Entry 3:

Pete du Pont is a former governor of Delaware and policy chairman of the Dallas-based National Center for Policy Analysis. He writes a columneach Wednesday  for the Wall Street Journal's Opinionjournal.com. William H. Gates Sr. is a co-chairman of the Bill and Melinda Gates Foundation.

Dear Mr. du Pont,

I allow that my posing possible losses (not dire consequences) to major federal programs from the repeal of the estate tax may have included a bit of hyperbole. The point is this: There will be some working out of what federal programs and what reduction in our national debt should be supported, and there will be a determination of what tax revenues are necessary to pay for these. Inevitably a tax program will be required to produce the necessary revenue. My focus is the makeup of that tax program. The tens of billions of revenue produced by the estate tax will have to come from somewhere else if the tax is repealed. This will make some element of other taxes larger by the amount necessary to replace estate tax revenues. It is a simple fact that those replacement dollars are going to come from folks a lot less able to pay them than the heirs of our very wealthiest citizens. You speak of fairness—is this fair?

I am not so willing to accept your charging me with insulting those who give to charity with some tax saving motive. I accept the fact that charitable bequests in wills occur where, in the first instance, the person has some predilection to support charity. But decisions of this kind are most often made for a combination of reasons. Certainly acts of goodness are encouraged by, and many would not occur without, the saving that the presence of the estate tax allows.

Here is the typical case: Our hypothetical citizen, Mrs. Smith, has a very large estate, three children, and some urge to make a gift to her university. She is concerned that a major gift to that university will, in effect, be paid by the children. She is hesitant, but then she recognizes that each dollar she takes from the children's inheritance to benefit the university will only amount to 45 cents because of the 55 cents that they would have paid as estate tax. I suggest Mrs. Smith is not a person of poor character if she then concludes, aided by the recognition that the imposition on her children is relatively small, she will make the gift to the university or that she will make a larger gift than what she otherwise might have considered. I do not see this line of thinking, which is routine, as greedy.

A proposal has been made to permit non-itemizers to itemize and deduct charitable gifts in computing income taxes. Is this not predicated on the belief that the availability of a tax deduction is an incentive to give?

I do not know how many people with estates of $20 million or more filed returns last year. You say just 374 actually paid a tax. You seem to say there were thousands and thousands of people with more than $20 million who died last year and only 374 paid the tax—this is, to borrow your phrase, simply not so.

I am not aware of last year's numbers but just two years before, in 1998, there were 374 estates above $20 million that paid $4.4 billion—21.7 percent of total estate taxes. That is 374 out of the some 2,300,000 people who died that year. And just who will be providing these dollars if the estate tax goes away?

"Tens of millions of Americans employ accountants and attorneys" to avoid paying this tax. This assertion is pure hyperbole.

I agree with you and all those who see the need to raise exemptions. Your $850,000 example or possibly even your $1.5 million example is folks who should not, in my view, pay an estate tax.

What I think is fair is that we get as close as we can to a society in which every child starts the race from the same starting line. A society where a good life is one you earn, and not one that you get by winning the chromosome roulette game, is a society we should strive to create. I realize we will never fully achieve that condition. Nevertheless, an aggressive estate tax in respect to the really large estates, one that diminishes the accumulation of vast family fortunes, is a good thing.

This thought does not originate from some political maneuver by FDR. Here is Teddy Roosevelt in 1907 promoting the estate tax:

Our aim is to realize what Lincoln pointed out: the fact that there are some respects in which men are obviously not equal; but also, to insist that there should be an equality of self respect and of mutual respect, an equality before the law, and at least an approximate equality in the conditions under which each man obtains the chance to show the stuff that is in him when compared to his fellows.

Or take Herbert Hoover who said that a moderate inheritance of under $100,000 is a reasonable provision for dependents but: "Several millions of dollars is economic power and too often falls into the hands of persons of little intention to use that power for public benefit either in expansion of enterprise and employment or for public services."

What a fine world it would be if we could repeal all taxes—but this is not possible. If we are going to lower taxes let's be thoughtful about where we do it. Our wealthiest citizens see the movement for tax reduction as an opportunity to get rid of the estate tax. This is a good tax for our country and, yes, a fair tax for our people. If it needs some fixing then let's get at the fixing and forget this talk of repealing it.