Egalitarianism

by Henry on April 18, 2005

Howard Kurtz’s blog round-up points to this small gem of insight on the estate tax, from blogger and University of Nebraska law professor, Rick Duncan.


Of course, the Democrats played the Marxist class-warfare card and said this legislation would only help the dirty, stinking rich. Actually, it is a very egalitarian law that ensures that no one will pay death taxes. What is wrong with equal treatment?

Duncan finds himself in some interesting intellectual company. If I’m not mistaken in my recollection, Karl Marx himself was fond of quoting Anatole France’s not-dissimilar observation that “[t]he law in its infinite majesty, prohibits rich and poor alike from stealing bread and sleeping under bridges.” (I fear however that Duncan, unlike Marx and France, believes himself to be making a serious argument).

{ 40 comments }

1

abb1 04.18.05 at 4:10 pm

If inheritance was taxed (as income received by the beneficiaries) instead of dead-man’s estate, then maybe this kind of demagoguery would be a bit more obvious. Nah, they’ll come up with something else, of course…

2

mpowell 04.18.05 at 4:45 pm

It has been my understanding that the super-wealthy have been getting around estate taxes all along using trust funds. Moreover, this is a loop-hole that is basically impossible to close w/o practically eliminating charity trust funds as well. This would mean that people who are hit hard by the estate tax are only the moderately wealthy, hoping to give a few hundred thousand or a few million dollars in wealth to their children.

I think it would be great to tax inheritance heavily as it is one of the few non-distorting taxes. But as long as the tax only hits the unprepared and not the truly spoiled, it doesn’t seem as fair.

So, this is a place I feel like I might be able to get a decent answer. Is this how rich inheritances really work? (avoid estate taxes anyways) Or do we just not care?

3

textualist 04.18.05 at 5:03 pm

mpowell –

you are right, the rich can avoid estate taxes through trusts. They can also avoid creditors that way. But (and I don’t remember Trusts & Estates entirely well) — you can’t eliminate the effect of the estate tax wholly through use of trusts. So lowering or abolishing that tax would still be to the benefit of the dynastic rich.

4

Rick Duncan 04.18.05 at 5:25 pm

Thanks for the link. Although I was having a bit of fun with the comrades in the Democratic Party who always try to divide Americans by economic class, I do truly believe that the only real reason to tax estates is envy. And I don’t think envy is legitimate public policy. Visitors–all visitors,rich or poor–always welcome to the blog of the free, Red State Lawblog.

Cheers from Nebraska, Rick Duncan

5

Mike 04.18.05 at 5:44 pm

Mr. Duncan’s page can be viewed here [http://www.unl.edu/lawcoll/fac-duncan.html] and contacted at conlawprof@yahoo.com

6

Brett Bellmore 04.18.05 at 5:54 pm

Actually, it IS a serious argument: It’s the difference between equality of rights, which more or less automatically leads to inequality of outcomes, and equality of outcomes, which can only be achieved by enforce INequality of rights.

7

Dale 04.18.05 at 6:31 pm

It’s not about envy. Who could envy Donald Trump?
It’s about progressive taxation and the preservation of Democracy and human decency. Not to mention a modern expression of the prophetic tradition of our Jewish/Christian ethos.

8

Cryptic Ned 04.18.05 at 6:36 pm

Mr. Duncan, another reason to tax estates is to raise money for the government.

A third reason to tax estates, this time in comparison with other sources of money, is because it is by definition a tax on people who did not earn the money being taxed and would in no way be hurt by the tax.

9

carla 04.18.05 at 7:00 pm

Since when did conservatives start the “treat everyone equally” meme?

If that’s the case…where’s their Equal Rights Amendment and their “Anyone who wants to get married can get married” bill?

10

Wah 04.18.05 at 7:04 pm

Let me get this straight. A government program that is slanted to help the poor, elderly, and infirm is running out of money and we just passed a tax cut that is only ever applied to the richest 2% of people in one of the wealthiest countries on the planet?

Nah, I can’t imagine how this could be accuratley called exactly what it is.

