Opinion: Letter

Clegg no economist, just misguided

In response to �Robin Hood only lives in fairy tales, liberals� fantasies,� Feb. 7:

While I�m certain that freshman economics major Sam Clegg is currently flooded with requests to speak at the next meeting of the United Nations Committee on Economic and Social Affairs, I feel compelled to issue the following statements regarding the �death tax� in Wisconsin in the hopes that at least the university community will lend an ear.

Daniel Miller contends the estate tax actually runs small, self-made farms and businesses into the ground, is economically inefficient, deprives the neediest populations of the money it would otherwise be receiving from charity and ultimately redistributes the hard-earned wealth of honest Wisconsinites to �desperate masses� of the shiftless and the undeserving. And, says Mr. Clegg, because of the high-minded, unimpeachable rhetoric of progressive groups like One Wisconsin Now, the Legislature will resort to scapegoating the ultra-rich to close the budget shortfall.

So brace yourselves, readers, for some liberal propaganda.

To give you some national figures, according to the Federal Reserve, only 4 percent of family businesses have a net worth of more than $2 million, leaving those 96 percent of family businesses in the United States who are worth less than $2 million exempt.

Furthermore, the USDA reports that the average farm household net worth ranged from $576,000 for small farms to $1.5 million for very large family farms, which is well within the exemption range. The little guys are still protected.

Mr. Miller insists that �substantial expenditures� and an �undesired allocation of resources� are required for profitable rates of compliance, but fails to describe how. And keeping the estate tax is actually a great incentive for the super-wealthy to donate to charities if they wish to avoid the tax, because charity is tax-exempt.

The estate tax only taxes those born into wealth � not the ones who earned it. And, under the federal law, the inheritors still get to keep at least their first $1 million for free � tax-exempt. In fact, that figure is closer to $2 million now since changes to the law in 2002.

Ultimately, the Wisconsin Department of Revenue reports that for the next biennium, estate tax collections are estimated to be $244.9 million. True, it will not plug the $300 million hole. But it will certainly come close.

It�s true that a proposal more in line with conventional American wisdom might also close the budget gap. But if a progressive, liberal economic policy has any underpinning at all, it is that everybody should at least have a set of minimums of access to the system, beyond which it is their responsibility to �make it.� Adam Smithians, rejoice.

It is you, Mr. Clegg, who has framed this debate as if supporters of the death tax compare tax breaks for the rich to murder. It is you who appealed to class warfare to vindicate your opinion. And it is you who perpetuates the political culture war that poisons our university community.

In the words of Archbishop H�lder Camara: �When I give food to the poor, they call me a saint. When I ask why the poor have no food, they call me a Communist.�

Mitra Jalali
UW Senior, Political science
One Wisconsin Now
[email protected]

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6 older comments

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Mitra, you almost made me feel better about having the same money taxed twice.

Americans, eliminate double taxation everywhere!

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“you almost made me feel better about having the same money taxed twice”

Taxed twice??? You referring to the never-taxed capital gains that make up the bulk of all estates? The stock and other assets that heirs receive get a “step-up” in basis that eliminates capital gains taxes.

The money I use to pay my sales and real estate taxes with has already been income taxed.

The money I get as stock dividends has already been corporate income taxed.

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PS. Imagine trying to get the original purchase price for all grandpappy’s stock to calculate capital gains when you sell. Of course maybe it’s never sold and you never pay any taxes and that’s how the rich stay rich.

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Way to answer his argument as to how it reduces the capital investment in the economy and thus fails to raise net tax revenue because of tradeoff with the income tax.

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Mitra, You state that the estate tax only taxes those “born into wealth” and not those that earn it.

Please show me, what section in the IRS code is there a distinction made between “born into wealth” as opposed to earned income?

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Only in America do you have people defending the rights of the rich to pass on their fortunes tax-free.

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