Estate tax versus Woody Guthrie

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!

 

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  • Along with extension of the billions in Bush era tax cuts on income, the rich certainly got a huge return on their investment: $139 Billion for just the top 2% of the population, according to the Center on Budget and Policy Priorities

    Posted by Roselius Rotger, 02/01/2012 3:18am (3 years ago)

  • No reason inherited wealth should not be taxed the same as wages, lottery winnings etc, you ask?
    Because those dollars have been taxed already when earned by the individual. He/she finds themselves at the end of life with some money and they wish to pass such dollars on, using their discretion. Since you can't take it with you individuals, who don't die broke, look for ways to disperse what they have earned and saved. The idea that one’s hard work, which translated into earned monies, could be scooped up and then squandered by governmental inefficiency is extremely painful to imagine. That's why even middle class people have to hire attorneys and accountants and other specialists to calculate a way to preserve family money.
    I'm not talking about wealth with a capital W. Bill Gates and Warren Buffet can give away their fortunes but the lives of the grandchildren and children won't be altered. It's us little people who have used the Family Sugar Bowl for 70 years who are hurt by this Estate Tax. The Family Sugar Bowl is fuel for America’s engine which is now stalled. It stands between the family and the government as a source of dollars.
    Before it goes into the FSB, earned money was taxed at Federal, State & Local levels and then used to pay family bills. What was left went into the Family Sugar Bowl. There it continued to work, to protect, serve, educate and help the family live out its dreams. It was also tapped regularly for charitable giving and used to enrich the general community. Those with FSB saved for rainy days, sent kids to college without asking for help, saw to medical care of old and young, made sure family members didn’t have to go on welfare during tough times and invested dollars into entrepreneurial ideas of their own or others. Those dollars went on to grow into other jobs that produced taxable income for some other family’s Sugar Bowl. Then as we age the Sugar Bowl might have to go to our long term medical care.
    However, if we've been lucky, healthy & our families have grown independent by watching parents who know how to work AND save, then we have amassed something of a small fortune in our eyes. Two to four million can emerge because of our hard work and 13% interest rates of the 70's & 80’s. We've paid off our extremely modest 3 bedroom brick ranch homes long ago, drive used cars, shop with coupons, don’t shop for designer clothes, never flew 1st class, and have always lived BELOW our means.
    We can't take it with us and we have a family that we trust to do well with the Sugar Bowl. We don't trust that the government will demonstrate good stewardship.
    If the earned dollars, in the FSB, are invested then the interest made is taxed each year. If the dollars are put into a tax deferred interest bearing account then the interest will be tax upon withdrawal according to the tax bracket of the one doing the withdraw. If the original earner is dead and the “withdraw-er” is an heir, the money will be taxed according to his/her bracket. Why stick an additional Governmental-Middleman tax in there?
    The FSB has done its work for the family, the community and the government. Bleeding it by further taxation is both redundant and makes the power of the money anemic.

    Posted by JA Williams, 03/11/2011 12:02pm (4 years ago)

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