Friday, October 22, 2010

It's Still An Estate-Death Tax

This is the third post in response to Kent Pitman's blog posts.  In the first, I addressed his desire to gamble with Global Warming; in the second, I addressed his parable of George in relation to Global Warming.  This, the third post, has nothing to do with Climate Change.  Instead, I will address his take on the Estate Tax, and how those Evil, Scheming Republicans have started to call it a Death Tax (and Democrats have never changed the language to obfuscate the debate in their favor, of course :-).

After this, I will stop reading Kent's writings, except his technical least, I will try to.  These initial blogposts, especially, got under my skin, and I'm confident that if I continued to read Kent's blogposts, I'd get a severe case of eczema.

Kent Pitman wants to declare a $1.00 Tax on Death, so that Republicans would have to go back to calling the "Death Tax" an "Estate Tax", and so that Democrats can be on the Moral High Ground(TM) again, justifying the confiscation of yet more wealth.  There are a couple of problems with Kent's proposal.

First.  It doesn't matter what Kent wants to call his tax, it is still an Estate Tax.  you cannot tax someone who is dead; you cannot do anything to a dead person except to desecrate his body and tarnish his reputation--and since the person is dead, even these things don't really matter one whit to the person that's dead.  Thus, the only way you could collect this tax is by collecting it from his estate.  Hence, Kent's tax is as much an estate tax as the estate tax is a death tax.

Second.  Estates do not come into existence when someone dies.  If you want to, you could tax an estate before a person dies, as well as afterwards.  Indeed, property taxes are applied directly to the estate of an individual, so this is just as much an estate tax as a tax applied when a person dies.  Since the latter Estate Tax is applied when someone dies, it makes just as much sense to call it a death tax as it does an estate tax.

Now, apparently you don't believe that a rational person would want to get rid of the Death Tax.  I guess that means I can only give you some irrational reasons for getting rid of the Death Tax:
  • The Death Tax does not tax the wealthy.  The Bill Gates, William Buffetts, George Sorros, and Kennedys of the world hire armies of lawyers and accountants to make sure that the Government gets exactly what the Government asks of them, and not a penny more; and they have the clout to make sure that as many loopholes as possible are put into the laws as possible, so that "not a penny more" often means "not a penny".  Yet these people have the gall to insist on making taxes like this high.
  • The Death Tax is a tax on the middle class.  A family business could easily be worth $3 million on paper, but in practice only brings in $50,000 a year; thus, such a business owner cannot afford armies of lawyers and accountants.  Rather than continue family operations, such a business can be destroyed when the father dies, and the rest of the family have to pay Estate Taxes.  Historically, the Death Tax has been the death of many family businesses.
  • Even where the children have no interest in a business, or there's simply an estate, a Death Tax could destroy the retirement hopes of those children.  I know someone who barely makes enough for his family to make ends meet, and who has some hope in his father's estate for retirement.  While it's bleak hope--he's well aware that he could die before his father does--it's still hope.  And it's hope that could easily be dashed to pieces with a high enough of a Death Tax.
  •  What in the world has Government done that gives Kent any confidence that Government will know how to spend value from an Estate, better than the children of the parents of that estate would?  The children would have to do a lot of spending before they can even hope to achieve the levels Government Waste, even when taken on a percentage basis.

In closing, I will address this statement from Kent:
Hey, don't you always say you should tax people on what you don't want them to do. You don't want them to die, do you?
This is far more in line with what Democrats want to do, than what Republicans want to do; too many of these things, though, have been proposed by Republicans, and too many of such taxes have been able to get enough votes to pass, because of a few Republicans who have broken ranks.  Government, especially Federal Government, should get out of the business of regulating behavior, or of nudging behavior through taxes!  This is a major factor as to why taxes are so bad in the first place.  It's time we give up our deductions, so that we could have a simpler tax code!  And it's time we stop letting government gobble away our life's work, just so that some bureaucrat could pretend to do some good!

For the life of me, I can't think of one Rational Reason that a Democrat could provide on this issue.  Is it "Tax the Greedy Rich!  Except the Super Rich, of Course!"?  Or "Government is Wiser at Spending Money than YouThe Rich, Except the Super Rich!"  Or is it "The Person Is Dead!  Why Should He Want the Money Anymore?"

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