NYT: Myth, Reality and the Estate Tax (7 Letters)

The New York Times

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June 12, 2006

Myth, Reality and the Estate Tax (7 Letters)

To the Editor:

Re “G.O.P. Fails in Attempt to Repeal Estate Tax” (Business Day, June 9):

The Senate is to be congratulated for seeing through the ideological smokescreen of eliminating the estate tax. Behind the smokescreen is another in a parade of measures to shift the tax burden from the haves to the have-nots.

Senators saw, correctly, that the rhetoric calling the estate tax unfair was pure nonsense, appealing to the rich and to the weak-minded.

All income is taxed many times as it streams through the economy and in and out of families.

Supporters of estate tax repeal tried to take one snapshot of this income stream, a tax on income; and then another snapshot, a tax on this income stream as it returns as an estate to the economy. Then with “family values” and “fairness” bannered above them, they tried to push through another giveaway of our country’s tax base.

The Senate saw through the mythmakers’ stories. Democrats, and especially Republicans who saw the story as too outrageous to stand by their party, stood tall.

Robert Hogner
Miami, June 9, 2006
The writer is a business professor at Florida International University.

•To the Editor:

For all the discussion about the permanent repeal of the estate tax, there’s a wrinkle I haven’t seen discussed much.

There are a multitude of accounting and estate-planning maneuvers available to shield those with wealthy estates from this very tax.

Therefore, to what extent does the tax really affect those it applies to, and how accurate are the claims that the tax destroys family wealth?

In my discussions and reporting on the subject as a business journalist, I’ve learned that only those who fail to plan properly for the tax and shift their wealth into things like trusts to avoid it truly end up facing steep consequences.

Given that, it’s unclear to me how a permanent repeal does much more than toss a bone to the very wealthy, who’ve already benefited the most from recent tax policy changes.

Lance Helgeson
Chicago, June 9, 2006

•To the Editor:

Only the richest 1 percent of the population now pay the estate tax. What kind of hold must they have on those senators who voted to repeal it?

The percentage of the population that is poor and near-poor is increasing. The greatest threat to any country, as history has shown, is an ever-increasing gap between the very rich and the rest of the population.

The most patriotic thing a senator or representative can do is to reduce inequality in this country. How could so many of them have voted to increase it?

Vicki Meyer
Sarasota, Fla., June 9, 2006

•To the Editor:

As a financial adviser, I spend much of my time helping clients decide how to handle their estate tax liability.

I draw three boxes on a white board: family, charity, government. I then ask what percentage they want to give to each when they die.

Nearly everybody focuses on family and charity. In conjunction with their other advisers, I then create an estate plan that reduces or eliminates the government’s share and redirects it to family or charity.

It’s not that hard to structure an estate to avoid the tax. That’s what the thousands of accountants, lawyers and financial planners do.

From my perspective, the estate tax is purely optional. So repeal is unnecessary except for the uninformed, the unfocused or those people who are unwilling to pay their financial planning team a little more to make the tax go away or be reduced.

People pay their professionals to avoid lots of income tax legally, and they do it every year. Why is it so hard for them to pay a little every few years to review the estate plan and avoid much or all of the estate tax?

Using this logic, we should push for income tax repeal as well. But that’s another story.

Marc J. Lewyn
Atlanta, June 9, 2006

•To the Editor:

An examination of the financing behind the anti-estate tax movement provides one of the best reasons for keeping this tax.

The bulk of the money and influence behind the movement to end this tax comes from a group of people who are members of America’s wealthiest families.

They have parlayed their wealth into significant political power, and have gotten an issue before Congress that is of benefit to a very tiny portion of our population.

This translation of wealth into political power, coupled with the unhindered intergenerational transfer of wealth, could place the vast majority of Americans into a position of fealty to a small group of wealthy aristocrats.

Daniel Maskit
Marina del Rey, Calif.
June 9, 2006

•To the Editor:

Paul Krugman writes (“The DeLay Principle,” column, June 9) of “a peculiar obligation to men of great wealth” that politicians today owe to their financial benefactors such that they would cut their taxes in time of war.

The column doesn’t note that many members of the administration and Congress would themselves directly benefit from repeal of the estate tax.

The lack of effective campaign finance reform is at the root of the dysfunction of our political system today. It has stolen the legislative process from the electorate and placed it firmly under the control of the extremely wealthy few.

Until the average person in this country begins to realize that he has little in common with these oligarchs, and to demand that political control be put back into the hands of the average citizen, we are lost, a democracy in name only.

Harry Lavo
Holyoke, Mass., June 9, 2006

•To the Editor:

Paul Krugman admires the fiscal principles of those “Americans from an earlier era” who instituted the modern estate tax.

Although my admiration is less, I’m willing to keep the estate tax if we return to the original personal-income tax policies of those “progressive” leaders in 1913: a tax-rate structure whose lowest rate was 1 percent and whose maximum rate of 7 percent kicked in only when annual incomes reached $7.7 million (in 2006 dollars).

Donald J. Boudreaux
Fairfax, Va., June 9, 2006
The writer is chairman of the economics department at George Mason University.



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