Tell me what you think of this…

Each generation should build its fortune upon its own ingenuity, not upon the wealth of the preceding generation. The government should tax the inheritances of the most wealthy individuals. This will encourage more charitable giving and help society pay for important programs.

2006 Young Democrats of Georgia Platform

As a Democrat, I’ve never been entirely comfortable with this particular platform plank, and if my memory serves me right, I voted against it being included in the YDG Platform. But I want to have a discussion about it, particularly the inheritance tax, because believe it or not, I agree with Republicans on this issue.

First of all, I don’t agree with the suggestion that each suceeding generation shouldn’t profit from the hard work, efforts, and talents of the preceeding generation. I believe that the only way our society progresses is by the children building on the works of their parents.

Secondly, while I agree that everyone should pay their fair share in taxes, I disagree with the notion that folks should have their inheritance taxed. And before you start getting on me about my previous statement, I’m fully aware that most Americans will never have any inheritances that they may receive taxed because of legislation passed that allows estates worth $2,000,000 or less to be excluded from the estate tax from now until 2008.

However, there’s a question on my mind that needs to be answered…Would the government be able to function at its current levels if the estate tax, inheritance tax, and gift tax were to be repealed?

If the answer to that question is yes, then I say let’s repeal the three taxes I listed above and take this issue off the table.

8 comments

  1. Fiddes says:

    Andre, I am impressed with your position on this issue which certainly cuts against the grain with many (not all) on your side of the aisle.

    You asked if government would be able to function if those taxes were repealed? Of course! But, again, you miss the point. Wealth does not exist to maintain government.

    The fact is that wealth only lasts for about four generations. This is not due to some sort of inept management on the part of children but that simply put, as a family grows generation after generation, the capital earned by the original owner is slowly dissipated. That capital creation, though, allows goods and services to be purchased across a broad spectrum of society which keeps the economic engine humming in a way that government programs cannot ever equal.

    It always amuses me when people say that all the wealthy do is buy yachts and build mansions and that they should “give back to the community”. By the very fact that they have yachts built and mansions maintained, they are already doing so. Who builds yachts and homes? People! What do they get for doing so? Money! Sounds like a good trade to me!

    It is not the role of government to take away a person’s money simply because he died wealthy and it is a utopian pipe dream to think that by doing so prosperity can be achieved.

  2. mercergirl says:

    Let me say this- I am about to marry into a very wealthy family. My fiances grandfather worked very hard so that his children and grandchildren could inherit a very nice legacy- but they are not soley dependent on their father’s wealth- they too have done well for themselves.

    Along with that, my fiances grandfather and children have always given back to the community- hell he pretty much donated all of the land for one of the state parks! So it kills me when people say that the wealthy do not give back to their communities, and I do not think it’s fair to tax wealthy people just because they have had more ingenuity or luck than others and have had the graet fortune to do well financially.

  3. jsm says:

    What gets me about the above quote is that it insinuates that government owns and controls all wealth. This is pure, unadulterated communism.

    The following four ideas are taken directly from 10 items Marx listed in the Communist Manifesto as “despotic inroads” that would “be pretty generally applicable” to affect the establishment of a communist government:

    “1. Abolition of property in land and application of all rents of land to public purposes.

    “2. A heavy progressive or graduated income tax.

    “3. Abolition of all rights of inheritance.

    “4. Confiscation of the property of all emigrants and rebels. ”

    Don’t these sound familiar? Some of the remaining six would sound familiar as well but are better suited to other debates.

    Whatever happened to a person’s FREEDOM to do as he wishes with his money once he has paid his debts? If a man wants to leave money to his children when he dies, government should not step in and stop that. Freedom doesn’t operate this way.

    The inheritance tax is communism, and the members of the YDG should be ashamed that their platform supports it.

  4. AlanSmithee says:

    I don’t consider myself a Communist, or even a democratic socialist, but I agree with a hefty estate tax. I say that as the child of a successful physician who worked his way through college and medical school. His parents (my grandparents) didn’t even graduate from high schoo, and had to work long hours at low wages to be able to help my dad with school even a little.

