It’s Time to Bury the Estate Tax

posted at 5:30 pm on December 18, 2010 by Jazz Shaw

The Wall Street Journal has brought up yet another argument against the ebb and flow of the estate tax debate this week. The crux of it is that the uncertainty over how large the government vultures will be when they come to feast on your corpse has some business owners spending more preparing for the estate tax than their families will eventually lose.

What’s unavoidable to many family businesses, however, is the cost of lawyers, accountants, family business advisers and business appraisers—and all that, owners say, has increased in the past decade as the estate-tax rate has continually changed. Trade groups, including the National Federation of Independent Business, have lobbied Congress for a more permanent solution.

“Virtually every small-business owner plans and responds…so that the estate-tax system, whatever it is, doesn’t end up destroying their life’s work,” says Lawrence Richman, chair of the Wealth Services Practice Group at Neal, Gerber, Eisenberg LLP, a law firm in Chicago.

This is only the latest in a generations long debate over the relative “merits” of re-taxing the wealth of those who manage to find success in America as soon as they approach room temperature. We have debated the various myths surrounding the effect it has on individuals and the economy as a whole. We have heard the arguments about whether or not it substantially contributes to government revenue or is simply a way for populists to mete out punishment to the wealthy. We’ve listened to progressives talk about how it’s the only “fair way” for the wealthy to “give back” to the rest of us.

Perhaps the argument should finally move away from the dollars and to the sense. As strange as it may sound, I am taken back to a scene from the original Jurassic Park film where Jeff Goldblum’s character, Ian Malcolm, makes a rather pointed accusation. “You were so focused on whether you COULD do it … you never stopped to ask whether you SHOULD do it.”

Aside from a few holdouts in remote, libertarian enclaves, few people argue with the fact that the government has established broad powers to lay taxes on nearly any occasion. But that only reinforces the widely held perception that one of the defining characteristics of government is an encompassing fear that somewhere there may be a dollar changing hands without their having a chance to nab a quarter out of each party’s pocket.

The real reason to oppose the death tax isn’t that it’s an inefficient way to raise revenue or that it suppresses job creation and expansion. The main objection to such a tax is that it is simply wrong. (Or have we passed beyond the era when the words “right” and “wrong” have any meaning in government?)

When people work all their lives and accumulate wealth – with the long term goal of passing that wealth on to family, friends, or whomever they choose – they have achieved the most fundamental definition of the American dream. And the moment of their passing – generally just as a family is dealing with the grief of losing a patriarch or matriarch – has to be the worst possible time for Uncle Sam to come knocking with a bag and a gun.

And lastly, if it hasn’t been pointed out often enough already, the wealth has already been taxed repeatedly. There comes a point where enough is enough already.

Pushing back on this will not be easy, though. In closing, let us remember once again the immortal words of H.L. Mencken:

When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before.

Words to live -and at least for now, to die – by, sir.

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Comment pages: 1 2

How any of this relates to the Spanish Inquisition is beyond me, though.

Sailfish on December 18, 2010 at 10:33 PM

A little thing about the torturer being for their own good.

Slowburn on December 18, 2010 at 10:50 PM

That’s just a sad way to look at life.

Sad? Really? I disagree. Life is about charting one’s own goals and working to achieve them. Those who are given a life of leisure are the one’s who are to be pitied, no?

Sailfish on December 18, 2010 at 11:43 PM

A little thing about the torturer being for their own good.

Torture, ay? heh

I do not think it means what you think it means.

– Inigo Montoya

Sailfish on December 18, 2010 at 11:48 PM

…As the kid in Sixth Sense said…”I see dead people…” and I’m pretty sure they’re saying they ain’t happy about the Estate Tax!

StarLady on December 19, 2010 at 12:12 AM

No, why do you need any money after you’re dead? The government took care of you all of those years, what’s wrong with them getting maybe 50-60 percent back? Or more?

hawkdriver on December 19, 2010 at 12:24 AM

The real reason to oppose the death tax isn’t that it’s an inefficient way to raise revenue or that it suppresses job creation and expansion. The main objection to such a tax is that it is simply wrong. (Or have we passed beyond the era when the words “right” and “wrong” have any meaning in government?)

