“Estate tax” really is a tax on dying

There’s the old story of President Coolidge leaving a church service one Sunday when he was accosted by a reporter. The prez was known as “Silent Cal” for good reason; he was a man of few words, and the fewer the better.

But eager to get a quote, the reporter asked Cal whether he had liked the sermon. “Yep,” replied the president.

“Well,” said the reporter, “what did the minister preach about?”

“Sin,” came the answer.

“And what did he say about sin?” the reporter persisted.

“He’s agin it,” said Cal, and he paced on down the sidewalk, interview ended.

The estate tax is back in the news again as the US House voted (again) to eliminate the tax permanently. The House has tried three times before, but the measure has never made it through the Senate, and faces tough going again this time.

As Calvin Coolidge’s preacher stood on sin, so I stand on the estate tax - I’m agin it. Believe me, it’s not because of the yachts, private jets, villas and Caribbean islands my children will inherit. From now to 2010, the tax’s floor of estate value (the amount excluded from the tax) is several multiples on the safe side for my leavings, and very comfortably above what my siblings and wife stand to inherit ourselves.

Here’s why I’m agin it. As I pointed out in a comment on James Joyner’s post about the topic, the tax on an inherited estate is made up of the remnant of income that has already been taxed.

Suppose I sell my blog to Paris Hilton [see the post - DS]for a million dollars. Right off the bat the gummint get about $350,000, leaving me with $650,000, which I put in a bank. The next day a runaway oxcart bowls me over and kills me. Now the gummint wants another 30% or so of the $650K for no other reason that I died. ...

The estate tax is literally a tax on dying.

Again, I know that there is a floor, but the math and the principle works the same whether there is a floor or not. This is a tax that kicks in solely because of death, and taxes net worth that is in fact the remainder of income already taxed. Its opponents’ characterization of it as a “death tax” is literally correct. And James made a good point: if the government gets to confiscate a sizeable chunk of a rich person’s net worth, why wait until s/he is dead?

Further, if the argument is that it’s unfair for the sons and daughters of the rich to have it better than the sons and daughters of the poor, then why wait until the death of the parents to do something about it? It’s not immediately clear to me why it’s fine for Paris Hilton to get to live off her daddy’s millions while he’s alive but not after he’s gone.

Exactly right. In another post, James reveals the class envy that is really at the heart of the pro-tax side. He quotes Kevin Drum, writing in the Washington Monthly,

... The only thing being taxed is estates of robber baron size; the only people being taxed are the pampered children of the robber barons; ... .

Get that? “Pampered children” are for some reason especially deserving of having their property confiscated, above the level of the rest of us schlubs. Replies James,

To the extent that we want our society to be based on “merit,” inherited wealth creates disparities. If the solution is governmental confiscation, though, I want no part of it.

For that matter, if social engineering is our goal, why not simply tax the estates of all decedents one hundred percent? Then, no one would have unearned income.

It is a reasonable question: why is Kevin’s thirst to confiscate the property of the rich slaked by confiscating up to 47 percent rather than all of it? (That’s Paul Krugman’s figure in the NYT, the WSJ says the top rate is 45 percent.)

Come we now to Austin Bay, whose wife is a trust and estates attorney. Austin quotes an Investors Business Daily piece:

A 2003 Joint Economic Committee report states: “For every dollar of tax revenue raised by the estate tax, another dollar is squandered in the economy simply to comply with or avoid the tax.”

Heritage Foundation economists estimate that the federal estate tax alone costs the U.S. between 170,000 and 250,000 potential jobs each year, because the investments that would have been made in the economy are never made…

…the Warren Buffetts and Paris Hiltons of the world can afford to hire an army of lawyers, tax accountants, and estate planners to deal with the day when the taxman cometh in conjunction with the angel of death. Small-business owners, family farmers, and the successful entrepreneur can rarely afford this luxury.

It is the heirs of the not-so-rich and the nouveau riche, who made their money the old fashioned way by earning it, whom the death tax hits hard. As Thomas J. Stanley and William D. Danko reported in their 1996 best-seller, “The Millionaire Next Door,” 81% of millionaires made their own money…

…The death tax punishes the entrepreneur and small businessman and those who work hard, save and invest.

For some reason, confiscation by taxation of personal property has a strong appeal to a lot of my colleagues in the clergy. But their arguments don’t really difer much from Kevin Drum’s “pampered children” slur and generally reek of a thelogy of envy rather than sound biblical exegesis. They say, generally, that the wealthy have a duty to use their wealth for the benefit of the poor - let us say for the benefit of society as a whole. And yes, the Bible does teach that, also teaching that to love money rather than God or neighbor is a grievous spiritual offense. But these exegetes then jump to the biblically unwarranted conclusion that being taxed is the way the wealthy are supposed to do it, that they can essentially “contract out” their discipleship to the Internal Revenue Service.

