Capitalist unction

Posted: Feb 19, 2001 12:00 AM
Well, catch Warren Buffett! He is worried that the estate tax might be eliminated. Mr. Buffett, who is reported to be the fourth-richest man in America, isn't going to wait for Congress to take his advice to maintain the tax. He will do it himself! For himself!! He has told the awaiting world that he intends to leave his own children only "a pittance."

It is wonderful how, faced with the current challenge, he can cope with such mature decisiveness over his own affairs: Give his children a pittance and leave the rest of his estate to be taxed by the government. Indeed, he can go further. One motive for his stand against the death tax is his concern for private charities. Well, he can deed all of his estate to private charity. Once again, he is demonstrating sovereignty over his own affairs.

There is the problem that this does not satisfy him, not by any means. He wishes not only to restrict his children to a pittance and to dispatch his earnings to the government and to private charity. He also wishes that others should do so. He wishes to make his preferences a matter of law, enforceable even on others who have different priorities.

And he is not alone in the pleading to derail the movement to end the estate tax. He is garishly accompanied by 120 of the super-wealthy in America. They include George Soros. He got there by selling the British pound short a dozen years ago, without marked concern for those poor people who held their savings in pounds they thought durable in value, and without high scorn for government policies whose fiscal and monetary policies had the effect of a capital levy on everyone who owned a pound. Debauching the currency, Lord Keynes acknowledged, only governments can do.

David Rockefeller, protesting a return to the tax code that gave the Rockefellers their great launch in life (Mr. Rockefeller has been an exemplary citizen, with only the one reservation, that he is often eager to contrive for government to appropriate the savings of non-Rockefellers). Also William Gates the First, who was wealthy even before William the Second conquered the entire world. He is concerned that the elimination of the death tax would do two things: straiten the returns of charities, and demoralize nascent entrepreneurs.

What this says is that if you leave $1 million to your son, you run the risk of extinguishing his acquisitive energies. Instead of applying himself as a neo-capitalist, inventing things and organizing people and generating great commercial ideas, he will retire to his yacht and golf club and dissipate that acquisitive exuberance without which we would not have a world with such in it as Warren Buffett and Bill Gates.

A different view of things propelled the Congress to pass last year a measure to end the estate tax. That measure was endorsed by Republicans and many Democrats, though not by enough to circumvent President Clinton's veto. The reasoning was based on several assumptions. One of them was that estate taxes are a levy against property which has already been taxed, a kind of double-jeopardy objection. A second was that in order to pay the tax, beneficiaries are often required to dissolve or dismember small enterprises, notably farms and businesses. A third was that in order to avoid or mitigate the tax, people who are subject to it reorder the closing years of their lives in such a way as results in profligate spending and maladroit investments, leaving heirs with less than such accumulations as might finance investments that would increase the national product.

President Bush has the problem of priorities, to be sure. He has his big tax-reduction plan, which seeks general mitigations, and there are those who will be telling him that to eliminate the estate tax on top of the general tax reduction is to dilute the political appeal of his package.

This problem he could handle quite simply. A singular feature of the estate tax is the Bolshevik reach of the tax itelf. Uncle Sam wants as much as 55 percent of the taxable estate dollar. Fifty-five percent! Add to that state taxes, and you get taxes of more than 60 percent, which is confiscatory stuff.

Mr. Bush could tell Congress that he reiterates his recommendation to repeal the estate tax, but that pending other matters -- and with apologies for those who will die in the meantime -- he is prepared to settle for interim relief: Let the estate tax be reduced to 20 percent. Maybe there would be some way around the constitutional prohibition against a bill of attainder, in which case Congress could vote to keep it at 55 percent for Warren Buffett and George Soros and, to avoid class distinctions, anyone else who applies for that special privilege.