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Should the living envy the dead?
Dimitri Vassilaros is a Tribune-Review editorial page editor. He can be reached at dvassilaros@tribweb.com or 412-380-5637. He also blogs at KDKA
Opponents of the estate tax (better known as the death tax) call it immoral because the federal government can take almost half of a person's worth above $1.5 million when he dies. Grave-robbers should be so productive.
The House passed the Death Tax Repeal Permanency Act last week. If the U.S. Senate does a double ditto, President George W. Bush will rubber-stamp it into law, thereby killing the tax by 2010. May it rest in peace.
But since it is morally wrong for the government to take money from someone when he dies, is it not just as immoral to take it while he lives?
"That is a fantastic question," said Daniel Clifton, chief economist for Americans for Tax Reform. ATR is a Washington, D.C., think tank that hopes to, well ... reform taxation. "There is no difference from a moral perspective. Should the government take money in the first place?"
He answered his rhetorical question by suggesting there are degrees of tax immorality.
"Losing half of your income while you are living (via other taxes) and then half of that again at death, with just 90 days to pay the death tax, makes it worse." However, the death tax does not always lead to double taxation. Capital gains on assets such as houses, stocks and bonds are not taxed until they are sold.
Is it much different for the living?
The ATR says that July 7 was the Cost of Government Day last year. That is the date counting from Jan. 1 at which the average American has earned enough in cumulative gross income to pay for his or her share of government spending (total federal, state, and local) plus the cost of regulation.
And the living are taxed from dollar one instead of on income over $1.5 million.
Speaking of an immoral rate of confiscation.
The living also are robbed by double taxation.
Investment income, savings and Social Security proceeds can be double taxed, Clifton said. Even your home.
You pay annual taxes on your real estate, and then when sold, your real estate is taxed again (the realty transfer tax). He offered many more examples of double taxation on the living.
The fairness argument is not the best one to push for elimination of the death tax, said Chris Edwards, director of tax policy at the Cato Institute public policy think tank.
He argues that the death tax creates an industry of tax experts advising people how to legally avoid paying taxes.
People are advised to hand down their estates little by little to family and friends who usually are in lower tax brackets. The death tax also creates a "die broke ethic" among potential estate-tax victims.
And it discourages older business owners from continuing to invest in their companies if they know that, all too soon, half will be taken by the government, Edwards said.
Being forced to make choices to avoid excessive taxation -- choices one otherwise might not make -- should sound very familiar even to those who do not have estate-tax problems.
Defenders of the death tax hope to divide and conquer when they argue that fewer than 2 percent of all Americans in 2003 were affected by it.
But in an ideal world, none of the dead would be penalized by immoral taxation.
Double dittos for the living.
