Estate-tax repeal: a morality play
Tax disputes don't often turn so clearly into moral issues. Usually, legislators make tax choices along the lines of Jean Baptiste Colbert, a 17th-century finance minister of France's Louis XIV, who said: "The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing."
Well, there's a lot of hissing right now over the estate tax. "There is a big moral dimension" in this tax, says Steve Ricchetti, cochair of the Coalition for America's Priorities, and a former deputy chief of staff for President Clinton.
The United States, he says, "was not founded on the principle of inherited wealth." Rather, the goal is a system with "basic fairness and equity" for all so that "hard work" can be rewarded with achievement, success, and prosperity.
The Republican leadership of the Senate plans a vote this month to permanently repeal it, or, more likely, shrink it drastically. Opposing TV ads will soon appear in states of undecided senators.
Last week, proponents of keeping the tax, seeing at stake $1 trillion in revenues over 10 years, held a press conference in Washington, D.C., to reveal a "multimillion-dollar lobbying effort" to repeal the tax. This effort, they said, is led by 18 "superwealthy families" with a total net worth of $185 billion. Eliminating the estate tax would save their heirs $71.6 billion on their huge estates.
Calling the lobbying effort "one of the biggest con jobs in recent history," Joan Claybrook, president of Public Citizen, charged the families with relying on "deception to bamboozle the public and Congress, not only about who must pay the estate tax, but about how repealing it will affect the country." She accused them of masterminding "a fraud" on the public by selling repeal on the basis that the "death tax" will harm small business and small farms, and it does not.
Strong language is one way to get some attention. It's not unusual in partisan Washington these days. Speakers at a Summit for Permanent Death-Tax Repeal at the Hart Senate Office Building Tuesday probably will not be mealy-mouthed, either.
But proponents of keeping the tax are truly outraged by the prospect of repeal because they see the tax as involving genuine moral issues. These include the merits of working for a living, rather than living on inherited wealth. The tax, they say, also provides some financing for federal programs that equalize opportunities for children of poorer families, or provide healthcare, or other national welfare measures that benefit the less wealthy.
It used to be that a majority of Americans approved abolition of the estate tax. Perhaps they feared they or their business friends would be hit by the federal tax should their parents die. But this year, estates of $2 million for a single person ($4 million for a couple) can be passed along tax-free. Only 0.27 percent of estates - those of megamillionaires and billionaires - will face the estate tax.
As this fact became known, public opinion shifted. Today some 57 percent prefer keeping the tax or reforming it. Only 23 percent favor repeal, finds a recent poll.
Andrew Carnegie, the wealthiest man in the world when he retired in 1901, believed in the "Gospel of Wealth." Rich people, he held, have a moral obligation to give money back to others in society, and he did so by giving $350 million to various philanthropies primarily involving education.
Carnegie's moral thesis was echoed at the press conference by Public Citizen and the other sponsoring group, United for a Fair Economy. In an audio statement, Bill Gates Sr. held that the estate tax is "just paying back to the country for all the wonderful things it's made possible for the people who have that wealth.... There's no sensible argument that I can think of for insisting on being able to pass the last penny of $100 million to your three kids."
As press conferences often have become a kind of show, a young high-schooler destined to become an heiress of considerable taxable wealth was presented. "If keeping the estate tax means a step closer to a debt-free treasury, a step closer to an improved healthcare, Social Security, education, and every other program that makes me proud to be an American, show me where to sign the check," said Stephanie Letzler, daughter of a New York investment manager.
Also showing up (not by accident) was a parody group, Billionaires for Bush, that frequently attacks the "Dynasty Tax." No mercy was shown the 18 billionaire families. "We pay good money to get rid of laws we don't like," said a woman who took the name Iva Fortune.
Another phony billionaire, Anita Nutther Taxcutte, talked of the "stigma" of the estate tax. It "makes us feel like criminals, like people who had to work at a grocery store or the 7-Eleven or other common stores that we've seen in films."
Only five of the billionaire families cited earned their family fortunes, estate-tax proponents charge.
The wealthy sometimes see the estate tax as confiscation of property that they should be free to pass on as they see fit, and that wealth provides the capital that creates jobs for those less rich.
But economists, including two at the Congressional Research Service, find that the estate tax, whether abolished or maintained, will have "little effect" on the national savings rate, says John Miller, an economist at Wheaton College, in Norton, Mass. To him, the estate-tax issue remains primarily a moral one.