When people work all their lives and accumulate wealth – with the long term goal of passing that wealth on to family, friends, or whomever they choose – they have achieved the most fundamental definition of the American dream. And the moment of their passing – generally just as a family is dealing with the grief of losing a patriarch or matriarch – has to be the worst possible time for Uncle Sam to come knocking with a bag and a gun.

This, right here, is why I so loudly opposed the tax deal. The Republican Senate should be deeply ashamed that it surrendered on a basic foundational principle. The propert rate for the estate tax is not 35 percent nor 55 percent.

It is zero. Period.

Jimmie Bise, Jr on December 19, 2010 at 12:54 AM

The thing that kills me is that the Estate Tax is a Progressive tax that is designed to do two things. Redistribution of wealth, naturally one of them, and the breaking down of the American family so that there is further dependence of the individual on the evergrowing State. Something that I believe Woodrow Wilson instituted.

The Estate Tax idea is sold to Progressives as redistribution of wealth and class warfare where Americans who have accumulated wealth are now not considered Americans anymore, but are simply known as the evil rich. As with all things Progressive, the laws of unintended consequences kick in. The only people that end up paying it are the middle class. The wealthy pay death insurance to cover the heirs upon inheritance so that no taxes need be paid. Another Ponzi type scheme where the rich still get shaken down, insurance companies benefit from the tax law at the expense of someone else, and only those who cannot afford estate planning and its payoffs end up paying the actual tax.

This is exactly what the Founders did not want Federal Government involved in for the obvious reasons….

Big Brother is a Socialist Democrat……….

adamsmith on December 19, 2010 at 7:32 AM

Did Jazz Shaw write this ??? Let me ask this question again. Did Jazz Shaw write this post ??

In the last few days so many strange things have happened that I feel like America is living in the twilight zone.

nagee76 on December 19, 2010 at 7:42 AM

@hawkdriver,
Most people here in HA know you and therefore don’t need an explicit tag for your last post.

But what is really scary is that this is exactly how progressives think.

nagee76 on December 19, 2010 at 7:47 AM

This, right here, is why I so loudly opposed the tax deal. The Republican Senate should be deeply ashamed that it surrendered on a basic foundational principle. The propert rate for the estate tax is not 35 percent nor 55 percent.

It is zero. Period.

Jimmie Bise, Jr on December 19, 2010 at 12:54 AM


Amen to all of that Jimmie!

Keemo on December 19, 2010 at 7:59 AM

Sorry gang, but my kids’ future comes before your inheritance.

NorthernCross on December 18, 2010 at 5:52 PM

Your kids future comes before my kids future, eh? Very responsible of you.

Well I’ve got news for you, what I build for my kids future is NOT YOURS!

As for “paying down the deficit”, stop spending. Simple, effective, and it doesn’t require stealing from my children.

Squiggy on December 19, 2010 at 8:18 AM

Good grief, the estate tax applies to DEAD PEOPLE! It’s not their property anymore!

NorthernCross on December 18, 2010 at 6:38 PM

Are you that idiot Anthony Weiner?

Squiggy on December 19, 2010 at 8:24 AM

Life is about charting one’s own goals and working to achieve them. Those who are given a life of leisure are the one’s who are to be pitied, no?

Sailfish on December 18, 2010 at 11:43 PM

So stealing from them, is for their own good. So they chart goals of earning back the money. If they choose to waste their life on leisure that is their right. But if their goal in life would have been to fix Trisomy 21 (Down syndrome), but instead have to make money instead of spend it.

And the miss spelling. I’m a terrible speller, but if somebody as stupid as you got it I’m not worried about every one else.

Slowburn on December 19, 2010 at 8:36 AM

And the miss spelling. I’m a terrible speller, but if somebody as stupid as you got it I’m not worried about every one else.

