Thank heavens–Senate Democrats and Republicans have finally reached an agreement that doesn’t quite repeal the loathesome estate tax, but does double the exemption to $3 million per person from the current $1.5 million (descending to $1 million after 2011). (Hat tip to Michelle Malkin, who’s got a link to a subscription-only Wall Street Journal story.)
Liberals for months have been fighting this effort to improve and make permanent the first Bush administration’s efforts to get rid of the outrageous system of tribute that allows the Internal Revenue Service to grab 45 percent of the assets of everyone who makes the mistake of dying. (That’s why we call it the “death tax.”) Liberals defend the estate tax the ground that it’s unfair for the children of the thrifty to inherit their parents’ savings, while the offspring of those who squandered their dough on junkets to Atlantic City get only funeral bills. So, in order to make the latter feel better, let’s confiscate the former’s money. How fair can you get?
The latest liberal meme, as this column by E.J. Dionne indicates, is to dub the estate-tax repeal the “Paris Hilton Benefit Act.” The idea is that the tax repeal would enable hotel-heiress Paris to make even more sex videos and trundle about in even shorter designer miniskirts.
What the Dionne faction doesn’t understand is that it’s not the Paris Hiltons of this world who’d benefit from estate tax cuts. The billionaire Hiltons could fork over 99 percent of their hotel fortune to the IRS, and there would still be plenty left over for Paris’s Jimmy Choos and weekend flings.
The group the estate tax penalizes are the “millionaires next door”–the people who spend their lives working hard, investing smart, and building businesses so as to leave behind large but by no means excessive nest eggs for their heirs. My late father, who started a solo law practice from scratch and worked 12-hour days so that my mother could enjoy a comfortable widowhood and my disabled brother wouldn’t have to worry about money, was one of those. So is my father-in-law, who held a blue-collar job for 40 years, then carefully invested his retirement income and made some wise real estate deals. Why should the government get to seize nearly half of his assets? Or the assets of millions of other Americans who own family farms and family businesses, who became millionaires via working, not Hilton-style family fortunes?
As a Wall Street Journal opinion piece puts it:
“The death levy also encourages people to transfer their assets while they are still alive, so that their heirs can enjoy their inheritances sooner and potentially at a lower tax rate. From the perspective of Paris’s father, Rick, this means the best he currently can do by his daughter is to raise her allowance and encourage her to spend every penny of it–preferably partying, since that leaves her with no taxable assets that she may someday pass on to her children.
“In any case, what liberals call the aristocracy of wealth already exists, despite the current tax, because super-rich families like the Hiltons have always found ways to avoid or mitigate it through offshore accounts, tax-sheltered foundations, and so on. It is the heirs of the not-so-super-rich–the thrifty dentist, the canny investor, the small-business millionaire–who are typically devastated by the tax.”
It’s no wonder that some 64 percent of Americans want to get rid of a tax that punishes them mercilessly for committing the crime of having a rendezvous with the Grim Reaper.