that we pay second taxes any number of times (e.g., sales taxes), but these are an exceptional case, and arguably unfair on that basis.

   Or are they? If we treat the estate as “income” to the recipient, as opposed to a tax on the giver, then it seems, perhaps, fairer. Though, then, why it should not be therefore considered a part of ordinary income and taxed as such for everyone is another question.

7. Though, even under the old estate tax regime, it was highly unlikely that I would ever have an estate large enough to be so taxed, I have absolutely no desire to see anything I’d bequeath to Katherine taxed by Uncle Sam. I don’t think I’d feel any differently regardless of my income bracket.

   It’s easy to say, “Oh, the estate tax only keeps the kids of the super-rich from getting wads of loot that they didn’t earn themselves.” But, essentially, any inheritance could be seen as the same. Whatever we pass on to Katherine will be something she didn’t earn. Anything my parents pass on to me will be something I didn’t earn. Should that be subject to some measure of taxation? How much? Why (as asked above) distinguish it based solely on the source (inheritance, vs. income)? Why should only the rich be subject to that, aside from their being able, arguably, to better afford it? (Arguably the super-rich could afford to be taxed at 90% of their income, or everyone could afford to be taxed to a maximum net income of $100,000 a year. Are those good ideas?)

   There’s a very grey, fuzzy line in there between what’s reasonable and what’s not. That both sides in the debate seem to prefer absolutist arguments (which are easier, I suppose, that nuanced debate over where that grey line is) hardly helps matters.

8. That the estate tax only hurts a small segment of the population doesn’t necessarily make it right, mind you. Progressively redistributing wealth from some to others is not always automatically the right thing to do, though I think there is a general societal benefit to it within certain bounds. I can see, though, why those who are subjected to the estate tax wouldn’t want to have to be in that position, even if they are in a position to best be able to afford it.

9. Tax policy does not exist in a vacuum. At the moment, no doubt folks who are subject to the estate tax do what they can to minimize it — creating various charitable trusts and the like. If the estate tax is done away with, how does that change the incentive of where people put that money, and what ripple effect does that have. Unintended Consequences is a specter that perpetually hovers over Washington.

10. The estate tax repeal, while perhaps defensible in principle, has such an odor of the rich-screwing-everyone-else, about it that the GOP leadership, even assuming they are all upstanding public-minded citizens acting solely for the highest ethical reasons, ought to be downplaying it like crazy. Instead, their obsession over the matter only further tars the party, justly or not, as a bunch of greedy, power-hungry oligarchs, out to make sure that their kids can afford five mansions instead of just four.