Slowburn on December 19, 2010 at 8:36 AM

LOL… You’re so right about that. So many lefties consider themselves better than thou because of some self created marker that is meaningless in the real world. I’ll take good old fashioned common sense solutions over fabricated markers every day.

Keemo on December 19, 2010 at 8:53 AM

oops
But what if

Slowburn on December 19, 2010 at 10:02 AM

I’m all for getting rid of the estate tax…

…AFTER we pay down the debt. You Republicans want your candy now, but we need to take care of the mortgage first. Sorry gang, but my kids’ future comes before your inheritance. ‘Sides, dead men don’t create jobs.

NorthernCross on December 18, 2010 at 5:52 PM

Why? Are you so incapable of providing for your children’s future that you need to depend on government largesse – provided by stealing from the productive members of society?

Why should I care about providing for your children’s future? That’s your job.

Solaratov on December 19, 2010 at 12:39 PM

My mother in law (80yo) is not rich, by any manner or form.
However, she does have a reasonable savings, which were taxed when earned during her 40 years of working in retail.
She’s recognized that when she passes on, those funds (legally willed to her heirs upon that event) would be taxed to nearly ZERO, and has started distributing that money to us and her grandchildren, here and now.
She understands that her dreams of sharing that sum with her family will be destroyed by the greedy gubmint, and she does NOT wish her life’s savings to fulfill else’s plans for it !!
Thanks, mom.

pambi on December 19, 2010 at 12:51 PM

*someone else’s plans

pambi on December 19, 2010 at 12:52 PM

Sorry, but if you’re dead, then the fruits of your labor should benefit the living. You won’t need it anymore, and that’s just how it is.
NorthernCross on December 18, 2010 at 7:00 PM

So, you have no problem with a thief killing a man and stealing his money?
After all, the victim certainly doesn’t need the money any longer – and the thief does.

You have NO right to the products of your betters labors – despite the tripe you’ve been fed by a public “education” system. If you want what others have, it’s up to you to work for it. If you don’t want to work — go without. Nobody cares whether you and your spawn survive, thrive or disappear.
It’s certainly not our job to babysit you and yours.

Solaratov on December 19, 2010 at 12:53 PM

Sorry, but if you’re dead, then the fruits of your labor should benefit the living……
NorthernCross on December 18, 2010 at 7:00 PM

Hmm.. last I checked, legally willed-to heirs are living, no ?
Sooo sorry your family isn’t in OUR wills.
Live with(out) it, leech.

pambi on December 19, 2010 at 1:09 PM

So stealing from them, is for their own good. So they chart goals of earning back the money. If they choose to waste their life on leisure that is their right. But if their goal in life would have been to fix Trisomy 21 (Down syndrome), but instead have to make money instead of spend it.

Slowburn on December 19, 2010 at 8:36 AM

First, each is allowed an inheritance of tax-free $5M, second, the remaining amount is taxed at a 35% rate (in 2011.) Thirdly, it’s not theirs, it’s their parents. They’ve done nothing to earn it.

Admittedly, having to build a meaningful life with, minimally, $5M is tough but if they’re anything like their parents, they shouldn’t have a problem, no?

And the miss spelling. I’m a terrible speller, but if somebody as stupid as you got it I’m not worried about every one else.

Slowburn on December 19, 2010 at 8:36 AM

Sorry to hear about your spelling issues but I have no idea what this ad hominem is in reference to?

Sailfish on December 19, 2010 at 1:22 PM

My mother in law (80yo) is not rich, by any manner or form.
However, she does have a reasonable savings, which were taxed when earned during her 40 years of working in retail.
She’s recognized that when she passes on, those funds (legally willed to her heirs upon that event) would be taxed to nearly ZERO, and has started distributing that money to us and her grandchildren, here and now.
She understands that her dreams of sharing that sum with her family will be destroyed by the greedy gubmint, and she does NOT wish her life’s savings to fulfill else’s plans for it !!
Thanks, mom.

pambi on December 19, 2010 at 12:51 PM

This claim makes no sense. Please have your Mom seek a real estate tax lawyer instead of trusty ol’ uncle Vinnie.

