“My guess is there will be a tax. Because I firmly believe that, you know, we’re not England. We’re not into landed gentry. You know, just because my grandfather did well doesn’t mean I’m entitled to a yacht . . . and so that’s just a firmly held value that I have, that we all make it in this country on our own, as best we can . . . if you’ve got help from people, that’s great. But this is about doing it yourself.”
— Rep. Ed Perlmutter, speaking to
The Denver Forum last month
Whenever the estate tax comes up for debate, someone always invokes the dreaded specter of an American aristocracy. If Washington doesn’t tax away wealth, we’re told, we’ll end up with a rich class of good-for-nothings who clip coupons from the refuge of country estates while manipulating the laws to their advantage.
Such warnings are usually coupled with the sort of rhetoric about self-sufficiency that would be denounced as naïve and heartless if uttered by any libertarian.
“Our nation views itself as a meritocracy and a land of opportunity and we have a proud legacy of upward mobility. An estate tax helps us promote this legacy,” claimed former Treasury Secretary Robert Rubin in a recent commentary he co-authored for The Wall Street Journal.
Of course, if Rep. Ed Perlmutter, Rubin and other fans of an estate tax really believed in pure meritocracy and the idea that “we all make it in this country on our own,” they’d favor confiscating wealth outright at death to ensure that no one got a jump on the race for the good life. Instead, they argue that taking half of a decedent’s wealth somehow fulfills their goal of thwarting the growth of an entrenched upper class.
Can they be serious? In reality, an individual’s death is an all-too-convenient moment for government to step in and demand a cut of the assets. Populist arguments that the heirs don’t deserve their good fortune amount to so much window-dressing.
We’ve all known a spoiled heir or two whose sense of entitlement might have benefited from having had to work for a living. But for every such eternal brat, there are others, equally blessed at birth, who contribute as much as they do to society precisely because they were born free from material want and able to pursue dreams that otherwise would have been extremely hard to fulfill.
Poverty may be the great equalizer, but wealth is the great liberator. It frees people from innumerable worries while opening up options and opportunities. There’s nothing wrong with seeking to bequeath this freedom to your children if you’ve achieved it for yourself. What’s government got to do with it?
Under President George W. Bush, Congress phased out the estate tax to zero this year, but if Congress doesn’t act, it will revert in 2011 to the Clinton-era rate of 55 percent. President Obama and many Democrats want to restore the tax to its 2009 level of 45 percent, with an individual exemption of $3.5 million.
They point out that such a tax would impact only a small percentage of households — most of which wouldn’t really miss it, allegedly, or have any idea how to use it more productively than government anyway.
Actually, economists make a very good case that those who own the most successful family businesses tend to plow their earnings back into the enterprises — and that the estate tax dampens jobs growth, capital formation and hard work.
But set the economic arguments aside and consider the moral calculus alone. Perlmutter is alarmed that someone might inherit grandpa’s yacht. I’m more concerned that he thinks the fellow who bought the yacht (I only wish) had a silent partner in government.
If Washington is determined to re-impose an estate tax, at the very least it should curb its appetite for such a large share of the pie.
Forty-five percent is grotesque. Twenty-five percent, on the other hand, would merely be unfair.
E-mail Vincent Carroll at vcarroll@denverpost.com.
