I am trying not to think about the long-term effect on the nation of our new President's proposed tax cuts. Let me correct part of that last sentence. I meant to say; our new President's regents' proposed tax cuts. George doesn't have the horsepower to do the intellectual heavy lifting required to get these things done. That said, let me say this: the tax cut we need to be concerned about in the long, long term is the abolition of the inheritance tax, what Dubya's regents refer to as the Death Tax.
One of the reasons the good pilgrims braved the briny deep to come here was to have freedom of religion. They were persecuted, in part, because of the ruling system of a landed aristocracy in England, where those who had land monopolized the means of production and hence controlled most of the money. This naturally set in motion the golden rule: they who have the gold, make the rule. Now I realize that's not exactly the Biblical version, but it was the reality of 17th and 18th century England.
At any rate, land in England was gathered through strategic liaisons between a limited number of upper-class families and usually it was only transferred through inheritance to the oldest male child. This kept the wealth concentrated in a few increasingly inbred hands. A cursory trip through English history turns up an alarming number of idiots, criminals and ne'er-do-wells produced under this landed gentry system, as well as the shiftless younger sons rapaciously searching for ready sources of support. Of course there were the exceptions, but for the most part the aristocratic system was fraying in the 18th century and its long cherished right to inherited wealth was hampering the growing Empire.
What does that have to do with the inheritance tax in 21st century America? Think about the founding of the United States. The inspired signers of the Constitution envisioned a new country, a fresh experiment in real democracy. They were English, they knew how the mother country worked and they were determined not to make the same mistakes in the new world. They provided for duly elected representative bodies, the balance of powers and they made provisions for the defense of the budding nation in their document. They also gave the federal government the right to levy taxes as long as they were approved by elected representatives.
Inheritance taxes were first instituted during the Civil War period and again during the Spanish-American War. The progressive inheritance tax as we know it today was implemented in 1916. The tax was instituted during the Progressive Era to control the concentration of wealth in the hands of a few corporate monopolies, Standard Oil being one of those, and although it was broken up in 1911, its stranglehold on the energy resources of the country demanded reform. Congress saw danger in the unhindered advance of such huge fortunes.
The creation of an interconnected group of families controlling huge wealth does not benefit a great democracy. The concentration of power that comes with inherited financial superiority is not conducive to governing by and for the people. While there would indeed be those who inherit great fortunes who believe in noblesse oblige, a reading of history, ancient and recent, will show that avarice and self-interest would prevail over philanthropy and self-sacrifice.
The inheritance tax is needed in the 21st century for the same reasons it was needed at the beginning of the 20th. Only about two percent of all estates pay an inheritance tax. The fantastic wealth generated today, along with that accumulated by the monopolists and heroic self-made men and women of the past will not be simply taken by the government. The inheritance tax was never designed to confiscate all that a person had gathered over their lifetime; rather, it was designed to prevent the establishment of a ruling class through the concentration of wealth in the hands of a few. Most, if not all, of those with estates large enough to be taxed have already given their heirs a giant head start on the rest of America through a superior education, positive role models and immersion in an environment that virtually ensures a successful life. To those notable advantages can be added an enormous amount of money after the tax has been assessed. Granting them an additional windfall of hundreds of millions of dollars is not justified. It is a slap in the face to our founders and to those citizens that work hard to provide their families with a little bit higher standard of living than their parents enjoyed.