Each of her children are eligible for non-tax of up to $5M and then the remaining estate is only taxed up to 35%.

Also, since you used the word “us” to describe yourselves, minimally, that’s $10M of tax-free inheritance. If so, suggesting that she “is not rich, by any manner or form” seems a bit of a stretch, no?

Sailfish on December 19, 2010 at 1:30 PM

I have specialized as an estate planning attorney for more than 25 years, and I couldn’t agree more that the Federal estate tax needs to be repealed.

It is nothing more than asset confiscation by the government as a result of death.

To call it a “transfer” tax is preposterous.

It is a Federal government asset grab – nothing more.

molonlabe28 on December 19, 2010 at 1:32 PM

Sailfish on December 19, 2010 at 1:22 PM

So your good with, anytime you are given something, the government gets to take what it considers to be its share.

Slowburn on December 19, 2010 at 1:40 PM

So, you have no problem with a thief killing a man and stealing his money?
After all, the victim certainly doesn’t need the money any longer – and the thief does.
Solaratov on December 19, 2010 at 12:53 PM

heh, the hyperbole people use on this board is funnier than reading Allahpundit. Too much! So, the government is not only having the gall to tax an estate after the first $5M, it also does the dastardly deed of killing the estate owner, to boot!

You have NO right to the products of your betters labors – despite the tripe you’ve been fed by a public “education” system. If you want what others have, it’s up to you to work for it. If you don’t want to work — go without. Nobody cares whether you and your spawn survive, thrive or disappear.
It’s certainly not our job to babysit you and yours.
Solaratov on December 19, 2010 at 12:53 PM

EWELL! Touchy! Touchy! So, I ask you, why doesn’t this same logic work for the “betters” children? Certainly, should they also not “work for it”? As for my well-being, Me and mine are doing just fine on our own, thank you. As I hope is the same for you and yours.

Sailfish on December 19, 2010 at 1:44 PM

So your good with, anytime you are given something, the government gets to take what it considers to be its share.

Slowburn on December 19, 2010 at 1:40 PM

If I was “given” something, the only duty I place on myself is to be gracious. If I earned something, the only stipulation I require before being taxed on it that the tax was levied in a representative manner, similar to what the original Tea Partiers demanded. That’s the cost of living in a civilized society.

Sailfish on December 19, 2010 at 1:50 PM

Our free market redistributes all the time. Is that really news to you?

NorthernCross on December 18, 2010 at 7:36 PM

(Emphasis mine)

FREE market, …not government edict. FREE market- where people get to use or consume their assets as they choose, freely!

Amendment X on December 19, 2010 at 2:05 PM

Please have your Mom seek a real estate tax lawyer instead of trusty ol’ uncle Vinnie.
Sailfish on December 19, 2010 at 1:30 PM

Uncle Vinney ! SNORT !!
Glad lawyer-dad’s not alive to hear you besmirch him that way !!
She’s lived thru this already, a coupla times, and no matter HOW MUCH the goverment takes upon her death is too much, regardless.
It’s been Taxed Enough Already !!
If there was real reform, and the outrageous g’ment spending curbed, it could remain HERS to do with as SHE WILLS, not someone else !
This is how she’s dealing with that.
Sorry you’re so bitter about her choice(s).
Can’t help you widdat.

pambi on December 19, 2010 at 3:54 PM

Keep in mind that there are some good things about having the estate tax — mainly the automatic step-up in basis at death, which benefits all heirs & devisees (even with estates not subject to the tax). Without the estate tax we end up with carry-over basis on assets passed at death, which is is far more administratively difficult for your family’s record-keeping, and also potentially more expensive in terms of later capital gains tax. I’d be more in favor of keeping some estate tax — but at a much lower estate tax rate and larger exemption amount — and keeping the basis step-up that helps everyone.

acasilaco on December 19, 2010 at 4:17 PM

The Death Tax is stealing, but liberals like stealing. They rename it wealth redistribution.

scotash on December 19, 2010 at 5:24 PM

Uncle Vinney ! SNORT !!
Glad lawyer-dad’s not alive to hear you besmirch him that way !!

pambi on December 19, 2010 at 3:54 PM

Notwithstanding who, seemingly, gave her the advice that her estate “would be taxed to nearly ZERO“, that’s just plainly incorrect. Perhaps she, or you, misunderstand the estate tax provisions?

