Speaking of the good Professor Bainbridge, his post on the estate tax contains a quote from Brian Leiter on the importance of Marxian thought that is the kind of thing that get my hackles up. My comments aren’t directed at Brian, as I understand the point he is trying to make, and further, agree that Marx is an important theorist for a host of reasons and shouldn’t be shelved because of the collapse of the Soviet empire.
However, the estate tax thing gets rather heavily on my nerves, for while it is true that a very small percentage of the population pays the Death Tax (a term I highly prefer), it is not so-clear cut a tax on wealth alone as some would have us believe.
For example: I had a close relative whose husband was blue color in the most traditional of senses. He died back in the 1980s and she lived in East Dallas in the kind of neighborhood that most of us wouldn’t want to traverse after dark across the street from a park, which in most recent years, was the kind of place drug deals and arrests went down at night. She lived very modestly, but because of frugality and a generous stock plan from her husband’s employer she died with sufficient wealth to qualify for the Death Tax. Now, she was being responsible in her own mind (she wanted the money to care for herself in the event of a medical disaster) and, as a child of the Great Depression, she was prone to assume that the money could stop at any moment, leading her sometimes extreme frugality.
Could someone explain to me why that wealth, which is the product of a lower middle class existence and the desire to save should be taxed at that person’s death.
Another example would be another close relative who started literally with nothing in life but who, in classic Horatio Alger fashion, made a way for himself to the point of being definable as rich in our society.
I simply do not see the justice in a Death Tax on either of those cases, and I know that they are not unique. Indeed, to partially counter Leiter’s assumption that the public support for repealing the Death Tax is the result of misapprehension on the part of the population as much as it is philosophical opposition to the very idea that one can’t leave one’s money where one wants to leave it.
June 30th, 2024 at 5:01 pm
I’ve come to realize that my opposition to abolishing the estate tax is contained completely in the issue of capital gains. If a person has untaxed capital gains at the time of their death, then those gains are never taxed if there is no estate tax, I assume. The person inheriting the stock, or property, would incur capital gains based on the value at the time of their inheritance, if I understand this correctly. And I don’t think that’s fair. Any untaxed capital gains should be taxed at the death of the owner. But any other type of wealth, I’ve come to conclude, should not be taxed at death. I hope this makes sense, I may not be explaining myself well.
July 1st, 2024 at 1:43 pm
I’ll comment here, although I may write a bit on this and trackback later.
Here is one reason why the estate tax is a very good idea: to avoid excessive concentrations of wealth across generations. It was passed in 1916 as a direct response to the massive estates and excesses of the “Guilded Age.”
I might agree with adjustments to the estate tax (e.g., raising the trigger to, say, $3-5 million), but the abolition of the tax is ultimately un-democratic. A democracy will eventually begin to falter as weath–and power–become concentrated in the hands of a minority.
On a final note, the term “Death Tax” is just a rhetorical device to cause people to dismiss the idea without ever thinking about the the issues and policy.
July 2nd, 2024 at 10:55 am
Steven, you might like this essay I wrote in November….
http://www.cuzwesaidso.com/archives/000029.html
July 2nd, 2024 at 11:14 am
OJ,
I disagre For one thing, the issue of wealth concentration is not a serious problem in the US (in my opinion). For another, the issue isn’t democracy, per se, but one of wealth distribution.
And while I concur that the term “Death Tax” is used for rhetorical puposes, I would not concur that is it used by people who never think about the issues and policy.