Ben and Jerry, of Ben and Jerry’s Ice Cream, have a petition from Moveon.org that they want me to sign.
Dear MoveOn member,
It’s Ben and Jerry—the co-founders of Ben & Jerry’s Ice Cream—and we need your help.
We want to pay our fair share of taxes, but Republicans in Congress are trying to pass an unnecessary tax giveaway to America’s wealthiest citizens. We don’t want, need, or deserve this tax cut—which is why we’re asking you to sign
our petition to Senate Democrats that states:
Here’s the truth: We don’t need this stupid tax cut.
As we recently wrote in an op-ed in USA Today, we’re wealthy thanks to the good fortune of our efforts—but also because of many other societal factors that contributed to our wealth.1 The estate tax is one of the ways that the wealthy pay forward so the next generation has the opportunities we had.
The estate tax, which the U.S. has had for more than a century, currently affects Americans with estates worth at least $5.4 million, or $10.8 million for a couple—only 1 out of every 500 taxpayers.2 And yet, it’s been a target of right-wing lawmakers, working on behalf of their wealthy donors.
Congress has shrunk the estate tax in recent years—and now the Senate and House, in advisory votes largely along party lines, have voted to repeal it entirely.3 The votes are only advisory, for now, but when the Republicans press this issue again, Senate Democrats will need to be ready to beat back the repeal and block this latest Republican giveaway to the superrich.
We know this may not be as fun as helping us choose names for ice cream flavors—but it’s critical to send a message that Congress shouldn’t be working on behalf of only the wealthiest Americans but should get back to the people’s business. Wages have been stagnant for decades.4 Young people are carrying around anvils on their backs called student debt.5 Our public infrastructure is falling apart.6
Good grief, Congress. With all this going on, are you really going to give another tax break to those of us who need it least?
Thanks for all you do.
–Ben and Jerry
I always find it fascinating when millionaires and billionaires write editorial pieces demanding higher taxes for themselves because it is such an obvious exercise in hypocrisy. They want to get credit for a generosity and benevolence they do not really have. If Ben and Jerry think that they are not contributing enough with the taxes they pay, they are perfectly capable of writing a check for any amount they want. If they sincerely believe the the federal government can make better use of their money than they can, they can give away their entire fortune. It’s their money that they have earned. They can do what they want with it. It may be that other people who have been successful might believe that they have contributed quite enough already and that they can do better things with their money than give it to the federal government. Ben and Jerry don’t seem to want to give them that option. Seen that way, Ben and Jerry’s offer to pay higher taxes shows not a generous giving of their own substance, but a desire to impose their own priorities on others.
An estate or inheritance tax is simply a tax levied on wealth that is transferred by inheritance. This tax is assessed when the owner of the property to be transferred dies and his will takes effect, hence the estate tax is often called the death tax, especially by those opposed to it. The estate tax levied by the U.S. government does not affect many, only 0.2 percent of the population and it is not a major source of revenue for the government. The receipts from the estate tax makes up less than one percent of the total revenue collected by the government. It isn’t likely that repealing the estate tax will cause a fiscal crisis. In fact, it is possible that the estate tax, as it is currently configured is not worth the effort of collecting it. It may be that if the heirs to an estate were permitted to keep the entire estate, the wealth they would generate through investments, etc word yield more tax revenue for the government through the income and capital gains taxes than the revenue from the estate tax. I imagine that is the thinking behind the efforts to repeal the estate tax.
I do not know if this argument is valid, since I am not any sort of expert on tax policy. Even if the analysis is true, it does not necessarily mean the estate tax should be ended. The current estate tax in the U.S. was enacted in 1916 not so much to generate more revenue for the federal government as to prevent the emergence of a hereditary class of the super rich who would pass down an ever increasing share of the nation’s wealth from generation to generation. Oddly, even many of the wealthiest men in the country supported the idea of an inheritance tax at the time it was enacted. Andrew Carnegie argued against rich men leaving large fortunes to their children on the grounds that it was doing them no favor to allow them to coast through life as the idle rich on their father’s inheritance. Carnegie and others of his class had worked their way up from the bottom and they believed that their children should have the same opportunity to work to get ahead.
I am not sure that the estate tax, as it is currently configured really accomplishes this goal. As Ben and Jerry pointed out, only amounts above a certain limit, $5,430,000 in 2015, are subject to the estate tax which is assessed at a progressive rate from 18% to 40%. If I were to die and leave an estate worth $100,000,000 to my heirs, they would still get roughly half of the estate after taxation In fact, the administration of the estate tax seems to be very complicated, if the Wikipedia page is any indication, and it is possible for a clever person to arrange his finances in such a way as to pay little or no estate tax. If we really wanted to discourage large inheritances, the estate tax ought to be raised, perhaps to confiscatory rates above a certain level of wealth and we would tighten up the rules regarding gifts given before death and trusts.
There is a persistent myth in politics that the problems of this country have simple, commonsense solutions that everyone would agree to if it were not for the selfishness and greed of special interests. In fact, even people with the best will can disagree over policies. I think the debate over the estate tax proves the lie to this myth, since there are very good arguments both for and against it. Any issue can be debated over matters of fact, whether or not repealing the estate tax will improve the public finances, and matters of values, which is more important, economic growth or economic equality. Matters of fact can be resolved fairly easily but arguments over values tend to be intractable. If you believe the government should promote equality, you will probably favor keeping the estate tax. If you believe economic growth is more important and can be promoted by lowering taxes, you might favor repealing it. Both sides have different opinions on what is important or desirable and both sides may well be trying to do what is best for everyone. One need not assume that they only want to give away money to the wealthy, as Ben and Jerry do, or have nefarious plans to redistribute all the wealth in this country, as some of President Obama’s critics seem to believe.
As I said, there are good arguments on both sides and I do not know enough about tax policy to really have a strong opinion on the estate tax. I do think that Ben and Jerry should stick to making ice cream.
- Republicans still interested in total repeal of the estate tax (pubcit.typepad.com)
- Where Not To Die (lewrockwell.com)
- Which State is the Worst to Die in (as Far as Estate Taxes)? (zarembalaw.com) New Jersey. Well I wouldn’t be caught dead in New Jersey
- GOP’s Attack on Estate Tax Worse Than We Thought (ringoffireradio.com)