11

Barry 04.18.05 at 7:25 pm

I would say that right wing lawyers have pretty bad logic (InstaBSer, PowerLineofBS, and now Duncan), but I’m sure that they’re actually just extremely dishonest.

12

KCinDC 04.18.05 at 7:28 pm

MPowell, people leaving “a few hundred thousand” to their children are *already* unaffected by the estate tax, because that’s below the exclusion. In fact, Democrats proposed raising the exclusion to $7 million, but that still wasn’t enough for the Republicans. The repeal *is* about the superwealthy — the top 0.3% of estates — and that’s why the Mars and Walton families are behind it.

13

John Emerson 04.18.05 at 7:46 pm

Anatole France’s most wonderful statement was “If sixty million Frenchmen say something stupid, it’s still stupid.”

In today’s world, you have to translate, “If 280 million Americans say something stupid, it’s still stupid.” Most Americans, no matter how stupid, would in fact agree too readily with a direct, literal translation of France’s statement, of course.

KCINDC — opposition to the “death tax” is an article of faith. Don’t expect any more factual accuracy from those guys than you do from believers in the Shroud of Turin.

14

KCinDC 04.18.05 at 8:04 pm

It’s an article of faith for the people who are spreading the lies about it (who still haven’t managed to find any of the affected “family farmers” to testify about it). There are people out there, possibly including MPowell, who have heard the lies and believed them, but aren’t ineducable.

15

Barry Ross 04.18.05 at 8:16 pm

I, for one, have never understood why those who have left this material realm should be able in absentia to control the goods they have left behind. While living, they have the choice of giving their wealth to whomever they might choose; but having died, I see no reason at all that those goods not return to the care of the greater society from whence they came. This, to me, is the essential arguement for an estate tax – it should be 100% – then there would be a faint chance of an egalitarian society developing.

16

wavemaker 04.18.05 at 9:19 pm

1. The estate tax most definitely CAN be completely avoided through the use of trust strategies.

2. Most of the property that is passed taxably at death is NOT cash or liquid assets but illiquid assets like real estate and non-marketable securities (i.e., the stock in the family business) — KCINDC, happens often enough with closely-held companies. May not be a HUGE problem, but it happens often enough.

KC, are you suggesting that —all of the lies aside — one is ineducable if one has a philosophical objection to the notion of the government taxing wealth as it passes within a family?

I hope not, because that would be rather, um…arrogant.

17

John Emerson 04.18.05 at 11:13 pm

“KC, are you suggesting that—-all of the lies aside—one is ineducable if one has a philosophical objection to the notion of the government taxing wealth as it passes within a family?”

Well, speaking for myself and not for KC, yes. You guys are a bunch of fanatics. “Philosophy” for you is a rebrand of dogmatism.

If you think that that’s arrogant of me, I suggest that you take your whine to the proper authorities.

18

Walt Pohl 04.19.05 at 12:33 am

John Emerson has a good point — the way things are going, you’ll be able to have him arrested for saying mean things about wacko Republican ideas.

Really, what do you expect? Either you’re in favor of ideas like fairness and equality, or you’re not. If you showed up and started advocating the divine right of kings, do you think we would just say “kudos to you my good man, for your fresh thinking”?

19

mpowell 04.19.05 at 12:59 am

Thanks, wavemaker, for your explanation. It seems plausible enough. I don’t think, though, that kcindc is committed to the claim that anyone w/ a philosophical objection the death tax is ineducable. KC was responding to Emerson and pointing out that there are people out there still collecting information and forming opinions. I happen to be one example.

As for Emerson’s follow up comment: you may not be very impressed w/ the political advocates for abolishing the death tax, but it is typically part of libertarian philosophy. You’d probably have to make the claim that Robert Nozick was ineducable as well. Which is just not that credible, despite the shortcomings of his theory.

20

Barry 04.19.05 at 7:01 am

Of course not – that’d be ridiculous.

Now, divine right of Bushes, or God’s Own Party, would obviously be different.

21

theCoach 04.19.05 at 8:36 am

Isn’t it ridiculously obvious that “ineducable” in this post relates to education on this issue?

