Is the push to abolish the estate tax over?
And should we worry about a glut of luxury yachts on the market?
by Leigh Pomeroy
Detractors of this theory have argued that this is a greedy approach perpetrated by the "haves" at the expense of all others, that taxes play a necessary role in paying for shared operations as overseen by government, and that government itself has a role in maintaining a fair, equitable, peaceful and ultimately successful society.
Representative-elect Michele Bachmann (MN-06) has stated that her three priorities in Congress will be (1) protect the country against terrorists, (2) upgrade transportation, particularly roads and highways, and (3) cut taxes — not necessarily in that order. Never mind that the first two create a demand for revenue while the third leads to less revenue. Budgets have never been a strong point for members of Congress, be they Republican (like Mrs. Bachmann) or Democrat.
One of the taxes that the neoconservative agenda has taken aim at is the estate or inheritance tax, dubbed by opponents the "death tax". The latter has a wonderful political cachet; of course, in reality the estate tax is not a tax on death at all.
The estate tax goes back only about a century, instituted originally to provide revenue, although not much, and to require those few who had gained huge fortunes in the gilded age to return to society some of their bounty. As Teddy Roosevelt said, "The man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government."
The estate tax was also instituted to curtail passing on large fortunes from one generation to another, which favored an inherited aristocracy over a more egalitarian democracy.
Initially, only the very wealthiest of estates were taxed. But like income tax and the alternative minimum tax, "bracket creep" due to a lack of indexing for inflation made proportionally more estates liable to the tax. It also became incredibly complicated, thanks to Congress's mania for constant meddling. Yes, the tax could be applied to more estates of lesser value, but a good accountant could easily take care of the problem legally for a relatively reasonable fee.
In answer to the problem of the estate tax, the late Sen. Paul Wellstone and others proposed raising the level at which estates would become subject to the tax, primarily to protect family farmers in his own state of Minnesota.
For many moderates, this seemed like a thoughtful compromise, but politicians on the right found they were gaining political traction from the "abolish the death tax" cry as well as massive contributions from several of the very wealthy families who wanted the tax abolished altogether. For them, these political contributions were just the cost of doing business, much like hiring a good accountant or tax attorney.
However, not all of the very wealthy have opposed the estate tax. Three of the country's wealthiest men — Warren Buffet, George Soros and Bill Gates — have either openly or tacitly supported it. Plus, there are many others whose estates are subject to the tax who believe that a fairly administered inheritance tax is necessary for the promulgation of a strong democracy.
While it is widely accepted that the outcome of the recent elections hinged upon the war in Iraq, corruption and the economy, most of the politicians who suffered defeat supported the repeal the estate tax. And those who won, although it was not a major issue in their campaigns, have favored its continuation.
The new Minnesota congressional delegation should be representative of the nation as a whole, with Democrats promoting reforming the estate tax to solidify protection for family farms and businesses, and the Republicans wanting to do away with it altogether.
One key defector from the "abolish the death tax" crowd might be Republican Sen. Norm Coleman, who saw two estate tax abolitionists, Mark Kennedy and Gil Gutknecht, go down in stunning defeat to moderate Democrats. Sen. Coleman has already moved towards the center on the DM&E railroad expansion issue and is trying to portray himself as a born-again moderate in anticipation of a strong Democratic challenge in 2008.
Still, the core group of the greedy wealthy, who have done extraordinarily well from the Reagan era on and made out like bandits since the beginning of the Bush Jr. administration, will no doubt continue to push for an end to the estate tax. But with many of their mouthpieces in Congress gone and the remainder of their hired hands diminished in power, reform, not abolition, will be the order of the day.
Representative-elect Michelle Bachmann is correct on at least one point: Taxes have become too complicated. And where there is complexity there is inefficiency and waste, not only from administrative cost and potential for error, but also a lower rate of compliance.
Hopefully, in attacking the estate tax issue, the new Congress will minimize the rhetoric and seek to establish fair, easy-to-administrate reforms that will prove a model for dealing with much more needed reforms to the income tax.
(See also "Estate tax repeal benefits only the very rich and the politicians on their payroll".)
by Leigh Pomeroy
"Great accumulations of wealth cannot be justified on the basis of personal and family security … Such inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our government." — President Franklin D. Roosevelt (FairEconomy.org)One of the rallying points of the neoconservative agenda has been to get rid of taxes — seemingly all of them, if possible. Taxes have been portrayed as an impediment to an efficient society directed by business and overseen, albeit quiescently, by a limited government.
