Republicans demanded “liberalization” of the estate tax on inherited wealth as the second part of the payback to the rich (the first part was extending the Bush tax cuts for the super-rich) – in exchange for letting workers and the unemployed keep their benefits and income for the coming year. Why not?
After all, corporations and the rich lavished hundreds of millions on their Republican rubber-stamps through anonymous campaign contributions in the November midterm elections. The campaign contributions were enabled by the outrageous Supreme Court decision which permits “corporate fronts” to contribute unlimited funds to candidates without ever revealing the names of the real donors. Now they want theirs!
Together with extension of the billions in Bush-era cuts in taxes on their income, the rich certainly got a huge return on their investment: $139 billion for just the top 2 percent of the population, according to the Center on Budget and Policy Priorities.
The estate tax rate was 55 percent through 2009, with a per person exemption of $1 million, but under Bush-era tax “reform” it went to zero in 2010. The rate would have gone back to 55 percent if the deal had not been passed.
Under the compromise, the rate was lowered to 35 percent, and the per person exemption was raised to $5 million. The cost to the public for this bennie: $23 billion.
As Justice Louis Brandeis once said, “We can have concentrated wealth in the hands of a few or we can have democracy, but we can’t have both.” Even robber baron Andrew Carnegie testified in Congress in favor of an estate tax as the best way to address wealth concentration.
The federal estate tax was established in 1916. In its first 60 years, it, along with other progressive policies, went a long way toward accomplishing the goal of reducing wealth inequality. By 1976, the amount of the nation’s wealth controlled by the richest 1 percent of Americans had fallen from more than 50 percent to only 20 percent. And this greater dispersal of wealth fostered a strong middle class.
The tax policies of the past 35 years, however, have reversed the trend. Today the wealthiest 1 percent own more than a third of the country’s wealth, leaving 80 percent of Americans with just 16 percent of it.
But there is no good reason inherited wealth should not be taxed the same as wages, lottery winnings and all other forms of income.
In an ideal world – at least my ideal – there would be no inherited wealth. Essentially, the concept violates the principle of equal opportunity. While it’s not unnatural for people to want to secure their children’s future, to do so at the expense of other children does them no particular favor, since the price tag always includes a strong dose of corruption. Death urges all to seek some measure of immortality, to leave a legacy remembered beyond one’s time. Accumulated wealth creates an illusion that this can be found in property passed on to one’s heirs. The illusion is often, ironically, exposed by the very richest men and women who choose philanthropy over their own children. Warren Buffet decided to pay for his children’s education but donate the remainder of his immense fortune to public goods. Bill Gates’ heir is really his foundation, involved, for better or for worse, with health care and education across the world.
On the other hand, Woody Guthrie died a pauper, but left a legacy more profound than Croesus – “This Land Is Your Land.”
The song goes: “As I was wanderin’, I saw a sign. That sign said, ‘No Trespassin.’ But on the other side, It didn’t say Nothin’ – This land was made for you and me”!
Eliminate inheritance and leave a legacy of public goods. In its place provide education and health care and housing and opportunity to pursue happiness – for all!