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Estate Tax

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from: Bob Packwood
to: James K. Glassman

Posted Tuesday, July 8, 1997, at 3:30 AM ET

Good God Jim. I never thought I'd hear you say the government needs "the money." All governments think they need the money. Governments are ravenous creatures that are never financially sated. In 1950 all of the governments in the United States (federal, state, and local) taxed 21 percent of gross domestic product and spent 23 percent of it. We collectively had a deficit. Forty-five years later the same governments taxed 32 percent of the gross domestic product and spent 34 percent. We still have a deficit but the governments want to tax and spend more. They'll never have enough.
And oh Jim--how can you say "it's better to collect taxes on wealth than on income"? Wealth is nothing but earned and then saved income. For a generation and a half we've been saying this country doesn't save enough. Now you want to tax the very heart of savings--wealth. That's absolutely the wrong way to go.
Now, all of the above aside, for purposes of argument let's assume the government needs "the money." Given that assumption, we would have been better off to dump the $500 child tax credit, which produces no jobs, and instead repeal the estate tax. The Joint Tax Committee (the professionals who advise Congress) estimates that the cost of enacting the $500 child tax credit versus eliminating the estate tax is about the same. But eliminating the estate tax will create jobs. See the Heritage Foundation study authored by Bill Beach on this subject. It's the best of all the studies that exist.
As to the fairness argument--what the liberals call "income distribution"--it says anything that taxes the rich is good; anything that taxes the poor is bad. The problem with attempting to determine who the estate tax actually taxes, however, is that it does not count all of those wealthy people who, through estate planning or just pure spending, chose to get rid of their money while alive rather than waiting for the government to take half of it when they die. They are not figured in the statistics.
Now then Jim--as to our "ultimate goal"--a flat tax or equivalent. I am with you. It will be a battle to the finish. You and I will be like Shane and his farming friend (read: flat tax advocates) fighting in the bar with ax handles against the sod-busting, fence-hating cattle ranchers (read: charitable, real estate, union, etc., interests). Recall, however, that Shane won.


dialogues
entries
12345
from: Bob Packwood
to: James K. Glassman

Posted Tuesday, July 8, 1997, at 3:30 AM ET
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Bob Packwood was a U.S. senator from Oregon from 1969 to 1995. He is president of his own consulting firm, Sunrise Research Inc. (located in Washington, D.C.), where he lobbies on the estate-tax issue. James Glassman writes a weekly investment column for the Washington Post. He is moderator of CNN's Capital Gang Sunday.
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