The Wall Street Journal has a good editorial today on the estate tax, and how it's not really serving the purpose liberals claim it serves.
For proof that they're right, they need only watch the current debate. The superrich or their kin--such as Bill Gates Sr. and Warren Buffett--are some of the loudest voices opposing repeal. Yet they are able to shelter their own vast wealth by creating foundations or via other crafty estate planning. Edward McCaffery, an estate tax expert at USC Law School, argues that "if breaking up large concentrations of wealth is the intention of the death tax, then it is a miserable failure."
Do the Kennedys or Rockefellers look any poorer from the existence of a tax first created in 1917? The real people who pay the levy are the thrifty middle class and entrepreneurs who've built up a modest nest egg or business and are hit by a 46% tax rate when they die. Americans want family businesses, ranches, farms and other assets to be passed from one generation to the next. Yet the U.S. has one of the highest death tax rates in the world.
Honest Partisan asked "what if the estate tax was raised so that it hit at $10 million instead?" That's like suggesting "Let's ban abortion, but only in the 9th month of pregnancy." If something is right or wrong on principle, you don't go against that principle just because it's a small exception. The estate tax is a key principle of Marxism. And can anyone point out a significant difference between saying "You're dead and rich, so we'll take half your estate" and "You're rich, hand over half your property?"
This latest article also highlights that the estate tax is quite possibly a regressive tax! Specifically on Paris Hilton:
The American Family Business Institute has found that the bulk of the Hilton estate has long been sheltered from the IRS in tax- free trusts.
That leads me to suspect that there exists a number Y between X ($2/$4 million, the current level of exemption for the estate tax) and Z (Bill Gates' wealth*) such that if the estate tax exemption were raised to Y, there would be virtually no money collected by the estate tax, a rate far, far below the nominal percentage rate of the tax.
The estate tax is not meeting its goal (unless you're in that field of law). Dump it.
*Well, the total amount of wealth Bill Gates will pass to his heirs, in both tax-sheltered and taxed forms.