Is the estate tax fair?
by Sam
Michael Kinsley takes on the estate tax in today’s Washington Post, in light of discrepancies between the tax in the House and Senate budgets. The House included Obama’s plan—45 percent on estates over $3.5 million. The Senate has been more lenient and “Ten [Senate] Democrats have joined the Republicans in calling for a $10 million exclusion and a 35 percent rate.”
Kinsley is appalled. The Senate plan essentially abolishes the estate tax (there aren’t a lot of $7 million and over households), which Kinsley lambastes as philosophically weak.
There are philosophical arguments against the estate tax that aren’t contemptible, though they also aren’t convincing. My favorite is that money is only one advantage that parents can pass on to their children. If you reduce the role of money in determining where people end up, you aren’t leveling the playing field. You’re just tilting it in favor of other inherited qualities such as talent or intelligence.
[. . .]
But why the populist fury over those AIG bonuses of a few million dollars while no one seems to care much about billions being transferred through inherited wealth? The obvious answer — that there’s a difference between what people do with our hard-earned money and what they do with their own hard-earned money — isn’t actually as persuasive as it seems.
The estate tax is one of those issues that seems to endlessly plague public policy debates, with each side outraged at the other.
While Kinsley canvasses the terrain of popular argumentation fairly well, he does miss what might be the crux of the debate: to whom does the money of the dead belong?
Early French sociologist Emile Durkheim famously railed against inheritance because his belief was that the state had a fair claim on the money after years of expending public resources (in police and courts) to protect it.
Over a hundred years after Durkheim wrote, the core question remains one of ownership. The arguments for the estate tax can focus on transfer (ownership cannot be transferred) or debt (you owe the government money for your protection, an obligation deferred until death). The arguments against estate tax are the converse, that ownership is limitlessly and freely transferrable or that it is absolute after income tax.
Debates over how the inheritance tax does or does not advantage the next generation are important and interesting, but they’re also ancillary. The question of ownership must be decided first. Both sides argue that there’s actually no “difference between what people do with our hard-earned money and what they do with their own hard-earned money”—they just disagree on whether it is, in fact, ours or theirs.
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- Money for nothing
- Who should pay for health care reform?
- How much do CEOs deserve to make?
- Thomas Jefferson didn’t get into Harvard
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