Today the Roanoke Times printed an article co-authored by Bill Gates. I found it online as "Inheritance tax recycles opportunity." The article closes with this statement.
A progressive estate tax could serve as an intergenerational pact between the wealthy at the end of their lives — and the next generation who are not born wealthy. Like the GI Bill, it could be one of the best investments our nation makes in its people's aspirations.
Now before everyone get excited, the article proposed that the tax be limited to the very top of the income scale even fewer that the top 1/3 of 1% of our richest people.
Starting in January, the amount of wealth exempted by the tax will be $2 million for an individual and $4 million for a couple and the tax rate will fall to 45 percent. At that point, less than one-third of the richest 1 percent of households will pay the tax. Ample wealth will still flow to heirs and heiresses, as the effective tax rate on a $10 million estate is only 19 percent.
I have never seen a tax that I like, but I have to agree with another statement in the Gates-Collins article.
Abolishing the estate tax would cost $1.03 trillion over the first decade. There are only three ways to fill that shortfall: cut spending, raise taxes on the non-wealthy, or, the current favorite, pile it onto the national debt.
With an unneeded and unending war to pay for, there are probably more important things to worry about than ending the estate tax, but I think Bill's idea of a progressive estate tax makes lot of sense. I also found it interesting that the article credits the "technological and scientific commons" as being part of reason some people land in the midst of riches.
I assume this means means technology which might not been developed by an individual but was perhaps brought into common use through government research or support. The internet has led to much wealth. It the underpinning of much of the recent wealth generated by technologically savvy individuals.
My dad who was at his business prime during the depression used to say that he was proud to have the money to pay taxes.
Now I don't like taxes, but I acknowledge that we need public funding for some items, so I guess I would reluctantly vote in favor of the inheritance tax. Of course it is easy to vote for a tax that neither you nor your estate will likely ever pay. After all by the time you pay property taxes, sales, usage, federal and state taxes, and personal property taxes there isn't much left.
Still I salute Bill Gates for standing up for what he believes. Heaping praise on the MS founder is not easy for an Apple guy who has had Microsoft is the evil empire preached into his ear for years.
First of all, I like the "idea" of taking excess money from the top and re-distributing it to the bottom, and spurring on the economic engine. But in my experience the richest 1% are already doing this on their own; they donate heavily to their Alma Mater enabling ever more scholarships and grants, they donate heavily to local charities, they donate heavily as seed investors in regional businesses, they keep substantial monies in stock portfolios that enable today's entrepreneurs and small businesses to push new products to market, and so on, and so forth. Typically when they die the give a substantial amount to certain key charities or to their religious institution. Bill Gates is a great example; each of his children are set to receive something like 20-30 million each as inheritance, and the remainder is going to his foundation. I think that the strongest proponents of the estate tax are really more concerned with controlling HOW the wealthiest 1% spend their money. In other words, with so much money changing hands, I think the politicians and lobbyists pushing the estate tax would prefer to have that money to do with what they will, which all too often is a pork barrel here, and a bridge to nowhere over there.
Don't get me wrong, I'm happy to pay taxes. But if you're going to take my money, take it while I'm alive. Estate taxes are too much like retroactive taxes. Or, put another way, you're being penalized for not spending enough money while you were making it!
Sean
Posted by: Sean Pecor | December 27, 2006 at 11:29 PM
Well, if Bill wants to pay his money, I don't want to stand between him and the tax collector.
Posted by: ocracokewaves | January 01, 2007 at 07:39 AM