Ugh. I think I might sinking into "the blogosphere." Help! Hopefully my next post will be about something silly and random, like iTits. Oh well. Until then.
You know what's silly? Calling the "Estate Tax" a "death tax." A few months back, PBS ran this excellent Frontline episode called "The Persuaders." It's about marketing and whether and how marketing works. It was a really fascinating behind-the-scenes look at how a company chooses a new direction for their logos and brands. One of the people they talked to was this guy named Frank Luntz.
Frank Luntz was hired by the Republican Party to change their brand. They had become the "old rich white guy" party and they wanted to appeal to a younger, hipper generation. They wanted to broaden their message and find the best ways of getting the everyday person to understand their political messages.
Admittedly political positions can be a little difficult to comprend, especially for those of us who don't deal with every political issue. Take, for example, the "Estate Tax." For the most part, none of us will ever receive an estate tax. None of us will receive income from an estate that's been taxed. It doesn't affect a whole lot of people. However, it does effect those that have estates that can be taxed (over $2 million, I think??) and it taxes them pretty severely - to the tune of up to 55% (but, trust me, if you are paying the estate tax, you can afford an accountant and attorney who will make sure you aren't paying the full 55%). Anyway, Luntz is a bit of red herring in all of this, because his only role was to change the name of the "the estate tax" to "the death tax" because it makes it sound much more ominous, and thus like something no one would want, rather than an "estate" tax which connotes rich, white guys. So, changing it to "death tax" makes it seem more immediate to those who will never be impacted by it. Silly, right?
Anyway, Republicans (rich old white guys) hate this thing. Why? Because like Capital Gains Taxes it is a double tax. Not only are you taxed when you earn the money, but you are taxed when you try to give the money through inheritance. In this regard, I agree with the rich old white guys. It seems superfluous and unnecessary. If you must, raise the tax on the income, but what's the point of taxing the savings and inheritance?
However, this article, in the Christian Science Monitor is probably the best call against the estate tax that I've seen. And, it sort of makes me mad. The reason it makes me mad is that it presents a perfectly legitimate, and entirely persuasive, reason to keep the estate tax (the "death tax" if you will). Yet, jackasses like Dick Durbin run around to every media outlet that will let them spout their rhetorical bullshit and proclaim that we should keep the estate tax as a way of "sticking it to the man." (e.g., "This bill has nothing to do with the average American," said Sen. Dick Durbin, D-Ill. "It is about the wealthiest people in America flexing their muscles and pushing through on Capitol Hill the most outrageous piece of special interest legislation in modern memory.") That's not a reason, it's just argumentative.
I guess I'm fairly conservative in these matters. I believe that if I make money, that I pay my taxes and then leave me alone. If I don't use up all my money before I leave the earth, that shouldn't be seen as a taxable event. But, as the article points out, wealth differential is almost at an all-time high. And, it is the disparity in wealth that leads to the accumulation of power by those with money (they can afford to 'buy off' the democratic process). Of course, one can argue that even WITH the tax they can still afford to buy-off the democratic process. But, the argument goes, at least it costs them a lot more to do it, and we get some social programs paid for by their money until the reckoning day comes.
So, my answer is this: get rid of the estate tax and get rid of special interest groups. Or, only tax the rich, so that those with lower incomes can take their money and recycle it into the economy and actually be able to afford their own special interest groups.
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4 comments:
I thought of doing a whole blog entry in response here, but I'm going to try to limit myself to a comment. We'll see how it goes. I want to make two points.
First, I object to calling the estate and capital gains taxes "double taxes." By the same logic, EVERY income tax is not only a double tax, but an "indefinite #" tax. Why? Well, all money was someone's income, and so was taxed already. The money I use to buy my widget from Best Buy was taxed; this money is taxed again as Best Buy income; more, though different, taxes apply to payroll; then it's taxed as income for the Best Buy employee. Of course, it's all a bit more complicated than this, but it is still true that income is taxed, and the "same" money is taxed an indefinite number of times as it is transfered, and thus becomes income an indefinite number of times. The estate tax is a tax on what is in fact income for the beneficiary. Captital gains taxes, as far as I understand them, do not tax the initial investment, but only the positive change in value of the investment; in other words, they tax the income realized from the investment. I think the use of the words "double tax" is rhetoric of exactly the same kind as you point out with regard to the use of "death tax."
Second, a broader (dare I say philosophical) point. You say that you agree with the rich white guys insofar as you do not see a good reason to tax inheritance (apart from the article you link to). I see a vital reason. Of the essential underlying assumptions of the American political and economic systems is that they function as a meritocracy. This is a false assumption. In order to be a meritocracy, the United States would have a ensure some reasonable equity in starting conditions for its citizens. This is not currently a reality. The estate tax is one effort to aggressively redistribute wealth to help assuage the vast inequity in starting conditions between the rich and the poor. Note that raising the tax on income doesn't directly attack the problem of unequal starting conditions the way the estate tax does. The current disparity in wealth gives lie to the claim that we are a meritocracy, and further undermines any policy based on this assumption. As an example, the whole rhetoric of "personal responsibility," and the policies based on it, depend on this false meritocracy assumption. Therefore, these kinds of policies effectively codify, support, and ensure the continuation of existing inequity.
As to your first point: fair enough about "double tax" being equivocal rhetoric. And I keep having this exact same internal debate every time the subject of the estate tax comes up. But, I think, by "double tax" what I mean, is that the same dollar is taxed while held by the same person. In the case of the estate tax, it is not the beneficiary that is taxed upon receipt, it is the estate. The estate is taxed before distribution, thus the taxes reduce the estate available for distribution to beneficiaries. So, it is a tax on the same dollar held by the same person - a "double tax" if you will (though I'm sure you won't ;) Thus capital gains are actually "triple taxed" if they are part of an estate (once as income, once as capital gain, once as accumulated wealth in the estate).
As to the second point, I think that was, without being quite that explicit the point of the article. But, I again disagree. And, it triggers an internal conflict. On the one hand, the wealth keeps those with it in power. On the other hand, wealth (rightly or wrongly) is a convenient short-hand for merit. Thus those with more wealth have risen in the meritocracy. Obviously, as you point out, this isn't particularly true for those who come after the one who rightly accrued the merit. They have the money (the indicator of merit) without actually expending effort to obtain the merit.
On the other hand, the other option is the taking of an individual's property by the state. And, there you have a greater conflict between weighing the benefits to the state in general resulting from the taking, and the erosion of American ideals by the state taking personal property of its citizens. An act we look upon with great disdain (to wit: eminent domain disputes). So, we weigh on one side, the purpose to which the taking is being put (by numbers, about 60% of it funds our military); on the other side, we weigh the erosion of Americanism by taking citizen's personal property.
Thus far, I've stayed on the side of preventing the taking (which I feel is internally consistent with my feelings about eminent domain) and leaving the individual with his property. But, the arguments raised by you, and by article, make it a very hard decision.
Keep it up, you two - this is great studying for the GRE vocabulary!
keep it up, you two. This is great vocab prep for the GRE!
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