To borrow from the Monty Python “dead parrot” skit: When Sam Walton died in 1992, he became a previous person, a past human, a former someone. You couldn't take him to dinner. You couldn't invite him to your son's graduation. And you couldn't tax him. He was flat-out dead.
Uncle Sam didn't tax a dead man when it taxed the income Sam Walton's heirs received. Those living individuals simply had to pay a tax on their unearned income, just as coal miners, secretaries, engineers and teachers have to pay tax on the earned income they worked hard for.
For those who still feel sorry for the top one-half of 1 percent of Americans who have to pay estate taxes, consider this: Five major heirs to the Walton fortune are now worth more than $16 billion each — and that's after having paid their estate taxes for what they inherited in 1992. Or, consider the 11 heirs to the Pritzker fortune, each of whom is worth from $2.3 to $3 billion, again, after paying inheritance taxes.
If government further eliminates taxes on dividends and capital gains — as some politicians are now fighting for — the continuation of these and many other aristocratic family dynasties will be extended as far into the future as we can see. Their distant descendants will never have to work a day in their lives, except, of course, for therapeutic reasons.
As unfair as this is to those taxpayers who actually work for their incomes and provide society with products and services, the worst part of eliminating estate taxes comes later, as:
• These heirs to millions, or even billions, of dollars actually make the problem of job creation in the U.S. worse. To maximize returns, they follow the advice of today's Wall Street gurus and invest their money in our low-wage competitor nations like China, India and Mexico.
• They drive up the costs of the world's dwindling resources. They buy multiple mansions in different countries and fly their private jets all over the world to vacation in the world's best locations. They have virtually no incentives to limit their consumption of the world's vanishing resources: seafood, oil, commodities of all kinds, and even pure water and fresh air.
• They add to their own descendants' competitive advantages over those of working-class Americans. Their descendants have free (paid for by mom and pop) access to the very best educations and financing of new businesses. On the other hand, they support politicians who will oppose the funding of government programs that benefit those who can't afford a good college education or who don't have access to financial backing.
Today's heated debate about eliminating “death taxes” provides an important clue as to a politician's true values and loyalties. Those who cynically distort the nature of the estate tax are hiding their commitment to America's new aristocracy. As a general rule, they are the same ones who oppose government programs that benefit most working Americans — from extending unemployment benefits to preserving Social Security and Medicare — unless cuts can be made from other programs that also benefit the middle class.
On the other hand, if a government program benefits corporations or the wealthy and powerful — from financing the military-industrial complex to tax cuts for the wealthy — these same politicians are perfectly willing to add to a growing deficit.
Incidentally, “because the wealthy can best afford it” is a terrible justification for progressive taxes. They should pay more taxes because, as Warren Buffett pointed out, they have benefited most from our government's policies and programs: everything from our interstate highway system and our regulated securities markets to our government's purchases of products and services.
If we really want to salvage our economy, we need to get more money into the hands of consumers who will spend it in this country for things they actually need. That means we need to elect politicians who support the kinds of progressive tax policies we had throughout most of the past century — when the U.S. had a vibrant middle class, as well as a prosperous wealthy class — and became the great country that it is.