22

John Emerson 04.19.05 at 8:44 am

As soon as someone pounds their stake into the ground and calls their dogma a “philosophical position”, discussion and education cease. Yeah, Nozick was ineducable. He assumed his basic position and then defended it.

My original point here was based on the fact that the “anti-death-tax” commentators at Jane Galt, besides having a firm and unshakable philosophical position on the question, and possibly because of their firm and unshakable philosophical position, felt no need to inform themselves about the actual facts, and kept repeating the same old apocryphal stories of poor farm families stripped of their land, etc., etc.

23

jet 04.19.05 at 8:49 am

Carla said “Since when did conservatives start the “treat everyone equally” meme?”

Well to answer that question, we have to go back to 1964. It’s called the Civil Rights Act of 1964. The very first vote on this act has Democrat votes against at 59%(41% in favor) and Republican votes for at 76%(24% against) [35% more Republicans supported this bill, and they were out of power and it was politcally dicey]. It does appear that the party of Lincoln (that dude who started the Civil War with all his speeches about equality and stopping slavery) has a long tradition of equal rights.

You might also want to look at Republicans challenges to affirmative action and their 1996 welfare reform for more instances of “treating everyone equally”.

24

JRoth 04.19.05 at 10:10 am

jet, you really need to start your own website; it would rival The Onion!

Democrats who voted against the CRA in 1964 included Thurmond. I forget, which party did he find his natural home in? Whose Senate Majority Leader praised his judgment?

I’m sorry that the Republican Party embraced racism. I truly am. But what disgusts me is that Republicans lie to themselves and the rest of us about it.

25

Richard Bellamy 04.19.05 at 10:11 am

It’s called the Civil Rights Act of 1964. The very first vote on this act has Democrat votes against at 59%(41% in favor) and Republican votes for at 76%(24% against)

And by “Democrats”, jet of course means “Democrats like Strom Thurmond.”

Jet is, of course, pointing out the universal truth that it doesn’t matter whether you’re a “Democrat” or “Republican” in name. We should always support “liberals”, who are not racist, and oppose “conservatives”, who are.

26

Hannibal Lector 04.19.05 at 10:14 am

You might also want to look at Republicans challenges to affirmative action and their 1996 welfare reform for more instances of “treating everyone equally”.

Posted by jet · April 19th, 2005 at 8:49 am

If you live in Fantasyland, where up is down, black is white, and Republicans are not corrupt Plutocrats who kick the poor while fawning over the oligarchs.

27

JRoth 04.19.05 at 10:30 am

And another thing – why are “egalitarian” Republicans so gung-ho on the idea that $50,000 in capital gains should be taxed less than $50,000 in labor? Anyone, anyone? I can’t wait to hear how your elegant, majestic philosophy reconciles this?

28

mw 04.19.05 at 11:37 am

I’d be in support of Democratic position here but for a few things. First of all, my sense is that the Dems proposal to establish a high fixed threshold and a high rate above that is a tactical compromise–what they’d really prefer (but lacking a minority cannnot have) is a low thresold and a high rate.

Philosophically, the Dem position (at least judging by the conversation here) seems to be, the original owner is dead, the undeserving heirs didn’t actually earn any of the money, therefore they have no natural right to any of it, therefore it really belongs to the state, and the heirs should count themselves damn lucky for any fraction they get.

Well, that philosophy rubs a lot of people the wrong way–even many of that vast majority who wouldn’t come close to paying anything under the current Democratic proposal. Why? Because providing for one’s children and grandchildren by leaving a legacy is a pretty basic desire. It is one of the things that gives meaning to people’s lives. And people are offended by a philosophy that implies they have no natural right to do this–that being able to leave their worldly goods to their family is possible only at the discretion of the state according to whatever arbitrary limit is in effect at the time of their death.

I think the Dems would do much better to push vigorously for the elimination of the “Angel of Death Loophole” which is patently unfair. Elminating it would generate significant revenues when heirs sold inherited property (and would apply to all estates, not just the uber-rich). This would neatly avoid the ‘small business’ / ‘family farm’ problem (even as a rhetorical device).

