What the 'estate' tax really does

by Rich Miles

Sometimes a blogger experiences that bane of our existence, the comment that explains the thesis better than the original post did. Or really, it's not a bane, it's just mildly embarrassing - if we're so smart, why didn't we say it that well to begin with?

Hilzoy over at Washington Monthly has had this happen to him/her, though at this writing, I'm not sure he knows it yet, unless he's an early riser. He offers a quite cogent, yet rather technical explanation of the ins and outs of the estate tax, and then, a person calling herself Jennifer comes along, and in essence says, "This is what Hilzoy really meant." She's not snarky about it - she just says it a little better and a whole lot funnier than Hilzoy did. Here's Jennifer's comment, in its entirety because I laughed out loud at the observation in the last sentence:

The estate tax was imposed in the first place because there was a recognition that over-concentration of wealth into fewer and fewer hands is ultimately detrimental to the economy. The estate tax is one means the government has to put the brakes on over-concentration of wealth; progressive income taxes and capital gains taxes are the others. All of those have been slashed to the bone and guess what? The utterly predictable thing happened - too few people now control too much of the money, the rest of us have had to borrow from them just to stay afloat the past 10 years, and a lot of people can't pay it back - leading to the credit crisis.

The "death tax" tripe has always irritated me no end. Dead people don't write checks - they're dead, and they could care fuck-all about anything at that point. They use this terminology to boost their ridiculous argument that it's somehow "unfair" that the money "gets taxed twice". Uh, no, it doesn't - it's treated like every other dollar in the economy - it's taxed when it changes hands. Such as when rich dude dies and the money goes to his heirs. At base, the argument is that Paris Hilton shouldn't have to pay any taxes, even though she's very wealthy without ever having worked, but you and I should pay full freight on every dollar we earn doing actual useful work. Paris' daddy or granddaddy isn't being "taxed twice" because it's not his money anymore. Paris isn't taxed twice because the money belonged to someone else when it was taxed before. Just like I pay income taxes on my earnings, then spend some of my money at the grocery store, where I pay sales taxes, then when the cashier at the store gets a paycheck in part underwritten by money I spent at the store, she pays taxes on her income as well.

In short, the Republican argument (and make no mistake, Miz Blank IS a Republican in all but name) is one that only makes sense to stupid people who have no idea how the estate tax works. Since stupid people are the natural constituency of the Republican Party, expect this moronic argument about the "unfairness" of "death taxes" to continue ad infinitum.

Since stupid people are the natural constituency of the Republican Party...Wow. I wish I'd said that. It is precisely le mot juste (or is it les mots justes?)

It's particularly important in both Hilzoy's and Jennifer's words to note this fact: the "inheritance tax" was first imposed to keep the rich from becoming richer to an obscene degree, and they (the rich) have never gotten over it. It is amazing how entitled one thinks oneself to be when one has money, and ONLY money, never having contributed to anything by the sweat of one's brow or the work of one's hands or mind.

Seriously, this redistribution of wealth upward MUST be curtailed, and soon. I mean, the question I've always had about the concept is, if the rich people get all the money, and the rest of us starve, what are the rich people going to do for servants?

I'm kidding, of course. It will come to an American storming of the Bastille long before that.

And remember, rich bastards: to most of us, the guy who makes $500K a year is just as much a plutocrat as the guy who makes $250 million. And will be dealt with just as harshly when the Revolution comes.