It's about time someone stood up for the estate tax - that fairly painless bringer of equality, insurer of social mobility, and bane of the Republican party.
Repealing the federal estate tax, often assigned the pejorative term "death tax", was a top priority for George W. Bush. In 1997, the federal estate tax rate was 55%, with a deduction of $600,000. In other words, if a loved one died and left me $600,001, I would pay $0.55 in federal estate tax. Laws signed by Bush gradually brought that rate down to 35% and the deduction up to $5,000,000, until the estate tax was eliminated all together in 2010.
What's wrong with no estate tax? Shouldn't hardworking individuals be able to leave their wealth to their children? After all, these people didn't work all their lives to give money to the government. That's true, but let's consider how much unearned wealth is being transferred.
With $5,000,000, I could draw a $50,000 annual salary for 100 years. A family could comfortably live off the interest of this inheritance for generations, without ever working for a paycheck or contributing to society. Look no farther than the celebrity socialites of rich parents, and you can make the case that it is actually harmful to be the recipient of large sums of unearned wealth.
What happens to our society if large sums of wealth pass from family to family, without ever requiring these people to work, and where their livelihood is secured through inherited ownership? What does it mean for democracy and social mobility if there are generations of families who, simply through lucky birth, are ensured a life of leisure and luxury through no efforts of their own? I can't help but be reminded of feudalism in medieval Europe, or the deeply impoverished countries with a handful of super wealthy families that we see today.
Rather than opposing such a tax, I think the ultra-rich should be proud to pay their fair share into a system that created space for their success. Our government provides a legal system to enforce their contracts, a patent office to protect their intellectual property, and officers of the peace to prevent theft of their belongings. In lawless lands where ideas and money can be stolen without consequence or the opportunity for recourse, it is doubtful that our mega-rich neighbors would have accumulated the wealth and power they now possess. The chance for upward mobility and personal wealth is unique to those places that have strong government infrastructure and (relatively) low corruption. Those wealthy enough to pay this tax (we're talking about 5,500 families in 2009) owe this country for their success, and should be honored to ensure the continued stability of our system through one last payment.
If you don't think that's a good enough reason, then think of the children. I for one would be embarrassed to create children or grandchildren in the mold of Paris Hilton by giving them seemingly endless amounts of money. And I think the hardworking builders of personal fortune would feel the same.
For 2011, the estate tax has returned with a $1,000,000 deduction and rates between 41-55%. I for one am glad to see it back. It's fair, it's good for the country, and it's good for the children.