She’s lived thru this already, a coupla times, and no matter HOW MUCH the goverment takes upon her death is too much, regardless.
It’s been Taxed Enough Already !!
If there was real reform, and the outrageous g’ment spending curbed, it could remain HERS to do with as SHE WILLS, not someone else !
This is how she’s dealing with that.
Sorry you’re so bitter about her choice(s).
Can’t help you widdat.

pambi on December 19, 2010 at 3:54 PM

The inheritance tax was established back in 1862, along with the federal income tax, so this isn’t something recently added.

If you think it would help mediate mom’s disposition console her that she should rather think of it as an unearned income tax on her heirs, after them each first getting a freebie on $5M.

I’m not bitter; rather, I just don’t empathize with her position.

Sailfish on December 19, 2010 at 5:42 PM

I’m not bitter; rather, I just don’t empathize with her position.

Sailfish on December 19, 2010 at 5:42 PM

Why ?

pambi on December 19, 2010 at 6:24 PM

Methinks you have a problem with the concept of ‘earned’ vs ‘unearned’, ??
She did, too, for some time, frankly, but found out (the hard ways) the truths of unfair confiscation …it was already earned, already taxed, and merely gifted.
Why the HORRORS of that concept ??

pambi on December 19, 2010 at 6:34 PM

Methinks you have a problem with the concept of ‘earned’ vs ‘unearned’, ??
She did, too, for some time, frankly, but found out (the hard ways) the truths of unfair confiscation …it was already earned, already taxed, and merely gifted.
Why the HORRORS of that concept ??

pambi on December 19, 2010 at 6:34 PM

Because we are a people that believe strongly that individuals should “earn” their wealth, not have it given to them freely. Again, we are not discussing re-taxing her wealth, we are discussing taxing the unearned heirs wealth above $5M each AFTER she has left this corporal world.

You seem to think that heirs deserve more than a $5M free ride. Why?

Sailfish on December 19, 2010 at 7:00 PM

Why not ??

pambi on December 19, 2010 at 7:21 PM

The Estate tax is meant to destroy small farms and farmers. Stealing land from families that have fed this Republic for generations is wrong.
Stealing from the Citizens that have worked all their lives to hand something on to their children is wrong and is meant to prevent the rise of the middle class, to hold them down and keep them forever creating new wealth that can be stolen by tax.
yes??

Army Brat on December 19, 2010 at 7:52 PM

Army Brat on December 19, 2010 at 7:52 PM

I’m with you on that, AB

pambi on December 19, 2010 at 8:20 PM

The current estate tax laws do not allow for a step-up in tax basis value of the assets inherited. If your Dad paid $10,000 for that beach house and it is worth ten million and you sell it, you pay the capital gains tax…………..no adjustment for inflation.

SC.Charlie on December 19, 2010 at 8:45 PM

The Estate tax is meant to destroy small farms and farmers. Stealing land from families that have fed this Republic for generations is wrong.
Stealing from the Citizens that have worked all their lives to hand something on to their children is wrong and is meant to prevent the rise of the middle class, to hold them down and keep them forever creating new wealth that can be stolen by tax.
yes?? … Army Brat on December 19, 2010 at 7:52 PM

Wrong, it is made to redistribute wealth, as if the government should be assigned that job.

SC.Charlie on December 19, 2010 at 8:48 PM

Wrong, it is made to redistribute wealth, as if the government should be assigned that job.

SC.Charlie on December 19, 2010 at 8:48 PM
The result is the same.

Army Brat on December 20, 2010 at 1:19 AM

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