Liberal Solution to the Financial Crisis: Death Tax
The liberals’ have floated their latest solution to the financial crisis and its success is guaranteed to be equal to that of the stimulus. Bring back the death tax, as unveiled by the liberal mastermind, Robert Rubin in the Wall Street Journal.
That’s right. After quadrupling the deficit in less than a year, and spending more on “stimulus” programs than on seven years of the Iraq War, liberals think the solution to our economic woes—they call it a revenue problem, not a spending problem—is to bring back the costliest tax the government has yet to devise: the death tax.
The Congressional Budget Office estimates that the estate tax, combined with the gift tax, brings in about $8 billion a year. In the context of our national budget of $3.5 trillion, that’s hardly a drop in the bucket.
Typically shortsighted, this latest liberal solution doesn’t take into account that the death tax actually hurts the economy by depriving it of about $850 billion in capital over ten years.
When the death tax hits, the heirs of a business have to worry about finding cash to pay 45% to 55% of the value of their inheritance, including businesses or farms, to the government.
Consequently, they are not able to expand their business or hire new workers. Instead, money that would build businesses and in turn our economy goes to the government for it to redistribute to others, or just to squander, as it sees fit.
Essentially, this tax allows the government to confiscate vast portions of an individual’s wealth once they die. It can hardly be called a tax: these are assets that have already been taxed once, when they were earned. This is the act of confiscation and there is no justice or common sense behind it.
Liberals argue that this tax is the least damaging to the economy. They know better. They understand, as the CBO does, that reinstituting this tax (it has been at zero during 2010) will kill around 1.5 million jobs. They know that it deprives our economy of what it desperately needs right now: capital. And they know the toll it takes as individuals and families with farms and small businesses fork over vast sums, which could be used to grow their businesses, in compliance costs to CPAs and tax lawyers so their heirs can avoid the brunt of the tax.
Liberals ignore what they know to be the negative economic impact because they are seeking their idea of social justice, the economy be damned. Rubin argued that this tax will help us by “avoiding the accumulation of inherited wealth.”
These would-be social engineers and national equalizers insist that money not be passed down from one generation to the next. What they willingly ignore is that the massive fortunes of John Kerry or Warren Buffet will never be dispersed among the common folk; they have no trouble paying an army of attorneys to avoid the tax bill when their time comes. They know full well that it is the average Joe who has worked, sacrificed and scraped by to build a family business whose family will pay the piper. And because these small businesses often don’t have large, or any, cash reserves, they will usually do it by having to sell the farm or the business. So much for the American dream.
Since when is it the government’s right or responsibility to promote what Rubin calls the “proud legacy of upward mobility” by taking the product of one individual’s lifetime of labor and giving it to another? Whatever happened to the notion that our proud legacy of upward mobility includes passing on to one’s children a more prosperous life than the one we enjoyed?
Rubin is right: “The estate tax is grounded in powerful philosophical underpinnings.” Those underpinnings, however, are in stark contrast to those of our Founders: “Government should not take from the mouths of labor the bread that it has earned.”