I am one of the one-in-500 people who would wind up paying estate taxes under current law. And if congressional Republicans have any sense, they’ll keep it that way.
Though the estate tax wasn’t instituted in the United States until 1916, at least several of the Founders supported or were open to the idea. Benjamin Franklin wrote that the ability of people to pass property to their heirs was mostly a matter of “public Convention,” and that aside from items necessary for subsistence, “the Public has the Right of Regulating Descents, and all other Conveyances of Property, and even of limiting the Quantity and the Uses of it.” Thomas Paine suggested a 10 percent tax on inherited land in order to fund stipends for people over 50 years old and a one-time distribution to those turning 21 to help them get started with their lives. And Thomas Jefferson took the lead in the Virginia legislature to eliminate the rules of entail and primogenitor, which preserved the concentration of inherited property, and stated that, “A power to dispose of estates forever is manifestly absurd.”
Such views are in accordance with a young republic that rejected aristocracy and instead embraced the notion that people should succeed or fail according to their own merits, not because of their accident of birth. Republican attempts to repeal the estate tax test whether we still have those views.
Anyone who thinks that the wealthy don’t have outsized political power are either oblivious or in denial. Politicians spend an inordinate amount of time talking to and raising money from wealthy people, and with contributions comes access. Even for politicians who try to remain unbiased, it can be hard not to be swayed when you keep hearing one side of an argument and the other side lacks the means to get in the room. As our system becomes increasingly dependent on the wealthy, the wealthy are increasingly able to steer outcomes to their own benefit.
Repealing the estate tax would not only deepen this problem, but make it permanent. Instead of gradually breaking up vast fortunes over the generations, tremendous wealth could be transferred to the next generation, which could then exercise the same political influence as their predecessors – and without having lifted a finger for the privilege. Families would become political dynasties at the expense of the actual democracy that is supposed to be the foundation of our government.
As someone who would be subject to the estate tax, I don’t feel it is a great burden; instead, I am fortunate that I have the assets in order for it to apply in the first place.
Current law allows $5.49 million for an individual and almost $11 million for married couples to be transferred with no tax at all (and since beneficiaries inherit property at market value, they owe no capital gains taxes if that property were sold).
Because the tax applies only to the portions of estates above those amounts, the average effective estate tax rate for estates between $10 million and $20 million is about 17 percent. So people with estates at the lower end of where the tax kicks in have plenty to give to their beneficiaries, and those with even more assets have even more to give away despite a higher effective tax rate.
This tax is no burden at all for 99.8 percent of Americans; it does not prevent wealthy people from directing considerable assets after their deaths; and it helps deter the creation of a permanent aristocracy. Consequently, it’s hard to see proposals for its elimination, which would add about $270 billion to the national debt over the next 10 years, as anything but a giveaway to very rich people with the richest benefiting the most.
Justice Louis Brandeis said that we may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both. As wealth in the U.S. has become increasingly concentrated, Republicans should at the very least leave the estate tax alone for the sake of our democracy.
Daniel Simon is the Senior Advisor for issues involving money in politics for Voices for Progress and a member of the Patriotic Millionaires. He is a graduate of Yale University, the Stanford School of Education, and the University of Pennsylvania School of Law, and served as a federal law clerk on the Eastern District of Pennsylvania.