While the Washington press corps was fixated last week on the latest developments surrounding President Obama’s trillion dollar co-pay in the guise of health reform, followed by backyard beer swilling, IRS bean counters quietly went about their business.
Their mission? Find a way to pay for the massive zeroes this administration continues to add at the end of the government’s mounting debt. In what some privately likened to an ancient an archaeological find teeming with treasure, revenue agents discovered a potential $80 million golden pot of money – at the home of Michael Jackson.
That’s what the Feds stand to collect if they enforce a massively onerous and confiscatory tax on the King of Pop’s estate, affectionately referred to as the death tax. And you can bet they’re coming to a neighborhood near you.
Until President Bush’s tax reforms of 2001 that lowered the levy to 45%, the death tax in America ranked second only to Japan as the highest in the world – stifling enterprise in subtle yet noticeable ways.
The Obama Administration, however, has no plans to keep the Bush reductions in effect. They have too many bills to pay to surrender the approximately $60 billion in revenue the tax generates each year.
But what the Left fails to recognize is that by keeping the tax in place (or worse, allowing it to return to pre-Bush levels), they are planting the federal boot on the necks of an emerging class of survivors from this economic crisis.
Both sides frame the debate as an issue of fundamental fairness – spreading the wealth versus keeping what is rightfully yours. But when Americans are posed the question directly, the death tax is decreasingly one of social justice with left and right parameters, but instead a fatally-shortsighted policy with a base of support shifting beyond traditional party lines.
According to a recent survey conducted by Strategy 360, the polling arm of Dutko Worldwide, 55 percent of America’s “middleman” – the independent voter – favored a continued phase-out of the estate tax.
When told that the phase-out could create 1.5 million small business jobs (one-third of those promised by President Obama), according to a report by former CBO director Doug Holtz-Eakin, the margin of support among independents expands to 64%-28%. And when they hear that economic conditions make this the wrong time to raise taxes, support among independents expands to 63%-29%. Predictably, Democrats were less likely to support a phase-out, but even a 49% plurality favored the policy over establishing a permanent tax rate.
What’s apparently changed about this issue is not the party affiliation, but rather the age and income classes of those opposing the White House’s plan. This is not a rich landholder versus poor worker clash. The Dutko 360 poll uncovered that Americans favor the phase-out regardless of income, with support ranging from 53% among those with household incomes under $35,000 to 70% among those with household incomes of at least $100,000.
Think younger voters don’t care about death and taxes? Think again. The Dutko 360 poll surveyed adults ages 18-34 and found 61% of this demographic wanted the death tax buried. Folks, this ain’t your granddaddy’s tax anymore.
Fearing that nearly half of earned assets will be lost at death, the emerging class with visions to accumulate capital with age seeks to claim its stake in what some have characterized as an otherwise end-of-life debate.
And therein lies the fundamental problem for the Democrat Party when it comes to forming economic policies. The Left’s logic fails to recognize a fantastical aspiration every American strives toward – the insatiable drive of income mobility. It’s a political blind spot that has haunted them for generations. Yes, there are millions of Americans who earn no more than $30,000 per year, and struggle to make ends meet on that relative pittance. But more importantly, name me one who plans to stay at that income level, if they have anything to say about it?
The push to increase the death tax strikes at the heart of enterprise in this country because it clumsily tries to snuff it out. According to the Left, wealth is an inherent evil. Is an inheritance now, too? Has class envy by a select few forced Baron Barrack to declare heirs an enemy of the state? We think you died with too much. We want to spread that around. And since you're dead, it’s not theft.
The certainty of death and tax articulated by Poor Richard at this nation’s birth was hardly a permission slip to tax at death. Especially in a starving economic environment, investing into businesses is critical. We have a policy here that is expected to actually create (not just save) jobs, in addition to stimulating over a trillion dollars of Made-in-America capital. Yet sadly, today’s economic debate has devolved into worthless banter over “Cash for Clunkers” which takes billions out of the government so participants can purchase Japanese Toyotas and German Volkswagens.
While entrepreneurial Americans are working at the grassroots to reconstruct today’s broken economy, the federal budget is utilizing the death tax to constrain the long-term intergenerational effects of small business development. In 1980, Lawrence Summers coauthored a study that explained “intergenerational transfers account for the vast majority of aggregate U.S. capital formation.” Yet today, President Obama’s chief economic advisor discourages the very actions that he once argued would boost the country’s financial system.
When government sends a check to dead people, its called fraud. When government expects a check from dead people, it’s called paying your fair share. Until a pop icon’s assets were threatened by auction with the IRS, this job-killing policy escaped public debate. Yet no amount of class war mongering will suppress Americans from aspiring to one day achieve financial success and independence.
The Survivor Class is emerging from the economic ashes. It’s time to give them the boost they need to create and grow capital and investment that doesn’t end on death’s doorstep.