When some 120 wealthy Americans start urging Congress not to repeal estate and gift taxes, something strange is going on somewhere. After all, in the midst of tax-cut euphoria, it is hard not to question a tax-me-please attitude.
But these Americans are doing just that – and in a grand style that befits their stations. It is not every day one sees financial luminaries like George Soros, the father of William H. Gates, David Rockefeller, Jr., and Agnes Gund attach their names to paid advertisements in national newspapers in an almost surreal appeal to soak the rich.
Indeed, they have paid dearly to defend their right to be taxed. The least one can do is give them a fair hearing.
However, this short petition contains a few simple arguments, which seem amazingly shallow.
The document, for example, cites billions of lost tax revenue that would be offset by others less able to pay. However, only a little over one percent of government income comes from estate taxes. What is this in a nation awash in budget surpluses? Moreover, study after study shows that estate taxes actually decrease tax revenue not increase it.
The signers are only too aware of the hardships of the “death tax” on lesser millionaire compatriots. They surely must know that a family-owned business, for example, can lose up to 55% of all its assets including land, buildings and equipment when it passes from one generation to the next.
The document also states “the estate tax exerts a powerful and positive effect on charitable giving. Repeal would have a devastating impact on public charities.” Here again, the math does not necessarily pan out. It is hard to believe that the signers who must employ legions of tax lawyers are not familiar with at least some of the studies that indicate quite the contrary.
Even a casual study of tax return data clearly shows that tax-deductible charitable bequests account for little of charitable giving (in 1994 it amounted to $9.3 billion, or 1.5 percent of the total revenue of charitable groups) Most non-profit organizations received little or nothing from legacies or bequests.
Actually, the tax system as a whole is much friendlier to gifts during life than to gifts made at death. Recent research on this subject, however, indicates that the charitable tax deduction exerts only a modest, if any, simulative effect. At most it affects the timing of donations, but not significantly the overall level of giving.
No, the only real reason seems much more temperamental than economical. “Repealing the estate tax would enrich the heirs of America’s millionaires and billionaires,” the statement notes, “while hurting families who struggle to make ends meet.”
In the minds of these notably liberal signers (which includes Norman Lear and Paul Newman.), there is a prevailing idea that the only true determinant of wealth should be merit. The injustice of inherited wealth gives the less fortunate a disadvantage. The resources of the nation should be governed exclusively by merit of meritocracy.
Indeed, merit should have its place in society. But can it be the sole determining factor? Can it justify generational leveling and gallows socialism?
The radical promoters of meritocracy would have it that way. In their strange millionaire populism, they show an aversion for social and economic inequalities. They harbor a serious misconception about the nature of compassion and think all inequalities invariably cause suffering in those who have less.
Of course, this is not true. Christian compassion does not oblige one to feel sorry for someone who has sufficient means to live comfortably according to his station. Christian compassion simply elicits the desire to help those who lack the means to lead a dignified life according to the demands of human nature and their status. There is no reason for someone to feel guilty simply because he is richer than others.
But guilty they feel. This sentimental interpretation of compassion of those who have more leads them to disguise their wealth, education and culture so the lesser will not suffer the humiliation of seeing them with more. It leads them to eschew their role as models and even work against their own wealth by proposing that the government constantly level the playing field with progressive taxes on those who tower over others.
What they fail to see is that money is not only a reward for services rendered. Wealth creates the conditions for culture, tradition, excellence, and that horrible e-word – elites. Far from humiliating those with less, it often stimulates them to imitate or strive higher. And when this beneficial influence has continuity over generations, all society benefits and progresses as it tends toward ever-higher goals.
Constantly rebuilding wealth impairs this process and all society necessarily suffers.
However, sentimentality aside, the most compelling case for inherited wealth is nature itself. All people receive biological inheritance from their families. In this respect some families are obviously more gifted than others.
This biological inheritance has important psychological consequences. There are families, which, over the course of many generations, have transmitted artistic gifts, a gift for speaking, a talent for medicine, or an aptitude for business. This transmission of traits over generations by a family destroys the principle of equality at the starting point.
Furthermore, the family transmits more than biological or psychological traits. It is also an educational institution. Thus, a person who has been educated by parents highly gifted in art, culture, good manners, and morality, always has a better starting point. In fact, the only way to eliminate this parental influence is to suppress the family and educate all children in state schools just like those in totalitarian regimes.
Nothing could be more natural than inherited material wealth. If a father, for example, really has the heart of a father, he will necessarily love his own child more than others. Moved by this love, he will work and spare no effort or sacrifice to accumulate wealth that will protect his child from the many disasters life can bring.
At the end of a lifetime of work, he will die happy knowing he leaves his children in favorable conditions. However, the taxman enters at exactly that moment to confiscate his inheritance to impose the principle of equality at the starting point. Such a policy tramples underfoot one of the most sacred values of the family – parental love.
To many in this meritocracy crowd, the responsibility of maintaining a tradition and setting the tone for society is an intolerable burden. In their passion for the merits of an exaggerated meritocracy, these liberal individualists are blind to such social considerations and even parental love is sacrificed in the name of a sentimental compassion.
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