President Bus’s tax cuts involved a cut in the estate tax from 55% to 35%. That will expire on January 1. Rich people who want a better deal for their heirs had better expire before January 1.
Class warfare is the basis of this tax. So is jealously. The poor and especially the middle class — which has the votes — want to stick it to the rich. They want their children to inherit without paying much tax, but not the rich. It’s different strokes for different folks.
The test of a society’s commitment to the rule of law is flat taxation. The sales tax is flat taxation. So is the gasoline tax. They do not discriminate based on income. They uphold the idea that voting groups are not supposed to use force to steal from other groups.
The estate tax is popular in the West. The middle class pretends that it favors equal taxation, but it doesn’t.
What is the result? The poor pay no income taxes, and the middle class does. I find this amusing.
“How did that happen?” This is the cry of every theft-driven voting bloc when it finds that its members are the targets of some larger voting group. When passing discriminatory taxes, middle-class voters think, “Thus far, and no farther.” It never works, of course.
If a deal to extend the Bush tax cuts is hammered out before January 1, it is unlikely that the estate tax hike will be rolled back. Obama will veto the bill if it the cut is included.
The estate tax is mostly symbolic. It collects little revenue: under 2% of federal revenues. Very rich families create tax-exempt foundations and place their children on the boards of these foundations. The super-rich figured out this strategy a century ago. It works. Estate tax planning lawyers and CPAs rely on this as a source of income.
The tax says: “We have the right to tax you at a rate higher than we tax ourselves. Get used to it.” It is an assertion of class power. Middle-class Americans will not rise up in fury to retain the 35% top bracket. But they should. That would send a message to the Democrats, who say they represent the poor: “We believe in the rule of law.” But they don’t.