Bring Back the Estate Tax!
E. Noel Preston, M.D.

Winston Churchill argued that estate taxes are “a certain corrective against the development of a race of idle rich." Rather than just living off their inheritances Churchill wanted the English rich to stop being consumers of wealth, and become producers of wealth. He believed taxing them to the point of their actually having to work for a living would be good for them, and for England.

I am against reviving the "death tax" on principle -- it sounds horrible that after exempting the first one million dollars the federal government would take 55 percent of whatever is left of someone's estate -- especially if that someone had already paid income taxes while he or she was alive and now the money in the estate consists of after-tax dollars. I believe a person has the right to earn a good living, invent a better mousetrap, work longer hours, outsell the competition, and enjoy the rewards of success -- and to leave the estate intact to pass on to his or her children.

During President Woodrow Wilson's administration, the socialist movement was at its historic peak and a wave of anarchist bombings terrorized the nation's industrialists. Never in America's history was there a time when class warfare seemed more threatening. The accumulated wealth of America's richest families -- the Rockefellers, Vanderbilts, and Carnegies -- helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy.

But I think if we took away everybody's money and then redistributed it so that all of us had the same amount -- say, five million dollars -- in a short time we would again have very poor people and very wealthy people. Some people would buy property and build on it, start businesses, or provide services for which they would be paid -- but others would buy expensive cars, spend it on extravagant vacations, or somehow manage to squander it all away on beer and cigarettes.

My friend Susan and I went to the Waffle House last night for pecan pie, and a bi-racial couple sitting in the booth behind me were discussing the man's daughter and her upcoming eighth birthday. The man said, "I've already given her a dog hat and dog sunglasses, and I'm thinking -- maybe for her eighth birthday, I'll give her $800," and the woman said, "yeah, that's a good idea." Then they got up and left, the woman taking a full Juicy Couture shopping bag with her, and I remembered Mark Twain had said "a fool and his money are fun to go out with."

I worked for 46 years, and nobody gave me a pension plan. I'm grateful to Medicare, but I grew my own nest egg, and I have to maintain my house, car, prescription drug and other expenses on my own. And so no, I do not want the government to tax my small estate so that my four children and 13 grandchildren will get less than half of whatever is left.

But something is wrong here. There are a lot of spoiled brats out there (Paris Hilton comes to mind) who have done NOTHING to justify their enormous wealth and profligate lifestyle. 

On the other hand, a guy who works at a car-rental agency earns $20 an hour and works 40 hours a week. He gets a salary of $800 a week, or maybe $40,000 a year, less payroll taxes of $270 a month. That leaves him a net take-home pay of $36,500 a year.

Perhaps he lacks the skills for a higher paying job, and he can't afford the tuition or transportation to get higher skills training. Maybe he has a relative with special needs who needs attending. Anyway, it doesn't look as if he's going to enjoy a comfortable retirement. So why is it OK for Paris Hilton to live like a spoiled brat and for this other person to be barely able to afford breakfast at the Waffle House?

Is this guy ever going to have an estate worth more than a million dollars? Probably not, but he would also probably be a member of the Tea Party and one of those most opposed to reviving the estate tax. This is because we Americans have an enduring belief in social mobility. Almost all of us have bought into the idea that if we can't become millionaires ourselves, at least (maybe) (someday) our children can. 

And in the cold, hard light of day, is it cruel to stop and ask, "Really?"

Timothy Noah, in "The Great Divergence," ( Slate Magazine, http://www.slate.com) wrote that in 1915 Willford I. King, of the University of Wisconsin, published The Wealth and Income of the People of the United States. King was troubled to find the richest one percent possessed 15% of the nation's income. "Today," Noah writes, "the richest one percent account for 24% of the nation's income... According to the Central Intelligence Agency, income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Economically speaking, the richest nation on earth is starting to resemble a banana republic. Incomes in the United States are more unequal than in Germany, France, and the United Kingdom." 

I know that Paul will always vote in favor of robbing Peter, but I think exempting a certain amount -- say five million dollars, adjusted annually for inflation -- from an estate and then taxing the rest at a graduated rate sounds not just like a compromise, but eminately reasonable. But: I wouldn't let the government use any Estate Tax money for pork barrel projects! I would say the money could be spent only to help people improve their skills (and that includes providing childcare), so they could become a nurse, or a mechanic, or a tugboat pilot, or an airplane pilot, or a doctor, or anything else that would elevate their standard of living.

Why should anyone consume a life of wretched excess because their grandfather was a partner at Goldman, Sachs or owned an oil company or a railroad or a hotel chain? Why should having a last name like Kennedy or Roosevelt or Buffett or Gates (or Bush) entitle anyone to special treatment? 

The United States was founded on the idea that merit brings reward. We were founded as a "meritocracy." But somewhere along the way we lost that idea. We rejected loyalty to the crown of England, and while it is true the United States is not an aristocracy of princes, lords, and dukes, we have become a plutocracy of oil barons, CEO's, millionaire sports figures, and rock stars.

So bring back the estate tax. It is fair, and it's right. 

Noel Preston, MD, is a retired pediatrician.   He writes on a variety of subjects... More information can be found at whuffodat@aol.com

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