Thursday, July 8, 2010

Estate Tax is unfair Death Tax

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For what it is worth, I must disagree with an editorial by a Boston College Professor saying what a great idea the estate tax is. He cites an example of a billionaire who died in 2010 and his estate was not taxed. His heirs received a "windfall."
But did they really? What was not taxed was this man's BUSINESS. His heirs will be able to inherit the BUSINESS without the harsh burden of a huge estate/death tax to pay.
Consider the family farm. A woman dies and leaves her farm to her children. With an estate tax in place, the children must pay a huge estate tax to the government. If they cannot afford it, they must sell the family farm to pay the tax. Even if the heirs manage to scrape together enough money to pay the estate tax, when the son/daughter next dies the entire farm is taxed AGAIN with a new estate tax on the death of that son/daughter. And so it goes, with each new succeeding generation being forced to pay a new estate tax on the same property/business, over and over and over again.
Hence, the government is killing business with the estate tax. It really is "killing the goose that laid the golden egg."
By allowing the business to continue, without the unnecessary and burdensome estate tax, the business will continue to generate revenue which will then be taxed as income. So, the business thrives, the government gets the tax revenue from the business' income and the heirs get to keep the family legacy.
The argument that huge concentrations of wealth are a threat to democracy is bogus. As was explained by the late economist Milton Friedman, concentrations of wealth actually act as a bulwark against overreaching government. Indeed, large concentrations of wealth in the hands of the few have actually benefited the rights of the disenfranchised. Many causes which AT THE TIME were unpopular were bankrolled by a few wealthy benefactors who were considered eccentric at the time: abolitionists; women's suffrage; the civil rights movement of the 1960's and the anti-war movement; even gay rights today. These were once unpopular causes which were able to gain traction with the general public only because a few so-called "eccentric" millionaires were willing to back fringe movements. Now these "eccentrics" are considered heroes and the "fringe" movements are considered fundamental rights! These movements would never have gotten off the ground without the capital from a few wealthy individuals. Certainly the government bureaucrats and the politicians were not about to take on unpopular causes. Only when the wealthy kept pushing their unpopular ideas did the ideas get a hearing and become steadily more popular.

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