The Wall Street ran an editorial yesterday (praising anti-estate tax comments made by Whoopi Goldberg on "The View") that perfectly encapsulates the "battle" over the estate tax. Which is why I'll comment on that subject again, even though I run the risk of repeating myself.
As I've indicated before, I'm not a fan of the estate tax. But I'm even less of a fan of the methods used by the people who oppose the estate tax. Those people have made an industry out of lying to the American public about what the tax is, who it affects, and how it works. (The biggest but certainly not the only example: the mythical family of farmers whose livelihood is decimated by the estate tax.)
Let's begin with the name, since The Wall Street Journal talks about the "death tax." This is a made-up word, invented by people interested in manipulation. (Presumably "widows and orphans tax" was taken.) The Wall Street Journal states that "according to polls, some 70% of voters favor a full repeal." The Wall Street Journal doesn't tell us how that polling took place -- I imagine the questioning went something like this:
Do you oppose the patently unfair death tax, which takes money out of the mouths of widows, orphans, poor farmers, and even poorer small businessmen?
But the worst thing about the editorial is its mention of the fact that the estate tax represents double taxation. In a great many cases, it doesn't -- think, for instance, about retirement benefits and unrealized capital gains. Michael Kinsley addressed this issue more than 6 years ago, here. The whole article is good, but I'll let Mr. Kinsley speak for himself:
Indeed [the argument that estate taxation is double taxation] is probably the most tediously repeated sound bite of the estate-tax debate. It is also false. Not "controversial" or "disputed" or "misleading," but out-and-out false. Most of the accumulated wealth that is subject to the estate tax was never subject to the income tax.
This is so obviously, overwhelmingly true that anyone with the slightest business or financial experience surely knows it. Even George W. Bush. Well, probably even Bush. Yet he keeps on repeating the lie.
Maybe there is a solution here. Instead of the estate tax, could we all agree on a tax, to become effective upon death, of 100% of the value of a decedent's property that hasn't yet been subject to income tax? I presume that The Wall Street Journal would be more than happy to agree to such a tax since, if they are telling the truth, this new tax would generate absolutely no revenue.
