A Thought on Estate Taxes

To hear the wealthy complain about estate taxes, you would almost think the world was ending. Well, I suppose it is for the person whose estate pays the taxes, but certainly not for the heirs.... Still, if there's any point in time when it should be relatively painless to pay tax, it seems to me that the time would be after you are already dead.

There is a lot of misinformation - deliberate misinformation - circulated about estate taxes. The wealthy interests which oppose and decry them as "death taxes" do their best to convince average people that they are likely to pay estate taxes, even though only they have historically been paid by a tiny minority of estates. They also attempt to convince the public that estate taxes force people to sell family farms and businesses - without pointing to even a single apocryphal example where this has happened. (Perhaps the thinking is, "Well, it has never happened but, like an invasion from Mars, it could") They also gloss past the estate planning structures used by the wealthy to avoid paying estate taxes.

But perhaps there's something behind their opposition to estate taxes - something more than, "I earned it, so I should be able to leave it to my heirs without tax." Perhaps it is a recognition of the inherent vagaries of U.S. society. Despite the incredible advantages that the family wealth buys for the children of the rich, the combination of skills, opportunity and luck which combined to create that wealth are not likely to repeat with each generation. Even with the incredible head start of a multi-million dollar inheritance (after taxes), the wealthy seem to realize that absent being shielded from taxes their heirs will see their station in life decline over time. The legacy cannot be extended by notions of hard work and opportunity intrinsic in US culture - that's the "Horatio Alger" myth used to sell tax protections for the wealthy to the working masses. Does this whole "death tax" debate boil down to this: While the average taxpayer still believes in "the American Dream", the rich know better?

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