Despite strong pressure from Republican leadership in the Senate and urging from the White House, the attempt to permanently repeal the estate tax has failed for now. But, if all reports from D.C. are true, it is an issue that will not die.
Perhaps it is appropriate to again review this issue and reiterate why such taxes are essential to assuring that economic power in this country continues to be broadly based.
Alexander Hamilton, major author of the “Federalist Papers” and our countrys first Secretary of the Treasury, maintained that it was not in the best interests of the United States to create a “leisure class.” Apparently many of todays wealthiest families share Hamiltons view. Working through the “committee for responsible wealth,” many of the nations most prominent billionaires are urging that the tax be retained with some relief at the lower end.
The central thrust of their argument is the same thought that Andrew Carnegie espoused in his day–that “surplus wealth” should be used for the common good through trusts and foundations rather than pass to heirs.
Walter Savage Landor, writing in “Imaginary Conversations,” said, “Wherever there is excessive wealth, there is also in the train of it excessive poverty, as, where the sun is brightest the shade is deepest.”
The period of our history where economic power in this country was vested in a relatively few powerful families is one of the darkest chapters through which we passed. Given the current scenario of abuses at the corporate level, I am not convinced that the greed and lust for power of the 1890s is not alive and well today.
Of the arguments that have been put forth to support repeal, most are specious and will not stand up to scrutiny. There have not been mass forced sales of farms or small businesses to pay estate taxes as claimed by some. In fact, I read one article that claimed there was not a single documented case in recent years. It is always well to remember that it has been estimated that 75% of all major wealth is the result of appreciation that has never been taxed, and never will be if the estate tax is repealed.
Perhaps a more reasoned approach to this issue can be obtained by taking another look at the history of this tax. Simultaneous with the founding of our country, trade relations with France became strained and Barbary Pirates were harassing of our shipping in the Mediterranean. It was obvious if we were to survive and engage in world trade, we needed a strong navy. The first death tax was levied from 1797 to 1802 to provide for that navy and we survived.