Yesterday, the US House of Representatives passed HR 1105 to repeal the estate tax. Before we go even one sentence further, know that the estate tax applies only to inheritances greater than $5.43 million. That’s very few; according to the Joint Committee on Taxation, approximately 0.2% of deaths in 2013 involved estates large enough to be taxed. Perhaps that’s why Republicans invariably refer to the estate tax as the Death Tax: 99.8% of Americans will not pass on taxable estates, but everybody dies. On Twitter, Rep. Ryan Zinke (R-MT) called it “a tax on the American Dream.” Speaking in favor of the Death Tax Repeal Act of 2015, he said:
“I rise to bring awareness to a pervasive tax that threatens the very livelihood of the future of generations of Montanans…This tax punishes Americans that have worked hard, played by the rules, and want to pass that legacy on to their children.”
I submit that 0.2% is “pervasive” the same way inheriting more than $5 million is the American dream.
The American dream is, of course, to own your own land. That’s what it was when European scumbags immigrated to the colonies to escape the landed gentry of the 17th century, when Thomas Jefferson developed the ideal of the yeoman farmer in the 18th century, and when wild-eyed hicks settled the frontier in the 19th century. Then, in roughly 1890, free land in America stopped. The new American dream is to get so rich that you become the landed gentry yourself, and your children can live the workless lives of rentiers.
That’s an uncharitable way to interpret Zinke’s remarks. But to say that the American dream is to inherit more than $5 million in cash and property is to ignore the part of the dream that made America great: hard work. Zinke may speak of “generations of Montanans,” but the tax he voted to repeal affects only the heirs of the richest one fifth of one percent of dead people. Historically, the American dream has regarded those people as useless pussies.
You can argue that other taxes discourage hard work. Cutting the top bracket of the income tax would affect people who at least make money for themselves. Even the capital gains tax can be seen as punishing smart investors, who remain theoretically useful in a post-industrial economy. But the estate tax only affects people who get money from their wealthy parents, and even then only the richest quintile of the richest 1%. Is getting born rich the American dream?
As Paul Waldman points out in the Washington Post, now is an odd time for House Republicans to pursue this particular agenda. There’s no way last week’s permanent repeal of the estate tax will actually become law; it would have to beat a near-certain Democratic filibuster in the Senate, followed by an utterly certain veto from the President. Meanwhile, both the gap between rich and poor and public awareness of that gap are at historic highs. It seems like we are on the verge of developing an American aristocracy, and now not a propitious time for Republicans to go to bat for the very richest ones.
If it’s not tactically smart, it must be ideological. Zinke and his fellow Republicans must feel that the estate tax runs contrary to some deeply-held American principle. And they are right. It just happens that principle contradicts another deeply held American principle.
What we have in the estate tax is a conflict between liberty and equality. Liberty is the idea that every American citizen should get to do as much as possible without government interference. Equality is the idea that every American citizen should get a fair shake. The problem is that liberty tends to infringe on equality, and vice versa.
If you leave every citizen at liberty to pass on as much money and property to his children as he wants, you wind up with an aristocracy. The American dream starts to look less like the yeoman farmer and more like Donald Trump, who built his multibillion-dollar fortune out of a mere multimillion-dollar inheritance. That sort of aristocracy is exactly the scenario that the American principle of equality opposes.
But should the feds have seized Fred and Mary Anne Trump’s estate and forced young Donald to work at Shoe Mania until he had saved enough money to build Trump Towers himself? Maybe, in this particular case, but generally that’s just the kind of government overreach that the American principle of liberty opposes.
What we have here is a clash of deeply-held values. The whole point of getting rich is so that your kids can have soft lives, and we shouldn’t punish people for achieving that ultimately good and generous dream. But the whole point of America is that you and your friend with rich parents both have to succeed by hard work. If only we could find some middle ground—some way to tax estates that would resist the formation of a ruling class, but would also let hard-working people make better lives for their children.
If only there were some number that was plenty of money for a person to inherit—some crazy amount of money that would spin off enough interest that the children of rich Americans wouldn’t have to work, but not so much that they could seize control of government and society. Maybe $5 million, adjusted for cost of living? Nah—if I have to start with a measly $3.5 million, it’s not even worth it to try to achieve the American dream.