Monday, January 28, 2013

Endgame Chicanery: On Death, Taxes and the Moochers at the Top

In an earlier post, we talked about a remarkably vicious and destructive species of wetware hackery called the "fuckweasel," which is essentially a viral form of organized irrationality. Some of the most dangerously effective GOP shenaniganeering in this area to date deals with the process permitting wealth to migrate, largely intact and undiminished, through succeeding generations on a schedule of extremely expensive funerals. Wildly enthusiastic campaigns of disinformation have been mobilized over the years to promote the hare-brained conceit that inherited assets should be accorded some super-sacred pride-of-place in the hurly-burly hierarchy of capital. The arguments put forward for this privileged status range from clever sophistry to shameless lunacy, but they all seem to share in common a certain rank obliviousness to even the most elementary attributes of financial inheritance.

Here's what happens: somebody you either know or have received hand-me-down genes from has clocked out while sitting atop a massive pile of financial resources, and you've made the short-list for its redistribution. It's like winning the lottery, only slightly less respectable. If you've inherited a boatload of money, you've simply won a lottery in which somebody else entered your name—either by default, in the form of a birth certificate, or for various other reasons of relationship and/or affinity. The question of whether or not these winnings should be heavily taxed is a remarkably trivial one. Of all the possible paths by which one might acquire financial means, this one lies the furthest from any activity that could even remotely be thought of as "earning it." You never had any "skin in that game" (to repurpose a particularly nasty little fuckweasel from our contemptuous, tax-dodging gravy-trainrobbers); you only came by that windfall because you had a guy on the inside — one who died getting it to you. Some serious economic thinkers have suggested that such inheritance not be permitted at all. But if we are going to let you harvest the fruits of somebody else's labor at no expense or inconvenience to yourself, we are absolutely obliged, under any sensible conception of fairness to those who legitimately work for a living, to levy taxes on that form of income at higher rates than we do on any other. While such ethically sound notions of economic justice have been dying a slow and excruciating death for some time, a few weak and feeble vestiges do still cling to life in some quarters. And so, at least for absurdly exorbitant sums of inherited money, our government continues to insist on some pittance of tax responsibility on the part of these newly endowed beneficiaries. It's called the "estate tax." While the thresholds are far too high and the rates too low, we do at least still pay some meager respect to the irrefutable logic of this duty.

But the beneficiaries of our recently-reaped financial royalty and their courtiers say "Not so fast!" And they've got something we don't have: a high-performance, lab-cultured, lizard-spec fuckweasel — and it's so elegant its almost guaranteed to work. It operates by way of a simple and thoroughly gratuitous terminology swap. They merely replace the words "estate tax" with "Death Tax!" — and watch the gooseflesh bloom...

And that really is both the genius and the imbecility of it. Never mind that common sense might suggest that we actually raise the rate significantly and call it the "Murder Tax," given the number of suspicious deaths related to this type of wealth transfer that have to be investigated every year — at considerable public expense — due to obvious motive. It's a remarkably tasteless and unfunny joke to suggest that such unearned, posthumously awarded largess ought not be taxed out of some vague, implicit sense of sympathy for the deceased or respect for their wishes. We've all got wishes, but the departed can own nothing more than their imprint on our memories, and their heirs have just been paid dearly for the luck of some form of association with them — the original "money for nothing." Clearly, the living must not be permitted to reap the wages of the dead without so much as minimal public responsibility attached. This is an insult to even the flimsiest notion of merit, and a transparent attack on the foundational value of actual human enterprise. It offers free lunch—and in many cases free room, board, and lavish entertainment in perpetuity—to well-connected "takers" for generations to come. The inimitable Warren Buffet put it this way: "The idea that you get a lifetime of privately funded food stamps based on coming out of the right womb strikes at my idea of fairness." Indeed.