As I pointed out in a medium-long post in June 2003, this belief belies “a common misunderstanding: that because paying taxes is a civic responsibility, hence a civic virtue, it is therefore also a moral responsibility and a moral virtue. Not so.” The IRS is not - or should not be - the enforcement arm of the Kingdom of God.

But clergy really are not too opposed, understand: the General Theological Seminary of the Episcopal Church has a web page that advises Episcopalians on how to beat the estate tax by means of a,

Wealth Replacement Trust
A Wealth Replacement Trust is a vehicle for protecting the interests of your heirs while still providing for a significant gift to General Seminary. Under this plan you as a donor give to the Seminary property or assets, either outright or through one of the other deferred giving vehicles detailed in these pages. Using the tax savings generated by the gift, you then purchase a life insurance policy with your heirs as beneficiary.

Advantages: The Wealth Replacement Trust restores the assets of your estate which have been used to make a charitable gift, and can be designed to provide your heirs with their bequests free of estate taxes.

And the Episcopalians are hardly leading the charge in this regard. Every other denomination has similar setups. So the estate tax is a good thing unless it gores your own ox. Then it’s bad, understand, bad! When the estate tax hits his or her own pocketbook, even the most ardent neoMarxist cleric will suddenly get a new religion and be agin it.

Update: See “Paris Hiltonomics” on OpinionJournal.

Howard Kurtz writes in today’s WaPo of the reaction of a number of MSM figures to the coming in power of the blogosphere. Some highlights:

ABC’s Linda Douglass says she has “learned that I have not just critics but people who seem to hate me that I don’t even know about.”

“It’s very nasty and personal and scatological,” says Washington Post reporter Dana Milbank. ...

“You want to pay attention to what legitimate critics are saying out there,” [New York Times reporter Adam] Nagourney says. “In journalism, you screw up from time to time. But it’s become so toxic—attacks for the sake of attacks.”

And so on, with CNN’s Jeff Greenfield being the sole exception to the “duck and cover” remarks of the reporters quoted.

But that’s not what struck me about Kurtz’s piece. Further down the column we learn,

Nonexistent Mission

Los Angeles Times columnist Robert Scheer wrote last week that the Bush administration dispatched “self-appointed morals czar” William Bennett in 2003 to tell Vatican officials that the invasion of Iraq would be a just war. This was news to Bennett, who says he never took such a trip and can’t understand why Scheer never called him.

Scheer says he was “sloppy” in picking up the tale from the Houston Catholic Worker. “I should have been more careful,” he says. Says Times Opinion Editor Michael Kinsley: “I guess I would wonder why a story this juicy would have only been in some Catholic newspaper. That would make me want to check it out.”

Premature Journalism

Barbara Stewart, the Boston Globe freelancer dropped over her story about a Canadian seal hunt that had not yet taken place, says she never meant to deceive anyone. She just never checked back to learn that the scheduled hunt had been delayed by bad weather.

“The whole situation, while resulting from an egregious, massive, stupid [screwup] on my part, unbelievable carelessness, was nevertheless not malicious fabrication as in: pretending I was there and deliberately making up a whole scene and attempting to pass it off,” Stewart says by e-mail.

“It was stupider and more boring and more flat out dumb on my part. Quite dumb. Remarkably dumb. But not vicious and not really a scandal, for heaven’s sake.”

The juxtaposiition of MSM figures complaining about bloggers and the two fabrications reported by MSM is rather interesting.

I’m just saying, you know . . . ?

Glenn Reynolds posted about how his daughter’s school was once closed because of fog, garnering an email from someone who lives in Williamson County, Tenn., which is where I live. Said the correspondent,

You wouldn’t believe the number of memos that are sent home with long lists of symptoms for which the students should remain at home, but should your child actually stay home with one or more of those more than, perhaps, once, you are instantly guilty of not taking your child’s education seriously.

Apparently, our children really belong to the County Board of Education and we are just renting them for the evenings and weekends.

I’m not sure I would go quite that far, but I do remember in the fall of 1995, our first year living here, we walked out to our street with our then still-small boys to wait for the school bus. The time came and went, no bus. Finally a neighbor came outside and told us that school was canceled because of flooding. It wasn’t the school that flooded, it was the bus routes. Williamson County is still mostly rural, and many of the back-holler roads become flood beds after prolonged rains.

We found out that school closings for flooding happens about twice per school year. A little over a year ago the Tennesean posted an online slideshow of flooding in Williamson County; see it here.