OK, what am I missing?

29

des von bladet 04.19.05 at 11:43 am

MW: One of the things you are conspicuously missing is the rudimentary civility required to argue against your opponents actual position rather than the straw man “philosophy” you have chosen to foist on them.

30

mw 04.19.05 at 11:52 am

One of the things you are conspicuously missing is the rudimentary civility required to argue against your opponents actual position rather than the straw man “philosophy” you have chosen to foist on them.

Straw man? See response #15 in particular for a succinct expression of the philosophy I was describing:

but having died, I see no reason at all that those goods not return to the care of the greater society from whence they came. This, to me, is the essential arguement for an estate tax – it should be 100% – then there would be a faint chance of an egalitarian society developing.

In other words, your assets are not really ‘yours’, they are on loan from the state and therefore they should naturally revert to the state when you die.

31

KCinDC 04.19.05 at 2:05 pm

What is Barry Ross’s position in the Democratic leadership, MW?

Also, to clarify my earlier “ineducable” comment, I was suggesting to John Emerson that MPowell did not appear to be one of the fanatics he was warning me about. And I did not apply the word to people who have a particular political philosophy but to people who would continue to believe that the estate tax affects thousands of “ordinary folks” and “family farmers” rather than the top 2% (or as amended 0.3%) of estate.

Finally, why do libertarians object so much more vigorously to taxes on “unearned” income than they do to income taxes and payroll taxes? I suppose it’s because the estate tax and taxes on capital gains are more oppressive to the godlike capitalist supermen who create our world (and their equally deserving idiot children), while the income and payroll taxes oppress only us peons. And they wonder why they don’t have a lot of waitresses and janitors flocking to join their party.

32

mw 04.19.05 at 2:35 pm

What is Barry Ross’s position in the Democratic leadership, MW?

I must’ve missed the part where I made claims about the Democratic leadership.

Finally, why do libertarians object so much more vigorously to taxes on “unearned” income than they do to income taxes and payroll taxes?

But the estate tax, as constituted is not a tax on income (earned or unearned) but on wealth. As for capital gains vs labor. I believe they should be taxed equally myself and, in fact, I think the government should be collecting capital gains taxes it’s missing out on.

Why do lots of Americans object to estate taxes because of their effects on small businesses and family farms? Possibly because even though there is not much of that happening now, it has happened recently and, depending on what transpires, may happen again.

Beyond that, many people who would never be affected nevertheless object to the estate tax (and are persuaded to despise it as a ‘death tax’) because of what it embodies–the idea that your assets are yours to dispose of only so long as you stay below the threshold of what the government considers ‘rich’ (which threshold, of course, is subject to review at any time).

The ‘Angel of Death’ loophole, on the other hand, is both an unjustifiable boondoggle (avoidance of any taxes whatsoever on capital gains) and a major source of inheritance windfalls.

What would the effect be of eliminating both the estate tax and ‘angel of death’? Increase or decrease in tax revenues? How much?

33

r. clayton 04.19.05 at 2:54 pm

And people are offended by a philosophy that implies they have no natural right to do this – that being able to leave their worldly goods to their family is possible only at the discretion of the state according to whatever arbitrary limit is in effect at the time of their death.

No doubt, much as people were offended about extending suffrage to women, decrimializing inter-racial dating, or repealing Prohibition. The real question is: are such people behaving rationally and usefully (that is, intelligently) by being offended? If you believe they are, you should tell us why (and please – no vague and watery-eyed references to “natural rights” or legacy leaving as a basic desire). Here’s why I think such people are not acting intelligently: it is by the grace and actions of the state that people are able to build fortunes. It is rational and useful for the people – who are the state (let us pretend) – to arrange things so that the state can perpetuate itself by scraping off, in the form of taxes, part of the fortunes amassed. People who accept the premise be able to rationally and usefully argue that estate taxes are the wrong kind of taxes, and should be dropped in favor of other kinds of taxes (that argument seems to me to be hard to make, but that’s probably just me). People who reject the premise, who go the Grover Norquist route, are essentially destroying the thing that makes fortunes possible, which seems to me to be irrational and not useful.