Detractors of this theory have argued that this is a greedy approach perpetrated by the "haves" at the expense of all others, that taxes play a necessary role in paying for shared operations as overseen by government, and that government itself has a role in maintaining a fair, equitable, peaceful and ultimately successful society.
Representative-elect Michele Bachmann (MN-06) has stated that her three priorities in Congress will be (1) protect the country against terrorists, (2) upgrade transportation, particularly roads and highways, and (3) cut taxes — not necessarily in that order. Never mind that the first two create a demand for revenue while the third leads to less revenue. Budgets have never been a strong point for members of Congress, be they Republican (like Mrs. Bachmann) or Democrat.
One of the taxes that the neoconservative agenda has taken aim at is the estate or inheritance tax, dubbed by opponents the "death tax". The latter has a wonderful political cachet; of course, in reality the estate tax is not a tax on death at all.
The estate tax goes back only about a century, instituted originally to provide revenue, although not much, and to require those few who had gained huge fortunes in the gilded age to return to society some of their bounty. As Teddy Roosevelt said, "The man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government."
The estate tax was also instituted to curtail passing on large fortunes from one generation to another, which favored an inherited aristocracy over a more egalitarian democracy.
Initially, only the very wealthiest of estates were taxed. But like income tax and the alternative minimum tax, "bracket creep" due to a lack of indexing for inflation made proportionally more estates liable to the tax. It also became incredibly complicated, thanks to Congress's mania for constant meddling. Yes, the tax could be applied to more estates of lesser value, but a good accountant could easily take care of the problem legally for a relatively reasonable fee.
In answer to the problem of the estate tax, the late Sen. Paul Wellstone and others proposed raising the level at which estates would become subject to the tax, primarily to protect family farmers in his own state of Minnesota.
For many moderates, this seemed like a thoughtful compromise, but politicians on the right found they were gaining political traction from the "abolish the death tax" cry as well as massive contributions from several of the very wealthy families who wanted the tax abolished altogether. For them, these political contributions were just the cost of doing business, much like hiring a good accountant or tax attorney.
However, not all of the very wealthy have opposed the estate tax. Three of the country's wealthiest men — Warren Buffet, George Soros and Bill Gates — have either openly or tacitly supported it. Plus, there are many others whose estates are subject to the tax who believe that a fairly administered inheritance tax is necessary for the promulgation of a strong democracy.
While it is widely accepted that the outcome of the recent elections hinged upon the war in Iraq, corruption and the economy, most of the politicians who suffered defeat supported the repeal the estate tax. And those who won, although it was not a major issue in their campaigns, have favored its continuation.
The new Minnesota congressional delegation should be representative of the nation as a whole, with Democrats promoting reforming the estate tax to solidify protection for family farms and businesses, and the Republicans wanting to do away with it altogether.
One key defector from the "abolish the death tax" crowd might be Republican Sen. Norm Coleman, who saw two estate tax abolitionists, Mark Kennedy and Gil Gutknecht, go down in stunning defeat to moderate Democrats. Sen. Coleman has already moved towards the center on the DM&E railroad expansion issue and is trying to portray himself as a born-again moderate in anticipation of a strong Democratic challenge in 2008.
Still, the core group of the greedy wealthy, who have done extraordinarily well from the Reagan era on and made out like bandits since the beginning of the Bush Jr. administration, will no doubt continue to push for an end to the estate tax. But with many of their mouthpieces in Congress gone and the remainder of their hired hands diminished in power, reform, not abolition, will be the order of the day.
Representative-elect Michelle Bachmann is correct on at least one point: Taxes have become too complicated. And where there is complexity there is inefficiency and waste, not only from administrative cost and potential for error, but also a lower rate of compliance.
Hopefully, in attacking the estate tax issue, the new Congress will minimize the rhetoric and seek to establish fair, easy-to-administrate reforms that will prove a model for dealing with much more needed reforms to the income tax.
(See also "Estate tax repeal benefits only the very rich and the politicians on their payroll".)
Powered by Blogger
0 Comments:
Post a Comment
<< Home