Death Tax or spoiled brat?

I'm astonished that politicians can sell and people buy this charade regarding the "Death Tax".  I recently wrote my representatives explaining how I think this isn't the right time to fret over tax relief for the richest 1% of Americans and got a nice letter back from Talent about why he thinks it's a good idea.  Download talent_estate_tax_reply.doc

First they try to convince you that people are losing businesses and farms, and while that may occasionally happen, we're talking about 1% of the population.  Since it's a tax break for the wealthiest, it adversely effects the other 99% of us. Do the math.  Why would anyone support this idea, silver spooners excluded? 

The Estate Tax is essentially a spoiled-brat tax.  Just this week, the second richest man in America announced he would give away 80% of his accumulated billion dollar estate. Warren Buffet said that inheriting wealth is "un-American".  Knowing that he would probably give 45% to the government anyway, this is the right thing to do and he's exactly right about passing on wealth for generations.  Certainly $8 or $10 million is a nice inheritance for anyone, and the last time I checked the American Dream had to do with pulling yourself up by the bootstraps, not being born into royalty. 

Comments

[The Brain]

First, the money subject to the estate tax has already been subject to the income tax once. So essentially we're dealing with double taxation. Can you agree to that point?

I suspect you don't have an inheritance, because if you did I hardly believe you would find it un-American to accept it. Inheriting money is no less un-American than marrying money (hello John Kerry). And, no, before you ask, I haven't inherited any money and don't expect to. I'll be lucky to leave my kids a small inheritance some day.

A "spoiled-brat tax"? You can do better than that. How about "The rich eat the poor tax" or "The Rich steal from the poor tax" I am sure that I am missing even more inflammatory labels for the estate tax that allow the speaker to avoid an intellectual discussion of the tax.

Do you really think it's an effective argument against the estate tax to proclaim that all that would benefit from its repeal are "spoiled brats"? Is that going to win any arguments from anyone that is a remotely critical thinker? Also, don't you think that somehow a stiff estate tax will diminish global warming?

[djobe]

It could be triple taxation if it is the transfer of assets such as land or property that was purchased with after tax dollars and then property taxes were paid on the ownership of the asset (ie family farm, business)

Either way, the principle is what matters, the fact that a small percentage of people would be affected is hardly a principled stance. If 99% of the population decided to pee in the other 1% percent's corn flakes, that doesn't make it right, even though it is only affecting 1% of the population. (anytime I can squeeze a "pee in the corn flakes" reference I do.)

As the Sun notes:

Mr. Buffett could have let the government take its share of his estate after he dies. But just as Mr. Buffett has accumulated his vast wealth without paying much personal income tax, he has found a way to avoid the tax man in this maneuver as well, even writing in his letter to Bill and Melinda Gates that a condition of the gift is that the foundation "must continue to satisfy legal requirements qualifying my gifts as charitable and not subject to gift or other taxes."

On the estate tax, watch what Mr. Buffett does, not what he says. The Gates Foundation isn't the only recipient of his largesse--three foundations headed by Mr. Buffett's three children, Susan, Howard, and Peter, will get hundreds of millions of dollars. Tax documents show that in 2004, Peter Buffett and his wife Jennifer each took a $40,000 a year salary for what they reported was 30 hours a week each of work on the foundation.

When billionaires back the death tax, keep in mind that they have no intention of actually paying it. They are being "generous" with other people's money. This is the way in which the superrich wage class warfare against the merely affluent.

[The Brain]

Excellent points Djobe.

It is generally the super rich, like Buffett, that don't get stuck with the estate tax bill. They hire lawyers and accountants to plan their way out of it or dull the impact as much as possible.

JW, you should be angry with Buffett for depriving the US Treasury of all that money. Isn't your theory that when the rich don't pay taxes (or avoid or minimize them) that the result is a tax increase on the middle class?

[djobe]

Excellent point, 55% of $44 Billion (buffett's personal wealth) is enough to make a significant dent in the oh so frightening big bad budget deficit...
(which by the way is down to 2.75% of government spending in 2005-6 from a high of 4.5% even though we are fighting a war and cutting taxes....and receipts are up...even though marginal rates are down...

How is it that a guy like Buffett manages to become a paragon of liberalism, while owning a conglomerate insurance company that got it's start selling insurance exclusively to government employees and made billions in profits? GEICO, Government Employee Insurance Company...

But he doesn't practice what he preaches?

[JW]

Here is a great post on this subject from Gone Mild.
http://www.gonemild.com/2006/07/may-we-just-put-double-taxation-whine.html