34

james 04.19.05 at 4:50 pm

The move against estate taxation rests on the idea that “property rights” is an individual right. The argument mw is setting forth grants this assumption. The argument against, presupposes that property rights is really a state right. An individual, who believes in property rights as an individual right, would naturally be against the estate tax regardless of that individual’s current wealth.

r. clayton – Your stance that “it is by the grace and actions of the state that people are able to build fortunes.” is an unproven presupposition.

35

Gary Imhoff 04.19.05 at 6:17 pm

Henry writes, “If I’m not mistaken in my recollection, Karl Marx himself was fond of quoting Anatole France’s not-dissimilar observation that ‘[t]he law in its infinite majesty, prohibits rich and poor alike from stealing bread and sleeping under bridges.’” Marx died in 1883. The Anatole France quotation, which is “The majestic egalitarianism of the law, which forbids rich and poor alike to sleep under bridges, to beg in the streets, and to steal bread,” is from his novel, The Red Lily, which was published in 1894.

Perhaps Marx was even more foresighted than the most fervent Marxists believe.

36

r. clayton 04.19.05 at 7:56 pm

Your stance that “it is by the grace and actions of the state that people are able to build fortunes.” is an unproven presupposition.

Of course, of course. Practically everything written in this thread is an unproven presupposition, including

the idea that “property rights” is an individual right.

The only way I know to make practical progress in such cases is to bring Damon Runyon into play and figure out how you’re going to bet it. It seems to me to be responsible and intelligent to place your bet on the state as one of the better ways of providing for fortune amassing and other individual rights, and it seems to me to be feckless and uninformed to place bets on means that have no, or a greatly emaciated, state to achieve the same ends. I have no proof of the intelligence or uninformedness of these bets. However, as I look around a real things – not airy philosophical extrapolations – I see plenty to support the intelligent bet and very little to support the uninformed one. I also see plenty to suggest that a bet on the state is perhaps not so intelligent, but I also see plenty to suggest that a stateless bet is far worse than anything a state can dish out.

37

Uncle Kvetch 04.20.05 at 8:49 am

An individual, who believes in property rights as an individual right, would naturally be against the estate tax regardless of that individual’s current wealth.

Wouldn’t said individual be against all taxes on the same grounds?

And wouldn’t it be logical for those of us who actually live on Planet Earth to ask said individual just what kind of ideal world they envision, given that they view taxation in this way?

38

james 04.20.05 at 1:04 pm

r. clayton – You are correct that the ideas present in this thread are largly unproven. The idea that property rights is an individual right does have the benifit of being implied by the US constitution (Amendment IV).

“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. ”

Namely their persons, their houses, their papers, and their effects. The constitution strangely lacks the idea of all wealth generation being a result of state largess. The law of the land is already biased in favor of an individual right to property.

uncle Kvetch – Many individuals do infact believe that taxation is a form of legal theft. Some simply believe that you should only be taxed once. After that what you do with your resources is your business.

39

Uncle Kvetch 04.20.05 at 2:21 pm

Many individuals do infact believe that taxation is a form of legal theft.

Many people also believe Elvis didn’t really die on the toilet in 1977. I have yet to see a reason why I should take the first group any more seriously than I take the second.

40

abb1 04.21.05 at 5:57 am

Some simply believe that you should only be taxed once. After that what you do with your resources is your business.

But giving your resources to your heirs is a transaction, assets change hands – this is a typical occasion for governments to collect taxes.

How is it so drastically different from a situation when your employer sends you a paycheck – from his resources, already taxed? In fact, your employer can even be a member of your family, your father, for example.

I agree that what one does with his resources is his business, but once he decides to give his resources to someone else – all bets are off.

That virtual moment when these resources are hanging in limbo – relinquished by the previous owner but not secured by the new owner yet – at this vulnerable moment the government pops up out of nowhere and says: ‘I am the only guarantor and only reason you are being able to perform this transaction and I want my share.’ And inheritance is as much of a transaction as any other, correct?

Does it make sense to you, James?

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