Jul 192010

Back in the day, one of the key Republican arguments against the estate tax was that it forced hardworking, salt-of-the-earth children of small farmers to sell the family plot in order to pay their taxes after dad died. It was a sad story, but with one problem: no one could find even a single small farmer who had been forced to liquidate in order to satisfy Uncle Sam’s voracious maw. Even the American Farm Bureau Federation was eventually forced to admit that it couldn’t come up with a single example, and a few years later the Congressional Budget Office estimated that under the now-current exemption level, only a tiny handful of small farms were likely to owe any estate tax to begin with — and of those, only about a dozen lacked the assets to pay their taxes. And even those dozen had 14 years to pay the bill as long as the kids kept running the farm. In other words, the story was a fraud from beginning to end.

via GOP Fairy Tales | Mother Jones.

  One Response to “GOP Fairy Tales”

  1. Note that the $3.5 million exemption was not in effect for 2000, thus the actual effects were realized by 138 farms. Should we not use the actual data rather than use the exemption for a year for which we have no data? That seems to understate the case, perhaps resulting in an incorrect understanding by your readers. Appreciation of the estate values may have occurred during the 9 years. We should also agree that we are not really taxing the dead. Penalties for non payment are not effective because of their deteriorating condition, nor can they mount an effective appeal. Heirs are being taxed.

    Please indulge me while I envision how this may have transpired in one of the 138 cases that occurred in 2000:

    Dear Mr. Brown and Mrs. Green
    Our condolences on the passing of your esteemed father. He lived the American dream, rising from relative poverty and, through his industry and initiative, achieved success in building the farm on which he raised his family. The federal government has elected to exercise the authority to remove 47% of the accumulated value of your inheritance exceeding $1.5 million. The calculation of the estate tax is attached for your convenience. You may wish to consult a qualified tax adviser. Please note, this may have some impact on your decision to remain on said property with your respective families. Again our sincere condolences.

    This parable represents a nightmare rather than a fairy tale. It demonstrates callous disregard for their property rights. It should never come to pass.

    In effect the estate tax is opportunistically constructed, upon the death of an individual, to deprive the heirs of significant value of the estate in favor of the State, whether real property or personal property. It is an exercise of the majority, not possessing wealth, against the wealthy minority. Therefore, the central question arises, is this a just policy with regard to the standard of our law, which is the Constitution and the natural law upon which it is based? What is the reasoning by which we should hold that the estate tax is just or unjust? Is it not better to base the decision on reason rather than what you or I would rather do?

    The Constitution concerns the relationship of persons, individuals, with their government. It both establishes the form of that government and the protections from that government. This approach naturally rests upon the common characteristics of persons. We are typically able-bodied and able-minded. We construct shelters, seek sustenance, and otherwise care for our own survival. We typically try to improve our own condition. A consequence of our unequal capabilities and endeavors, not to mention unforeseeable events, is that some will be more successful, prospering to greater degrees than others. That is the pursuit of happiness part. No guarantees of happiness can be realistically effected. The common laws provide protection so that, in pursuing happiness, we do not violate the protected rights of others, becoming the immediate cause of their unhappiness.

    Not mentioned directly in the Constitution is nature of our procreation and the subsequent manner in which we protect, teach, guide and provide for our offspring. It is part of the natural law, upon which the Constitution rests. Nothing is more natural to humans than these activities. No one has to tell us these things. We learn by example however. It’s an old tradition, dating back before recorded history.

    Fundamental to our provision, is the desire (and necessity) to furnish our children with the fruits of our labor. We desire that our children will enjoy better circumstances, that they need not cross the plains in a Conestoga wagon experiencing the hardships of the pioneers. Provision for children is not expressly mentioned in the Constitution, nor is the concept of inheritance of property, real or personal. They do however, derive from natural law. What is mentioned, which pertains to natural law is that we intend to “secure the blessings of liberty to ourselves and our posterity”.

    Those persons that are not able-bodied or able-minded are also not mentioned. They need special consideration, often in the form of welfare. Others may also need welfare because of some exceptional circumstance. This is not however, the meaning of the phrase “promote the general welfare” which relates to natural law rather than exceptional cases. The existence of people who genuinely need welfare is not, therefore, justification for invalidation of the provisions and protections of the Constitution.

    It is no more just for our common laws to deprive people of inheritance, than it is to deny them procreation. We are at liberty to procreate and to inherit. Neither of these are specifically mentioned in the Constitution since they are part of the natural law. Since our Constitution does not recognize a category or class such as wealthy or poor, it is well understand that all citizens have equal standing before the law and require equal protection. Rich people are included.

    The wealthy generate larger tax revenue as a consequence of larger income (dividends, interest, etc.), larger expenditures (personal property and activities), and greater capacity for industry (investments, venture capital, and businesses) . Our progressive tax code has ample provisions for extracting taxes from those deemed rich or wealthy, without resorting to an unjust confiscation of inheritance. We suffer no harm from the lawful accumulation of wealth by other individuals or it’s transfer by inheritance. To the contrary, we benefit in many ways.

    Moreover, the transfer of that wealth from the private sector to government negatively impacts the overall economy. You might note the section in the CBO report discussing effects. It had some interesting statements such as: “A large body of research has, however, found that income taxes may discourage entrepreneurial effort.”

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