The estate tax: Death tax an affront to country’s core values

What makes death a taxable event?

How is that life transition distinguished from other important moments? Say, the birth of a child. Or a first love’s kiss. A 50th wedding anniversary, perhaps.

At the risk of tossing out an absurd tax idea and have some lawmaker somewhere catch it, how about a tax on retirement? We could call it the “near death tax.”

Imagine an IRS agent showing up on the porch one day and saying: “Congratulations on your success in building such a fine nest egg. Because your retirement is larger than most, you’ll be pleased to give this burly IRS agent 55 percent of it so that we may give it to the people who deserve it.”

Sounds ridiculous. Yet somewhere in the American experience rests a misguided collectivist notion that death is a perfectly justified opportunity for the hive to confiscate accumulated wealth and redistribute it.

Stalinist Russia did it. But America? The idea ought to turn our stomachs.

The modern form of an American death tax began in 1916. It almost died this year, but because Congress failed to drive a stake in its heart, it returns to life in 13 days — Jan. 1, 2011. And it comes back like a zombie in a Robert Rodriguez movie — bigger and badder.

The death tax rate would have gone up to a whopping 55 percent with only a $1 million per person exemption. So as part of the tax compromise between GOP legislators and President Obama, it was agreed to moderate the tax rate to 35 percent and a $5 million exemption. But so-called “conservative” Democrats thought it should go to at least a 45 percent rate and a $3.5 million exemption.

Liberal Democrats, meanwhile, still say even that’s not enough punishment for kicking the bucket.

Consider Rep. Jan Schakowsky, D-Ill., who said this on MSNBC’s “The Rachel Maddow Show”: “If someone leaves an estate of a billion dollars, under (the compromise) proposal, they would gain $100 million over what the Democrats are proposing for the estate tax. Imagine, Paris Hilton will be able to get an extra $100 million under their plan. It’s obscene.”

Or take the dog-and-pony show sponsored by a group called United for A Fair Economy’s Responsible Wealth. It aimed to convince lawmakers that “the rich” love paying more taxes. Organizers trotted out Jerry Fiddler, a venture capitalist in California who said: “The estate tax is the best possible way to pay back into the common good. I see it as a point of pride to pay back in.”

And John Russell, a wealthy real estate developer in Portland, said he’ll gladly pay the estate tax because, “I owe a debt of gratitude.”

Americans should rebuke collectivist transfers disguised as loyalty to the state. The very idea of government confiscating any piece of a person’s property after death, compounded further by the rationalization that it is justified because the tax applies only to the very few, grinds against the core values of this country.

So how shall we fund the government? Not by targeting small groups, but through broad-based and fair taxes levied to each according to one’s means. It’s important for all citizens — even the poor — to contribute to the support of the country and have a financial stake in the issues of the day.

Instead, we’re quickly becoming a nation in which an ever-smaller percentage of citizens pay an ever larger percentage of the bill. The top 1 percent pay more taxes than the bottom 90 percent. Forty-seven percent of Americans paid no federal income tax this year — zero! That’s not only bad citizenship, it’s bad economics.

And look, if there really exists a significant number of people like Jerry and John who feel moved to pay extra to the government, then by all means step right up. And don’t restrict the privilege to the “rich” Jerrys and Johns. Any old Jerry and John so inclined may send a love offering to the IRS. Just stick the check in an envelope, lick it and send it.

In the meanwhile, let’s work to kill the death tax once and for all. It ought not exist at any threshold. Not in my America, anyway.

Sherman Frederick (sfrederick@reviewjournal.com) writes a column for Stephens Media.