Thursday, June 08, 2006

Repeal the Death Tax

The Tennessean editorializes against the repeal of the estate tax, and in doing so it presents two contradictory arguments. On the one hand, the editorial declares that it affects so many people that it has minimal impact and that it is not necessary to repeal it. On the other, it claims that the tax brings in so much money that the government cannot do without it.

The most fundamental argument against the death tax is that it is blatantly unfair to punish people for dying. The government taxes people when they make money, when they use that money to buy something, and when they make money by saving it. That the government feels the need to take more for dying is the ultimate indignity. In addition, as I pointed out a couple of days ago, the death tax has little impact on the super rich; it primarily impacts the newly and moderately wealthy.

In fact, one example of the super wealthy, Warren Buffett, who is often cited as unselfish because of his support for the continuation of the estate tax, actually profits from it. His company, Berkshire Hathaway, has made much of its money by buying family businesses which were forced to be sold quickly at below market value so that heirs of an estate could pay the death taxes. In addition, Berkshire Hathaway is the majority owner of a life insurance company that makes much money by selling insurance to wealthy individuals concerned to leave enough cash to their heirs to pay the estate taxes.

What about The Tennessean's argument that the government cannot afford to lose death tax revenue? The editorial argues that the repeal will cost the government $1 trillion over 10 years. That's a lot of money, but it is only around 3% of the federal budget over that period of time. In addition, the real problem with the federal budget at this time is the failure of Congress and the Bush administration to control spending. President Clinton's final proposed budget, for budget year 2001, was nearly $1.84 trillion. President Bush's proposed budget for budget year 2007 is $2.77 trillion. That is an astounding 51% increase. Much of this increase is not accountable to the Iraq War. Indeed, the reality of the war should have, but did not, created a motivation for controlling non-defense spending. Non-defense spending has grown at about the same rate as the total budget.

That the Bush administration and the Republican controlled Congress have so expanded the size of government is scandalous to conservatives who hold to principles of limited government. That many Democrats accuse the President of spending too little boggles the mind.

The growth in government spending, not the existence of the death tax, points to the fact that the real need for the future is governmental restraint, not continued, unfair taxes.


Blogger Jeffraham Prestonian said...

Yet the $30K+ BIRTH TAX to every American born today an in the future -- no problem!

Heckuva job, Bushie!

12:15 AM  
Blogger MCO said...

I am not sure where the $30k figure came from (its early, but my math showed roughly $3300 per person over 10 years, but if my math is wrong and your number is correct, my main thought is that it is shocking to think that $30k per American represents only 3% of the federal budget for that period of time.

8:03 AM  

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