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Publisher Jim Webb and a tax by any other name
July 23, 2010 - Mike Maneval
Webb Weekly publisher Jim Webb, in his July 21 column, touched on the estate tax, or as he prefers to call it, the "death tax," or rather the "DEATH TAX." Under this tax, inheritances valued at $1 million or exceeding $1 million in value will be taxed at a rate of 55 percent starting in 2011.
Actually, starting again in 2011. From 1981 to 2001 and through the economic boom of the 1990s, inheritances were taxed at a 55 percent rate - and from 1936 to 1981, the top tax rate on inheritances was above 75 percent, as the Heritage Foundation's website acknowledges. While Webb refers to the tax "roaring back to life," he didn't see fit to mention the history of the tax and its rates, and that America has been able to thrive and prosper with this tax at even higher rates before.
Webb also suggests "there are a lot of estates that exceed $1 million due to real estate values and what all is plugged into the equation." Of course, "a lot" is a vague term, so perhaps he considers the less than 2 percent of estates the Congressional Research Service projects will qualify for this tax in 2011 to be "a lot."
He also, in that passage described his "DEATH TAX" as taxing "a lot of estates," which could leave a few readers wondering, why not just keep calling it an estate tax, then?
Perhaps I'm being too critical. Personally, I prefer another name for the estate tax as well - the laziness tax. Now, I understand some small farms and small businesses which may be impacted by taxes on estates don't fit my name for the tax at all. But I also believe there needs to be exemptions - stringent exemptions - to provide such hard-working estates relief or shelter.
Because at the end of the day, inheritances are a form of unearned income, and one that far too often competes with earned incomes for revenue. The anecdotal example I often use is the Hilton family. The Hiltons were only able to accumulate the fortunes their celebrity heiresses will one day collect by decades of opposition and resistance to improved compensation for their hotel chain's maids and clerks.
So when Webb describes the tax as a move to "transfer the wealth from those who have made it to those who have lived off the 'system'," I have to disagree.
In real life the ones who "made it" are the members of the workforce, and in cases deserving of estate-tax-free status, the proprietors of small farms and small businesses who are clearly members of the workforce as well. And the ones "who have lived off the 'system'" are the ones whose shot at a hand-out from dying relatives seems to prioritize them for tax relief above hard-working Americans in the eyes of far too many.
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