    I’ve obviously benefitted from having a prosperous father (private school, college and law school paid for, etc). That’s part of life.

    Unless you are an anarchist (which few people are), you need to find a way to fund the government you think ought to exist. That requires taxation at some level, and we should try to tax in the manner that harms economic productivity least.

    I challenge anyone to name a type of taxation less harmful to society than estate taxation. It does not tax personal productivity like an income tax (flat or progressive). It does not intrude upon and burden commerce like a sales tax.

    In fact, unlike most taxes, it at some level encourages productivity. It gives succeeding generations an incentive to work and be productive. I see no societal benefit coming from me being able to retire early when my father dies.

    Before you argue about the wealthy providing investment capital and charitable gifts, keep in mind my argument that someone (and some transactions) must be taxed if you believe government should exist. I am not saying the estate tax has no effect, negative or otherwise, on the free market and economic incentives. I am saying that I have never heard of a less economically harmful method of taxation.

  5. Chris says:

    Given all the forms of taxation, estate taxes are probably the least impacting for most people. However, there is one case which makes me supporting ending the death tax over all others. That is how family businesses are handled when the owner dies. A business valued at $2M isn’t all that big, espically if you consider inventory value. If I raise my son or daughter to take over the family business, instill my customer service values, etc – I want my kid to be able to inherit the business. But if my estate, or my kids, don’t have the cash on hand to pay the IRS then that business I spent my life building has to be sold.

    Thats bad for me, my family, and even the general consumers who would see an owner-managed business go out of business or sold to a larger company, thus reducing competition in the marketplace.

  6. Chris says:

    One last point on the wealthy “giving back to the community”. About the only wealthy person I know who doesn’t given anything back is Scrooge McDuck. Seriously – he keeps all his money in a vault and goes swimming in it. He doesn’t invest it to create new companies, technologies or jobs, he doesn’t spend to create jobs. He doesn’t donate it to worthy causes.

    If you look at the real “robber barons” of the late 19th century – Carnige, Vanderbilt, Morgan – they contributed a lot the the common person. How much of the turn of the century Asheville economy do you think was based around building the Biltmore estate? Then how many jobs did he provide to people to maintain it? Carnegie, amoung many other things, built a university of higher learning which leads the way in computer science and helped launch the internet. Morgan basically headed off a banking collapse.

    Even the turn of the 20th century robber barons – Gates, Buffet, Brin & Page (Google) are doing the same. One could argue that without Gates you’d never be reading this. The success of the Internet was predicated on the success of the PC, and the success of the PC was predicated on a functional and easy to use operating system.

    Sure, there are people like Paris Hilton who make inherited money look bad. But those are highly publicized minority of cases. The media doesn’t focus on the kid who takes over his dad’s business. It focuses on flash and lack of substance. Thus we see a skewed perspective.

  7. Chris says:

    Now I’ll answer Andre’s question:
    “Would the government be able to function at its current levels if the estate tax, inheritance tax, and gift tax were to be repealed?”

    AFAIK, estate & inheritance taxes are the same. Gift tax is somewhat different. I’d say you can get rid of the first easily. I don’t have the numbers handy but its not a large part of federal government revenue.

    Gifts are different. If you get rid of gift taxes then what prevents me selling my house to by brother for $1 taking a huge capital loss, then getting a $200k gift from him later that year?

    Of course, if we got rid of all taxes on income and only taxed consumption, many of these issues would go away. 🙂

  8. atlantaman says:

    I’m glad you voted against the plank. People who earn the money ought to be able to determine where the money goes, after they pay regular taxes of course. Why should someone be penalized for saving money? If the person who has amassed millions wants to give it to charity, blow it on stip clubs, buy race horses, and/or give it to their children it should be their right (and not the government’s) to make that determination.

    It astounds me that anyone could be for the death tax. To me it’s simply the majority wanting to take advantage of the minority with a, “You have more money then me, I want it, so give it to me” mentality. Anyone supporting the death tax has no concept of private property rights.

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