Sunday, December 19, 2010

It’s Time to Bury the Estate Tax

At Hot Air:

The Wall Street Journal has brought up yet another argument against the ebb and flow of the estate tax debate this week. The crux of it is that the uncertainty over how large the government vultures will be when they come to feast on your corpse has some business owners spending more preparing for the estate tax than their families will eventually lose.
What’s unavoidable to many family businesses, however, is the cost of lawyers, accountants, family business advisers and business appraisers—and all that, owners say, has increased in the past decade as the estate-tax rate has continually changed. Trade groups, including the National Federation of Independent Business, have lobbied Congress for a more permanent solution.
“Virtually every small-business owner plans and responds…so that the estate-tax system, whatever it is, doesn’t end up destroying their life’s work,” says Lawrence Richman, chair of the Wealth Services Practice Group at Neal, Gerber, Eisenberg LLP, a law firm in Chicago.
This is only the latest in a generations long debate over the relative “merits” of re-taxing the wealth of those who manage to find success in America as soon as they approach room temperature. We have debated the various myths surrounding the effect it has on individuals and the economy as a whole. We have heard the arguments about whether or not it substantially contributes to government revenue or is simply a way for populists to mete out punishment to the wealthy. We’ve listened to progressives talk about how it’s the only “fair way” for the wealthy to “give back” to the rest of us.
Perhaps the argument should finally move away from the dollars and to the sense. As strange as it may sound, I am taken back to a scene from the original Jurassic Park film where Jeff Goldblum’s character, Ian Malcolm, makes a rather pointed accusation. “You were so focused on whether you COULD do it … you never stopped to ask whether you SHOULD do it.”
Aside from a few holdouts in remote, libertarian enclaves, few people argue with the fact that the government has established broad powers to lay taxes on nearly any occasion. But that only reinforces the widely held perception that one of the defining characteristics of government is an encompassing fear that somewhere there may be a dollar changing hands without their having a chance to nab a quarter out of each party’s pocket.
The real reason to oppose the death tax isn’t that it’s an inefficient way to raise revenue or that it suppresses job creation and expansion. The main objection to such a tax is that it is simply wrong. (Or have we passed beyond the era when the words “right” and “wrong” have any meaning in government?)
When people work all their lives and accumulate wealth – with the long term goal of passing that wealth on to family, friends, or whomever they choose – they have achieved the most fundamental definition of the American dream. And the moment of their passing – generally just as a family is dealing with the grief of losing a patriarch or matriarch – has to be the worst possible time for Uncle Sam to come knocking with a bag and a gun.
And lastly, if it hasn’t been pointed out often enough already, the wealth has already been taxed repeatedly. There comes a point where enough is enough already.
Pushing back on this will not be easy, though. In closing, let us remember once again the immortal words of H.L. Mencken:
When a new source of taxation is found it never means, in practice, that the old source is abandoned. It merely means that the politicians have two ways of milking the taxpayer where they had one before.
Words to live -and at least for now, to die – by, sir.

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