The Progressive Socialist Elitist commonly claims that the estate tax in not levied on the individual who died, but on the heirs. Barney Frank just recently made such an often quoted claim:
Rich people should have a large chunk of their remaining estate confiscated by the government when they die because their heirs have done nothing to "earn" it themselves.Strangely enough, the tax cut, to be 35% in 2011 and 2012, is made before and not after the money or property is put in the hands of the heirs. The tax is made on the transfer of the estate, which really means before the transfer of the estate. Thus it is more correct to say it is made on the dead than on the heirs. Either way, this tax is made on those who generally did not choose to engage in an estate transfer, the dead usually not choosing to die and the heirs generally wishing their parent or other loved relation might have lived longer.
Unfortunately, the re-imposition of the death tax on 1 January 2011 for estates of $5 million or more has put dying people in the dilemma of choosing to die before then. It is highly immoral that the federal government is forcing people to make such a choice. Studies have shown that people do make the choice to die earlier in such cases. Imagine yourself dying, but fighting to hang on to spend a last few days or weeks to say goodbye to those you love and allowing them to say goodbye to you and having to make this choice to cut off that incredibly important process. You may have family members thousands of miles away who would wish to come to your side and spend a few last hours with you remembering the good times you have shared. Imagine how important it is to hear one last time that you were a great father or mother and that your children will miss you greatly. On the other hand, if you just stop fighting through the pain of dying, the business you spent a lifetime building may survive and your the employees you care about and trusted will continue to have jobs. Maybe one or more to those who will continue to have jobs will be your children. No one should ever be forced by a callous government run by Progressive Socialist Elitists to make such choices.
The Barney Frank claim begs several questions. For one, it is simply assumed that the heirs did nothing to earn the estate. Perhaps the children gave up many hours of time with their parent as the parent worked hard to accumulate the wealth. Despite this, the children may have encouraged or given strength to the parent with their love to be so dedicated to his work and wealth-building. In such cases, it is also often the case that the parent loved the work he or she did and the child understood that. If, as is often the case, the wealth was accumulated from a business owned by the parent, the children may well have worked in the business as children and may still be working in the business as adults. As adults working in the business, they may be the managerial succession plan of the business.
Yanking 35% of the business away from them at the difficult moment of transition may kill the business, causing much human grief as employees lose their jobs and as customers who have come to depend upon the business lose that relationship. These are losses to which the power-grubbing likes of Barney Frank are blind and insensitive. It may also be the case that the business owner had been retired for years and the business was in fact being run by his children for many years. His children may already have greatly enhanced the value of the business. One very important value enhancer is that a business gains value simply by having good managers it can count on for years to come, including tough recession years such as those of the Great Socialist Recession. Family members are often just such valuable managers. It cannot be correctly assumed that the children will not provide an even better manager and wealth creator than the family founder. Or, the founder may have found the formula for success in a business after years of trial and error and passed it on to the children who will have much more time to use that formula, with such modifications as they will have to introduce themselves, to further build the business. Destroy the business with taxation and the formula may also be destroyed.
Becoming an entrepreneur is a very difficult process. The successful entrepreneur may have had, and probably did have, a long struggle to learn how to be successful. One of the difficulties in becoming successful is the very fact that we already soak high income earners. The top 1% of high income earners paid 38.02% of income taxes in 2008. The top 5% of income earners paid 58.72% of all income taxes. The successful entrepreneurial wealth-builder is just the person whose wealth will be again outrageously taxed at 35% on his death, with the frequent collapse of his business with all of his highly trained employees. Such organizations are a wonder and should be highly valued in our society. They represent incredible numbers of hours of hard prior work and difficult decisions, which are rarely appreciated at all by the all-knowing Progressive Socialist Elitist. The founder or the heirs of the founder have built and maintained this organization. In either case, its destruction or the act of harming it does harm to our society. It has to be remembered that society generally is more benefited by the growth of the private sector than by the growth of government. We must maintain rational priorities, despite Barney Frank's desire for us to irrationally further continue the transfer of private sector wealth to the government.
