Infamy
Unbelieveable. Or perhaps I just wish it was unbelieveable. The Republican leadership has tied a hike in the minimum wage ($5.15 per hour - unchanged in 10 years) to cutting the Estate Tax. Infamous.
To put it in context:
"It was a decade ago, during the hotly contested campaign year of 1996, that Congress voted to increase the minimum wage. A person working 40 hours per week at minimum wage makes $10,700, which is below the poverty line for workers with families."
Even some Republicans recognize the infamy:
"The move comes after almost 50 rank-and-file Republican lawmakers pressed House leaders — who strongly oppose the wage hike and have thus far prevented a vote — to schedule the measure for debate. Democrats have been hammering away on the wage hike issue and have public opinion behind them
'We weren't going to be denied,' said Rep. Steve LaTourette, R-Ohio, a leader in the effort. 'How can you defend $5.15 an hour in today's economy?'"
Now the common worker only gets a meagre hike in his wages if multimillionaires get a tax break. As one Republican aide heartlessly put it:
"'It's the one chance for Democrats who want to get a minimum wage increase,' the aide said."
Infamous.
posted by Pete @ 7/28/2006 01:48:00 PM
12 comments
12 Comments:
Sadly, I'd characterize this move by Republicans as "par for the course" and "completely believable".
Is there any particular economic logic in this move? Are they saying multimillionaires employ thousands of minimum wage earners and therefore require tax breaks because a minimum wage rate hike is going to cut into their income/profits? Seems like a mighty big leap in logic to me.
I guess I was using "unbelieveable" more in the sense of wonder at the new height of chutzpah, than an actual inability to believe those people could bring themselves to do this sort of thing. But you're right, America should not be surprised. And no, I don't believe they are bothering to attempt to link the two. Its simply "You want a minimum wage raise? Then you have to vote for our Estate Tax cut with it, or you get nothing." At least they are not treating common Americans like idiots...just as their bitches.
It would be a pretty big stretch to link the minimum wage to lowering the tax on passing your millions on to your children. There is already an exemption for the first couple of million. Can't remember the exact number. Its in the millions, and gets phased upward every year.
Looks like the Bush Administration has a backup plan in case their little Estate Tax ruse fails: get rid of the cops.
The IRS has announced that it will be letting go half of the lawyers who are responsible for overseeing estate and gift tax issues. This at a time when that section of the IRS is swamped. Neat little trick, W.
Pete, I think the entire estate tax issue is being misrepresented in all media (Fox, Msnbc) as it makes for a quick sound bite. Do we value stability and predictability in the law? Yes. The problem is the current structure of the tax: the exemption is on an increasing schedule through 2010 when an entire estate would be exempt (I think that is the right year). The issue is whether that full exemption should be continued to permit sensible planning. In 2011 the tax exemption defaults at the end of the schedule period to the old exemption (less than 1.5 million) unless further action is taken. As structured the year that one dies has drastic consequences for their estate. The real question is why is death a taxable event? I am indifferent at this time on the cap number (it could be a few million with exemptions for privately held companies, farms, etc.) However, all families deserve certainty and the ability to plan.
I do agree with your point about certainty in the law on an issue such as this. There should not be a death lottery. However, I suspect we disagree as to the details of how the final law should look. First, a few points of agreement. I think provisions should be crafted to allow truly small businesses and family farms to be passed down intact. Of course, there must be a limit to this. It should not be used as a crafty way for huge functionally corporate farms or large private corporations to avoid estate taxation. With those exemptions in place, we should set a fairly low cap, somewhere in the $2-5 million range.
The whole point of the Estate Tax is to avoid the traditional European problem of a "monied class" whereby all a country's wealth is accumulated and kept by a small oligarchy who function as an aristocracy. Obviously, one need only look at American society to see that the Estate Tax is not 100% effective at doing this, but we're still better off than the Old World. So while death itself, however sound-bitey it might be, is not a taxable event, the passing of huge sums of money to members of your family is one.
