Straw-Farms & The Estate Tax
Avedon Carol offers up* this quotation which she says is from Dean Baker's The Conservative Nanny State. I haven't looked at the source, but I liked the quotation.
Of course, in reality the battle over the estate tax is an issue that is almost exclusively about wealthy people who don't want wealthy children to be taxed on their inheritance. In the spring of 2001 a New York Times reporter called the American Farm Bureau, one of the main groups lobbying for repeal of the estate tax, and asked to speak to a family that had lost its farm due to the estate tax. The Farm Bureau was unable to identify a single family in the entire country who had been through this experience.
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*Avedon Carol, "Money, money, money", The Sideshow, 28 November 2006.
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on Wednesday, 29 November 2006 at 00.01
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This probably speaks more to the quality of people running the Farm Bureau.
We lost Oscar's Dreamland in Billings, MT, to inheritance taxes. Oscar was a farmer/mechanic/tractor collector who lived to a ripe old age and had a world class collection of U.S. farm tractors, mainly those circa 1900-1930. He ran a casual museum, and his collection came to be worth several million dollars. He and his family did not take any steps to avoid estate taxes, and when he died the whole collection was auctioned away.
I think back on this with some regret. There was a loose group of friends in the area who were interested in Oscars, and I always imagine we could have set up a non profit group, or something, to keep the collection intact.
on Wednesday, 29 November 2006 at 05.00
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Two or three years ago Sen. Jeff Sessions of Alabama set out to find horror stories of bereaved families in financial hardship because of the estate tax, for farms and ranches that had to be sold, of businesses that had to be sold off or shut down. Sessions wanted these stories to use in floor speeches advocating repeal of the so-called death tax.
Like the Farm Bureau, Sessions' staffers and the IRS couldn't come up with any horror stories. The tax has been revised over the years to make it less and less likely any such hardship would occur.
What they found, undoubtedly to their chagrin, was that the tax affects a very few exceptionally well off families — ones more than able to withstand the opportunity to support their country.
on Thursday, 30 November 2006 at 09.34
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There are businesses sold to satisfy the estate tax, but I imagine they don't involve hardship, or horror stories, or bereavement.
I recall a survey, where even amongst the poorest people, there was a strong desire to pass any life savings on to the children. I imagine the reluctance to support an estate tax taps into this desire.
However, the evidence seems to be that passing a big wad on to the kids isn't all that beneficial. It is better to let the kids work for a living, in my opinion.
I recall a distant acquaintance who was living paycheck to paycheck. He came into a large inheritance, and went on to have a wonderful time of dissipation, flying down to Las Vegas, spending tens of thousands: hookers, limousines, high roller status. The entertainment value of his stories is quite high. Now he's back to living paycheck to paycheck. I rate this a better tax than writing a check to the US Treasury and letting Harry Reid funnel an earmark back to a constituent. At least we have the stories.
I found this article interesting:
http://www.washingtonpost.com/wp-dyn/content/article/2006/07/03/AR2006070300937.html
Tax Inheritance, Not 'Death'
on Thursday, 30 November 2006 at 16.40
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The idea RSF cites is from people at a right-wing D.C.think tank. Their attributing of class warfare to those who support the estate tax is thus neither surprising nor accurate.
I seem to recall, although it's been a long time, a big family owned business in the area I grew up in being sold off to satisfy the estate tax. The kicker, however, was that doing that got that very wealthy and well-connected family off the hook for other taxes they allegedly got caught doing some industrial-strength fudging on.
When it comes to alleging class warfare, I'm reminded of George W. Bush's only half kidding statement that the rich don't pay taxes. He knows whereof he speaks, from personal, family, friends and associates' experience.
I will say it one more time. It's true some of the very well off make exceptional contributions to our economy, government and society. It's also true all of them benefit out of all proportion to most Americans from our economy, government and society.
To those whom much is given much is expected. There is a certain fairness in that, and if ensuring some of that "much" must be gotten on the occasion of the death of the extremely well off, so be it. Better late than never.
on Friday, 1 December 2006 at 01.54
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I don't see where I was touting the class warfare line.
The rich pay taxes. According to IRS figures, the top 1% income earners pay 35% of income taxes. The top 10% pay 65%, the top 25% pay 85%.
There is something to be said for letting the rich flourish: they are generally the rainmakers, the most productive citizens.
I'm not so sure the wealthy "benefit out of all proportion". Beyond a certain income level, more money doesn't buy more happiness. In some ways the wealthy are the horses society harnesses to handle large projects, to manage large concentrations of money for the greater good. The wealthy often end up paying alot for a marginal advantage. A mercedes S-class sedan isn't a whole lot better than a chevy impala. A couple of double cheeseburgers from McDonalds provides the same calories as lunch at the 4 Seasons.
on Friday, 1 December 2006 at 20.40
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RSF, class warfare was cited in the article you linked to.
I don't take it literally that not a single wealthy person pays taxes. You shouldn't take it literally that all wealthy folks contribute greatly to the common good, even indirectly. I certainly can't see where Paris Hilton, George W. Bush or any of his siblings has, for a few examples. Then there are the malefactors of great wealth like Richard Mellon Scaife and the Houston homebuilder who financed the Swiftboat slimers' scurrilous activities.
on Sunday, 3 December 2006 at 09.52
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The linked article touted a plan to tax inheritance as regular income. I thought it was kind of a liberal idea, but one with some elegance.
on Sunday, 3 December 2006 at 13.28
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Of course the rich pay taxes, just vastly less than any of us.
Top 1% pay 35%? Hardly surprising. The wealthiest 1% of Americans possess 35% of the country's wealth. NB: The top 1% in income are not generally among the top 1% wealthiest — the wealthiest do not make their money from salaries, which is what this statistic usually represents, but from investment income, i.e., from their money.
If you are surprised by that statistic, it's because you've forgotten that wealth and income are generally log-normal distributed, and not normally distributed; larger pots serve markedly fewer people.
I have trouble seeing the wealthiest as more productive, though, since it's their investments — and the people who manage their investments for them — that do the work. While large amounts of money (i.e., capital) does interesting things in a capitalist economy, should owning large amounts of money be so richly rewarded simply because it's a large amount of money?
Trickle-down economics is so eighties, and hasn't become any more true just from wishing it so for the past 20 years.
on Monday, 4 December 2006 at 20.58
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"…the rich pay taxes, just vastly less than any of us."
I can't puzzle this true. The rich pay more in absolute terms, and as a percentage of their income. Investment income is still income, and is taxed.
I suppose someone could have a billion dollars in the stock market and lose money, thus having great wealth and no income. Theoretically, that money was earned and taxed at an earlier date, so the taxman's claim on that wealth is problematic.
If one buys an early Microsoft stock and sits on it while it goes up many multiples, one is taxed on that increase when the stock is sold.
Often wealth is in the form of property, which gets taxed whether it makes money or not.