Joe Biden and the Democrats on Capitol Hill have backed away from some earlier plans to hike estate taxes on rich dead people. More’s the pity.
The problem with those earlier proposals isn’t that they went too far. It’s that they didn’t go far enough.
If these people had any nerve they wouldn’t just tinker with estate taxes. They’d send them back to where they were before 2001. Before they got slashed by Bush and Trump, in a big giveaway to rich corpses.
Back in the 1990s, federal estate taxes kicked in around $600,000 and the rates went up to 55%.
Yes, they were terrible days…when communism stalked the land, and the people groaned under such oppressive taxation that we’d never had it so good, and the stock market went through the roof, real wages boomed, and the economy grew by more than 4% a year, or about twice as fast as it does now.
Oh, the humanity!
No, I’m not suggesting this because I like taxes. I’m suggesting it because I don’t. I dislike taxes so much that I would much rather pay them when I’m dead than while I’m alive and still using the money. Once I’m 6 feet under I’m not going to miss it. Take whatever you want.
Opponents of estate taxes have tried labeling it a “death tax.”
OK. I’ll bite. By all means, let’s call it a “death” tax. Or, even better, a dead tax. A tax on the dead.
My dad died back in the 1990s and he paid these taxes, and guess what? He didn’t feel a thing. He was already gone.
New data from the Internal Revenue Service show that estate taxes generated a paltry $9.3 billion in revenues in 2020. The richest 1% of Americans own one third of all the money in the country, but fewer than one-fifth of 1 percent of the dead pay any estate taxes whatsoever.
It tells you something that rich dead people carry more weight in Congress than living members of the middle class. Do they have a lobbyist on K Street?
When I saw the latest IRS data I immediately pulled out a double-backed envelope and did some quick calculations.
In 2000, the IRS reports, the estate tax raised $24 billion. Since that time, according to official data, consumer prices have climbed about 60%. Gross domestic product has jumped 130%. And according to the Federal Reserve, the net worth of U.S. households has tripled.
Yes, indeed. Our collective household wealth was around $40 trillion in 2000, says the Fed. Most recently the figure was $123 trillion, or almost exactly three times as much.
So even if the estate tax revenues had just risen in line with household wealth over the past 20-plus years, today they’d be raising three times as much as in 2000, or $72 billion.
That would be a net gain to the Treasury of $63 billion — which, incidentally, works out around $360 for each of the 175 million worker bees currently paying into Social Security.
Dear President Biden: I’ll take the tax cut today, thanks! Bill me for the money I owe when I’m dead.
Actually the revenues from the estate tax today would almost certainly be much bigger than this, because in recent decades wealth has ballooned most right at the top—in other words, among the people who typically pay the most death taxes after they die.
The Congressional Research Service estimates that in the past 30 or so years the share of American wealth held by the top 1% has risen by about a half.
Good for them, too. I have no problem with rich people becoming even richer. I applaud them so much, I only want to tax them after they have turned up their toes. To be perfectly honest, I’d be happy with a 100% death tax so long as all the money was used to offset taxes I have to pay while I’m living.
Some people say the death tax is “unfair.” My take? It’s less unfair than any other tax.
Why should I be taxed on money I actually earn through my own labor? Or money I earn through taking risks? I’ll always side with the people who are actually working for a living. For that matter, I will side with the interests of the living over those of the dead.
Others object to “death” taxes because they hate taxes.
There is a weary predictability to this. Talk about different types of tax, and immediately people start arguing with you about taxes in general. But that is a completely different point. How much we raise in taxes, and where we get them, are separate topics.
This cannot be restated often enough: Each dollar in taxes that we don’t collect from the dead we will have to collect from the living.
That is true whether you are a lower-tax conservative or a higher-tax liberal. It literally doesn’t matter whether you think taxes should be higher or lower: Unless you believe in abolishing taxes altogether, you will have to tax somebody, living or dead. I would rather tax the dead. Call me crazy.