While we're on the subject of eliminating the "monied class", we should also discuss the benefits of banning marriage and procreation between wealthy individuals. Robbing them clearly isn't enough, as they keep popping up every generation or so.
This "class" clearly cannot be trusted to invest wealth in private and non-profit ventures. Clearly, only the government knows best how to spend the created wealth of its citizens. Just because they earn it, doesn’t give them the right to spend it as they choose.
Pete, I need to finish this thought; can I borrow your copy of The Communist Manifesto?
Ah, the first red herring post, filled with lots of juicy exaggeration and mischaracterization. I'll bite.
Its not a matter of providing for society, nor a matter of "eliminating" rich people.
The theory of the Estate Tax is ensure that one small set of families does not become the aristocracy of America for all time. Randy, your reference to the fact that rich people "keep popping up" is exactly the POINT of the Estate Tax. The tax is not designed to prevent people from getting wealthy. In fact, its to create an society where ANYBODY can get wealthy, through their industry. What it aims to avoid is a "Duke of Virginia" being born wealthy because his great, great, great, etc., etc. grandfather was at one time industrious or happened to get granted all the land in the Commonwealth by a king or proprietor, while no other Virginians ever have even a chance. That's why Europeans loved coming here, upward mobility. Its the Land of Opportunity, and the Estate tax is part of that. Obviously, the whole "ban rich people marriages and procreation" is silly when you consider the tax's rationale.
Also, since the point of the tax is minimizing the creation of an "aristocracy", it really doesn't matter who can spend the money better. The whole "Does the government use money to help people better, or do rich people who donate to charities?" simply does not apply here. Its not about providing for society. The government could burn the money (although that's obviously a stupid idea) for all that would matter. So we can save that herring for chopping down the largest tree in the forest.
I disagree with your assertion that restrictions on an individual’s freedom to distribute thier wealth are necessary to provide others the opportunity to create wealth themselves.
Which person’s wealth had to be stripped so that Bill Gates could invent Microsoft and become the richest person in the world?
This is natural law. What’s mine (and not yours) is mine to do with as I please – whether it’s building a hospital, a factory, some legal activity of dubious merit, or even blowing it all on wings at Hooters, it’s is inconsequential and nobody else’s business.
Do you believe the government should truly be first in line ahead of widows and grieving children? (Only rich ones, of course.) Who more natural a recipient for one's wealth than the recipient of their love? What if the recipient is a charity? Or a stripper? What business is it of ours? The government taxed every dollar of that earned income once already... every penny of interest, every gain on a sale of stock, not to mention annual taxes on real estate.
I suppose one might suggest there's such a thing as too much money. It is such an amount that is always greater than one imagines they'll earn, but never less.
If anything, the Estate Tax encourages anti-productive behavior. “Make wealth... but not too much or we’ll seize it.”
“In a free government, almost all other rights would become worthless if the government possessed an uncontrollable power over the private fortune of every citizen.” Chicago, Burlington & Quincy R.R. Co. v. Chicago, 166 U.S. 226, 236 (1897)
The herring is that the Estate Tax is anything other than a vehicle to blame [punish, extort, eat] the rich. It is the extension of mob rule and class warfare.
I repeat, its about attempting to prevent narrow, extreme accumulation that eventually leads to an immobile society. Bill Gates lives in a mobile society that allowed him to become the richest man in the world (of course, his dad is a well-off lawyer and he dropped out of Harvard, not high school, so its not exactly a rags to riches story) BECAUSE of things like the Estate Tax. Of course, I cannot point to the person (let's call him Mr. Herring) whose personal Estate Taxes related directly to the rise of Microsoft, but I can say that mobility is important to allow Microsofts to be founded and grow. Otherwise, only people who are already Gateses could found a Microsoft.
The Estate Tax isn't the only answer. In fact, its quite imperfect, as statistics show wealth has been accumulated and consolidated at a disturbing pace in recent years. Mobility is on the wane, not the march. Killing the Estate Tax is like driving the last stake through our upwardly mobile society.