Of course there are cases we all know about in which the children are undeserving wastrels. This is not really relevant, since it is the parent who built the wealth who has the right to decide where that wealth will go. It is not our decision to make. Neither is it the decision of government to make. WE know the 35% cut the government will take will be spent foolishly and unconstitutionally for the most part. In fact about 75% will be spent unconstitutionally, making the proper government spending out of the 35% tax a mere (1 - 0.75) (35%) = 8.75%. This is a wastrel record which most wastrel children cannot match. Their spending, while unwise, may easily be less unwise than that of the government. Besides, the wasted part of the government spending very commonly goes to the undeserving poor or to the corrupt parasites of big business, labor unions, and other special interest groups, such as trial lawyers and public employees, who take advantage of the general taxpayer to live large. In these days in which half the voters pay almost no taxes and the high income earners pay an outrageous fraction of all taxes, the wealth accumulator in many cases spent a lifetime supporting wastrels with his tax payments and upon dying is to once again forced to support those same wastrels with another 35% of his wealth. You can hardly get more immoral than to demand that.
The Death Tax is highly immoral because it is a very discriminatory tax. It strikes a very hard blow against businesses which are capital intensive. Farming, for instance, is very capital intensive, since farmland has a very high value in the aggregate when enough acreage is held to make a farm profitable and a farmhouse and barn must be a part of the capital investment package as well. A tractor and truck and many farm implements are other capital investments needed in our high-productivity farming environment. The plight of farms due to the death tax has been often discussed and yet this important issue is of no concern to the Progressive Socialist Elitists such as Barney Frank. There are many other American businesses which are also capital intensive. In fact, for Americans to maintain their high standard of living in a global economy of intense competition, it is critical that many businesses achieve a very high labor productivity by being very well-equipped and by having other appropriate capital investment. But, the death tax is a tax aimed at the destruction of exactly these competitive types of business with high capital investment because they also have high asset value upon the death of an owner.
Our all-knowing Progressive Socialist Elitists have long been dead-set on damaging the private sector, particularly our productive businesses, with completely stupid policies such as:
- The Death Tax to destroy businesses with high capital investment.
- The highest corporate tax in the world, designed to cause many U.S. corporations to build more facilities abroad and keep more of the profits of those facilities abroad, while decreasing their ability to compete in world markets from production in facilities in the U.S.
- High personal income taxes on those with relatively high incomes which hurt the accumulation of cash to be re-invested in many small businesses, thereby decreasing their growth rates and the numbers of employees they have. Of course, high marginal tax rates at moderate to high incomes also decrease the incentive of productive people to work hard and produce as much wealth and as many jobs as they otherwise would.
- High company personal tax rates by counties and states which hurt capital intensive and therefore asset-intensive businesses.
- High power costs owing to wrongheaded supports for expensive ethanol fuel, electric wind generation and solar power subsidies and mandates, and restrictions on oil and natural gas production. The electric power supply dependability has already been harmed and will suffer much more as these policies are expanded.
- Some pollution controls have exceeded rational cost benefit ratios. Those on carbon dioxide are clearly such a case since carbon dioxide does not cause the global warming attributed to it by some all-knowing Progressive Socialist Elitists. Despite this, great expense is already incurred in the name of CO2 reductions and the expenses are to ramped up drastically if the Obama EPA has its way in raping the U.S. economy.
- Many safety controls and regulations are expenses on business with little to no benefit. Food inspection, drug regulations, FCC controls on broadcast and now Internet information and entertainment, anti-trust, railroad regulations, the first-class postage monopoly, and many more costs have been imposed on businesses and individuals more for government control and power and to protect big industries selectively while punishing other industries than makes rational sense. All such schemes were advanced by Progressive Socialist Elitists.
- Tariffs and many irrational trade prohibitions still restrict international trade which is only carried out when two parties are benefited. These restrictions are harmful.
- The minimum wage law creates higher unemployment and keeps many under-educated young people from receiving necessary on-the-job training and a start to their careers.
- Government favoritism toward unions makes labor too expensive in some industries, suppressing the competitiveness of those industries and pulling down other industries dependent upon those industries.
- Restrictions on the freedom of information exchange harm the economy, as does the introduction of government propaganda on economic issues critical of Capitalism through our government-run education system and by the Progressive Socialist Elitist media.
- Subsidies and mandates favoring some industries distort our economy and greatly harm the efficient utilization of capital and brainpower.
- Policies by the government favoring some races and women over men create an impediment to the efficient use of human brainpower.
- The huge transfer of wealth from the private sector to governments for unconstitutional purposes moves that wealth generally from production to non-productive uses.