Exempting the inheritance of private wealth from public responsibility also consolidates already overwhelming financial advantage in an ever smaller number of hands, and increasingly enables them to yank the "socioeconomic mobility" ladder up after themselves and their posterity once they've used it to shinny up to that opulent clubhouse on the top floor. Well guess what — that ladder was never theirs to begin with; it has always belonged to us all. Once they've been accorded every other advantage of privilege imaginable, why they gotta steal our ladder? Perhaps they have a hard time imagining a world in which they're not exclusively entitled to pretty much anything that strikes their fancy, even when laying false claim to it destabilizes the very system that allowed the wealth to accrue to in the first place — and even when they know they'll never need to use it themselves.

Then there's the old canard about the renamed tax being an underhanded attempt at "double taxation" — the notion being that these superhumanly industrious and enterprising tycoons had already rendered unto Caesar quite enough on the loot they'd amassed by the time they punched out, thank you very much, and laying on any additional responsibility following the transfer would just be extracting a punitive additional chunk from wealth that has already been properly trimmed. But even if it were true that all of the wealth that qualified for the estate tax had already been subject to a round of taxation, the estate tax would still be perfectly unexceptionable given that this wealth is now somebody else's completely unearned income. If I buy a car, I use income that I pay taxes on to acquire the right to call it my property. If I pay a mechanic to fix that car, I likewise use taxed income to do so. Yet the car dealer and the wrench-man also pay taxes on the income they take in from that sale or service. Do we call that "double taxing?" Of course not; that's simply the dues we pay for the privilege of citizenship, life and commerce in the society in which we live. Our government quite rightly taxes income acquired, say, through the sale of physical commodities, that are purchased using income that is also taxed; ditto for labor or service. We'd certainly better tax income that the recipient has simply mooched (or "won," if that still feels more palatable) through the demise of their well-appointed relatives or benefactors. So there you have it: even if we suppose this claim (that tax on the wealth was already paid by the person or entity previously holding it) to be generally true, it would still be a demonstrably fatuous and irrelevant objection to the estate tax.

The kicker? It's a rubbish claim to begin with. Most of the estates that are big enough to be subject to this tax consist, to a surprisingly large degree, of "unrealized" capital gains that have never been taxed at all! In fact, one of the more compelling reasons for the creation of the estate tax, back in 1916, was to make sure this stealth wealth didn't get unfairly shoveled through the cracks untaxed, and thence back into the pockets of parties propitiously connected to the obscenely prosperous departed. These unrealized, untaxed capital gains amount to more than a third of the assets held by estates of sufficient size to qualify for the tax ($5.12 million per person at the current exemption level, up from $3.5 million in 2009), and a full 56 percent for estates worth more than $10 million. Moreover, if the Urban-Brookings Tax Policy Center is to be believed on this point (and it most assuredly is), the exemption bar is so high that 99.87 percent of the estates in this country comprise too little wealth to owe even a dime of the estate tax in question. Make no mistake, repealing the laughably mislabeled "Death Tax!" is really about squirming out of any tax responsibility at all for a vast share of the wealth changing hands here, not about being spared any tax treatment that could be sanely viewed as unfair or punitive.

But ethically, the issue is even clearer. It is precisely those parties who have prospered most in our economy who owe the greatest debt to the necessary economic and political system — as well as the public infrastructure — that both enables and safeguards that success. Teddy Roosevelt summarized this point succinctly in 1906, pointing out that "the man of great wealth owes a particular obligation to the State because he derives special advantages from the mere existence of government." This observation is much truer today than it ever was in TR's time, given the far greater role of government in creating, maintaining and protecting the vast and complex landscape in which commerce and corporate activity take place in our current age. But don't get them wrong, these takers are perfectly content to soak the government for every conceivable public advantage that makes their wealth possible; they just reserve the right to pitch a first-rate hissy-fit if that government looks askance at the prospect of being stiffed by their broods and bros at the end. Now that's a pharm-grade dose of chutzpah right there. But , miraculously, if you just slap a tag like "Death Tax!" on the enormous bill justly owed to their country upon their passing, one could almost be forgiven for imagining that the lucky winners are the ones getting shafted. Such is the power of shrewdly-crafted fuckweasels: sometimes they can even convince people that you're getting hurt when you're getting over. So the next time the term "Death Tax!" turns up in polite conversation, do us all a favor and explain — calmly and politely — to the agent propagating this mindless malware both that they're full of shit, and why. Do it for your country.

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