Where would America be if enterprising young men could not emerge from obscurity and through enterprise and hard work found fine businesses like Manchester Marketing because some oligarch, whose family has been passing down money and property without check, already owned everything in VA?
Three other points:
1. "If anything, the Estate Tax encourages anti-productive behavior. 'Make wealth... but not too much or we’ll seize it.'"
Are you kidding? This is still just a tax. A percentage of an amount over the floor amount. Not a "confiscation" of all money above the floor amount. Do you really think people will decide to limit their earnings to an amount that avoids the Estate Tax (say less than $3 million), when their alternative is making $300 million dollars and paying a (most extreme example) 50% Estate Tax? Last time I checked, $150 million is still more than $3 million. Actually, you exempt the first 3 million, so I'd have to say $151.5 million is still more than $3 million.
2. Nice citation. You forgot the period at the end.
3. Class warfare? Really? Does anyone still say that? The only attacking going on here is your vicious pelting of me with herring.
I had initially taken the position that I would not involve myself in this debate, because frankly, as interesting and constructive (usually) this blog has been since its inception, I have realized one fundamental truth: We (meaning our various political sects) never have and never will see eye to eye on these issues. I am completely in line with Randy's thoughts on the Estate Tax issue. This alignment should be obvious for anyone who knows me, or recognizes that Randy and I share a common burden/boon by being involved in our family businesses. I won't speak for Randy on this point, but as far as I am concerned, I know far too well how much blood, sweat, and sleepless nights my grandfather and my father put into our business to make it successful. We aren't talking about a Virginia aristocracy here, we are talking about a three generation family business that came into existence following my Grandfather's service to this country in World War II. What is basically being said in this Estate Tax argument is that everyone must start at the bottom like my grandfather, and that he should not be allowed to pass along the fruits of his labor to his heirs, because that would give us a head start over everyone else. And don't kid yourself, Pete, people will cap their earnings to ensure that the government does not get more than it's "fair" share. I personally do it every year, whether it be through selling stocks at a loss to offset tax generating gains, refusing to sell property to prevent paying the capital gains on the sale, manipulating my own taxable wage income to minimize my year end tax burdens, etc. There is nothing more infuriating to me than to see how much of my money is taken from me to be placed in the government coffers, and I will do whatever is legally possible (gifting, donations, establishing trusts, burn the cash by the garbage bag load etc.) to ensure my final financial gift to the people I love is protected from the iron grasp of an entitlement driven government.
I can certainly see your point of view. However, I would re-emphasize a couple of things.
First, the Estate Tax exempts several million dollars altogether, and then taxes a percentage of the estate after that. So to say anyone "burdened" by the Estate Tax is being asked to start from square one or at the bottom is an exaggeration, to say the least. They will start with millions upon millions, and a successful business.
Second, it is certainly not a perfect solution. As you say, it can be manipulated and avoided, as any tax can. However, that is more manipulation of numbers than Randy's claim that productivity itself is minimized or discouraged. You're not refusing to make money, you're just figuring out how not to pay taxes on it. Within the bounds of the law, that is your right. In fact, one might say its productive in and of itself in that you (the generic you) may be forced to hire accoutants and lawyers in order to "overcome" your tax "burden", hence putting money into the service economy and helping other to financially succeed rather than just adding to the piles.
Third, of course this tax affects people in no immediate danger of becoming Virginia aristocracy. If the tax waited until then, it'd be too late. An ounce of prevention...
I think, at base, this question comes down to whether or not you agree with a policy that aims to check, to a limited extent, the accumulation and consolidation of wealth in the United States. If you fundamentally believe that accumulation and consolidation is good, taken to any extent, then you will never agree with this tax. If you think that, to a certain extent, the government is right to try and avoid an extreme situation where a very small number of people and/or families control nearly all of the country's wealth (I believe the aristocracy of England was referred to as the Top 10,000 or some such nickname), then you favor the policy, or some policy with similar goals, and what is left to be decided is the degree.
Post a Comment
<< Home