To The Editor:
One of your readers, a Mr. Charles Gorenberg, wrote in recently to argue against the estate tax. He accused people who support the tax, even with reservations, of being “leftists” and “jealous” of rich people (see National Underwriter, May 31).
Accusations of that sort generate heat, not light. Let me address the issue less emotionally. If there were no estate tax, many huge estates would pass entire and whole to heirs. To see what that might mean, open a history book. A century ago the Vanderbilts, Carnegies, Rockefellers and others built up immense fortunes, cores of huge power, and so became influential in Congress. Too influential: Theodore Roosevelt, a Republican, a conservatives conservative (President Bush takes him as a model), complained constantly of their stronghold on Congress and argued that an estate tax might help solve the problem.
His successor in the presidency, William Howard Taft, also a Republicanagain hardly a leftisttried to get Congress to pass an estate tax and failed, precisely because of opposition from those families. (It passed finally during World War I, because Congress didnt want to be seen as sending young men off to die while industrial families got even richer from the war.)
So there you have the original argument for the tax: two Republican presidents judged that we are a democracy and refused to consent to its becoming a plutocracy. Nor will a plutocracy be able to compete in a globalized economy. Warren Buffett has remarked that relying on inheritance instead of merit to choose leaders would be like “choosing the 2020 Olympic team by picking the eldest sons of the gold-medal winners in the 2000 Olympics.” I agree with Buffett. I find it in my own practice: in every case except one, where Ive seen the clients children take over the business, theyve mismanaged it, turned it into a cash cow. The estate tax prunes large family fortunes. It helps compel competitiveness.
Finally, theres an issue of fairness. Here is where people get emotional. I will be told that, if a man works hard to build up his estate, he should be able to dispose of it any way he pleases. I agree; but that reasoning implies equally that ones children ought to be productive to deserve what they inherit. Work and service are what morally entitle you to wealth, not idleness. (The law recognizes that exactly: transfer taxes are taxes, not on the giving, but on the receipt of a gift or inheritance.)
There are people in this country, aged 60 and ill with cancer, who work one shift at a warehouse and another at a restaurant, waiting on you and me, smiling and being pleasant, enduring headaches and the clatter of dishes, so tired that “my arms are dropping off,” and doing it all to pay their medical bills. Do they deserve help? I know, “lifes unfair,” but they deserve help.
You and I, through our representatives, can offer help in the form of subsidies and tax credits so that they can buy insurance. And, in fairness, heirs should help, as well: the estate tax can aid in paying for those credits and subsidiesand, by the way, for other things our country needs, such as the armed forces. Im not in favor of “soaking the rich,” but I am in favor of simple decency.
In sum: the estate tax will not remove, but does mitigate, the distortions which concentrations of power impose on politics and competitiveness. And it can help diminish the unfairness I just spoke of.