The death tax is a symbol of everything wrong with politics and leftism. A levy on inheritance taps into the very worst in voters’ dispositions, from feeling entitled to someone else’s property to stewing in envy that somebody else will have it better than you do. While it will not be a hill to die on for conservatives and libertarians come 2020, attacking the estate tax on the wealthiest of Americans is a battle worth winning to protect principles, common decency, and the family.
2020 and Death
With the general election around the corner, the declared Democratic candidates for president are revealing key planks of their platforms. Unsurprisingly, the likes of Sens. Elizabeth Warren (D-MA) and Bernie Sanders (I-VT) want to embark upon class warfare as a strategy, mainly by targeting the affluent. The first Native American woman to run for president proposes reducing the estate tax exemption from $11.18 million to $3.5 million. The cause of tens of millions of college Berns, hipster communities, and Karl Marx fan clubs aims to hike the federal death duty to an arbitrary figure of 77%.
Republicans have been as fishy as a Nigerian prince offering millions for only a small transaction charge. Instead of abolishing the 40% cost to die, as they have advocated for years, the GOP decided to double the exemption for the so-called super rich as part of the historic tax bill in December 2017. That said, with the measure in effect until 2025, it inevitably means that the next time the Democrats take power they will allow the law to expire and then jack it up to the suggested 55% rate.
Just because it has been given a stamp of approval from the electorate doesn’t necessarily mean that it is the right thing to do.
The Envy Tax
After you spent a lifetime of paying taxes, the government for the last century has wanted you to pay one more tax on your deathbed. The odious policy is typically justified with the Sanders’ “too many deodorants, too many sneakers” fallacy: Nobody needs that much money, so it would be better for the common good if it were redistributed.
Proponents think they have outwitted Econ 101 lessons by claiming that death duties, unlike other forms of taxation, will not remove the incentive to make as much money as possible in this life. And since the subjects are dead anyway, why not be a grave robber in the name of equality?
While this cynical approach may garner applause in modern-day classrooms, it does not consider the myriad of unintended consequences that will impact the rich, their heirs, and the public.
The first is the loss of savings. Let’s think about a man who plans to leave $1 million to his family when he transitions to the afterlife to spend eternity with Rita Hayworth. Rather than working hard enough to save $1 million to pass on to his children or grandchildren, he has to work double to save $2 million because the 55% rate is applied to the fruit of his labor. Will he do it? Well, the next question is: How much time is he willing to give to make that $2 million?
The second is the dissipation of overall wealth. Should the inheritance levy climb, high-net-worth individuals will save and invest less for the future and consume more in the present. This, of course, does not generate long-term wealth in a society, leading to the deterioration of capital in the economy. Contrary to the talking heads on CNBC, consumption does not generate prosperity, only saving and investing do.
The third is avoidance or evasion as wealthy retirees may use every tool, trust, foundation, and haven at their disposal to increase their family’s inheritance. This means productive capital is slashed, and these resources are instead transferred to accountants, lawyers, administrators, and other red-tape professionals. In this scenario, the government will get less or spend more to recover what it thinks it is owed.
The fourth is the tax’s egregious assault on common folk, not just the titans of Wall Street and the pillars of Silicon Valley. Family farmers, for example, have been subject to the estate tax since the 1930s. They may be rich in land, but they are cash poor, writes Zippy Duvall, president of the American Farm Bureau Federation:
“Many farmers play defense. They establish trusts, buy life insurance or make gifts to their families while they are still living, but this comes at a high cost. That money would be better pumped back into the farm. And that’s our biggest issue with the tax: endless expenses and legal maneuvering that accomplish nothing of value. All this happens so farmers don’t have to sell the farm piece by piece to pay the IRS.”
In the end is a diminished desire to leave your fortune to your offspring. Fearing that all your sacrifice and success will be in vain because of the state, you may reconsider leaving vast sums of your money to the next generation. Why bother if the government is taking half of the bequest anyway?
One constant theme in these arguments is the family.
Indeed, a bequest is instrumental in saving; some might argue that it is the primary incentive for scrimping and saving. Frank Fetter, an economist from the Austrian School, made the compelling case that “much of the existing wealth probably never would have been created if men did not have the right of gift.” Many family fortunes of the past and present have been accrued over several generations through persistent saving and permanent investing. These may become extinct if the death tax nears 100%.
Then again, the left has placed a bull’s-eye on the nuclear family’s back in the age of political correctness.
Leftism – not liberalism – is a futilitarian and nihilist philosophy.
These subscribers to progressivism hold the belief that human pursuits, endeavors, and enterprises do not have any utility and offer little meaning. Because there is no purpose to our existence, then everything someone achieves is superfluous; therefore, it is perfectly acceptable to steal the public’s fruits in order to fund visions of free stuff.
Surveys continually find that most people endorse the death tax because they have been sold a bill of goods by futilitarians and nihilists that they are justified in taking something that isn’t theirs. Using the mendacious trope of fair share and handwringing on street corners about the 1%, we are learning that the conventional American spirit of individualism, family, and determination are gradually becoming relics of distant times as cultural Marxism ascends to the mountaintop. And it’s all based on lies, damned lies, and entitlement and envy.