Director Randall Wallace’s Secretariat is a well-acted, exciting, and beautifully shot 1970s period piece about the Babe Ruth of thoroughbreds. It also dramatizes the immorality of the death tax.
During a contentious scene in a generally upbeat movie, Penny Chenery Tweedy (the outstanding Diane Lane), her husband Jack (Dylan Walsh), and her brother Hollis (Dylan Baker) convene soon after the family patriarch loses his lengthy fight against Alzheimer’s. Even before they can organize his funeral, the three loved ones replace grief with acrimony as they contemplate an impending $6 million federal death-tax liability (equal to $29.5 million today). They must dry their tears to debate angrily whether to liquidate the family’s 2,798-acre horse farm, sell Secretariat, or take other steps to satisfy the tax authorities.
“We don’t want to end up foolish or broke,” warns Hollis Chenery. The death tax is at 0 percent today. But if the threatened Obama-Pelosi-Reid tax hikes kick in on January 1, that levy will rocket to 55 percent on estates above a $1 million threshold. This would trigger far more Chenery-style family squabbles.
Talk abounds regarding a compromise of a 35 percent rate and a $3.5 million threshold. But Republicans in the midterm winner’s circle should ask humane Democrats to join them in resisting this deal and keeping the death tax as dead as its victims.
Just because someone has expired, why should Uncle Sam collect even one thin dime of the departed’s money?
Some argue that America needs the death tax in order to prevent the serious cash of wealthy dead people from converting their heirs into aristocratic layabouts. If that’s the goal, why not simply confiscate everything above $1 million? That’s a horrible idea. But if people like Bill Gates Sr. (who already got his, thank you) really want to avoid “the Paris Hilton problem,” they should have the courage of their convictions and demand a 100 percent death tax. After all, if they want Paris Hilton — at long last — to join the productive sector, do they think the prospect of only 45 percent of the Hilton fortune would really make her update her résumé?
Americans spend about as much hiding from the death tax as it generates ($28.8 billion in 2008, according to the latest revenue data). “The compliance, or more appropriately, the avoidance costs of the transfer tax system may well approach the revenue yield,” observed Alicia Munnell, a member of President Clinton’s Council of Economic Advisers. The Congressional Joint Economic Committee estimated in 2006 that “for every dollar of tax revenue raised by the estate tax, another dollar is wasted simply to comply with or avoid the tax.”
Economists call this a “dead-weight loss.” This money should be devoted to productive investments rather than pre-paid, posthumous tax-avoidance schemes.
Death-tax opponents have no need to drag public opinion toward repeal. The American people already want to drive a stake into the death tax’s heart. An April 2009 Tax Foundation/Harris Interactive survey found that among 2,002 adults polled, 67 percent want the death tax interred. Respondents also rated it the least-fair federal levy, with an unfairness ranking of 3.9 on a scale of 1 to 5, higher than the gas tax (3.6) and even federal income and corporate taxes (3.4).
Americans understand the death tax’s intolerable cruelty. They believe that people of all income levels should be free to bury their loved ones in peace without enduring family quarrels and worse, refereed by CPAs and financial advisers. Bereavement is excruciating enough without having to inspect spreadsheets and tax schedules. Sweden abolished its death tax in 2005. As publisher Steve Forbes puts it, Stockholm’s policy is “No taxation without respiration.” As anyone with some horse sense would ask: If life without a death tax is good enough for the cradle of Scandinavian socialism, what is America’s excuse for keeping it alive?
— Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution and Peace at Stanford University.