It is so good to see Congresswoman Darlene Hooley getting it about the estate tax. Already $630,000,000 has been taken from our kids’ pockets and put into the pockets of Phil Knight’s heirs, thanks to recent estate tax “reforms.” That’s enough reform for me.

It’s amazing that congress has devoted hours and hours and hours to this burning issue. Ellen Goodman asked earlier this week in her column, “Why exactly should the money handed down to super-rich heirs be tax-free while the money earned by your children be taxable income?” Yes why? Funny, we don’t hear concerns for those who win the Oregon lottery having to pay taxes on everything over $600 that they win. But those who win the birth lottery get $4 million tax free, and Congress still frets. Sure hope Senator Ron Wyden understands that this is enough already when it comes up for a vote in the Senate next week.

Jody Wiser:

How does Phil Knight leaving his fortune to his heirs equate to "taken from our kids' pockets"?

"Our kids" didn't build a company from the ground up. Phil Knight did. In the process, Phil Knight created a lifestyle company focussed on active wear and sports marketing that made Nike unique in America. Along the way, Nike created thousands of jobs, minted hundreds of new millionaires, and paid hundreds of millions of dollars to the State of Oregon by virtue of their corporate and employee taxes. Not to mention his philanthropy at the UofO and across the country, or his recently announced expansion of Laica Studios.

But you don't think Phil has done enough for Oregon? You want his estate to write another check "for the children" when he croaks? Socialists are greedy!

Our kids" didn't build a company from the ground up. Phil Knight did.

Actually, the people who built NIKE into the profit-grinding machhine it is are the third-world kids who work in the company's sweatshops for a handful of dollars per week.

Those "kids" you refer to were a Public Relations fiction created by people who hate globalization. And IF it were true, I would rather see a bunch of hard working sweatshop laborers lay claim to Phil's estate than the U.S. Government.

Anybody who worked in an Asian sweat shop (at least) improved their standard of living over those who found no work. Which is a less polite way of saying the most impoverished nations are pleased to attract the jobs they are able to attract.

Less developed nations become more developed, as has been the case in )(most recently) China, or (further back) Ireland, Brazil, and South Korea.

Phil Knight didn't do it alone, but it would not have been possible without him. His personal wealth should be his to do with as he pleases.

Phil Knight would have had a hard time building his fortune had he been born in Ethopia or Iraq. He didn't do it by himself, and while his firm provided jobs, our country provided employees, roads, a legal system, financial system, dependable utilities, a sound economy, etc.... And most of his wealth has never ever been taxed, it is stock in Nike which has not been sold and therefore has not been taxed. He sold $1 billion of it this year, and that part will pay the capital gains tax, but not payroll taxes or full income taxes. So his responsibility to share in paying for our country isn't actually yet satisfied.

The dual purpose of the estate tax has long been 1) provide the money to support our country and 2) to deter the growth of aristocracy. It started as a tax to support war, yet now we are at war and we are removing the tax?

Since 1916 we have had the estate tax. What is so different now? Why did our country once believe that it was a fair tax, but now we don't?

Two points, Jodi:

Phil Knight (and Nike's well compensated employees) have already paid hundreds of millions of dollars in income, capital gains, and property taxes. Any Nike stock owned by Phil Knight (or his employees) that hasn't been taxed will likely be subject to capital gains tax upon their sale (or income tax upon their withdrawal from a tax deferred account). Any stock shares given to heirs would defer taxation until sold by the recipient (with a "stepped-up" cost basis, meaning the capital gains tax are limited to the post inheritance increase in value). Surely you're not suggesting that all stock profits should be subject to payroll (FICA and Medicare) taxes as well? Stock aren't going to receive SSI or health care, so why should they pay into these entitlement programs? Similarly, how do you determine that any person has paid sufficient taxes to cover their "responsibility to share in paying for our country..." Your perspective sounds very arbitrary and anti-capitalist to me. Maybe I should get to decide how much property tax you pay in order to ensure you have paid your fair share?

The former U.S.S.R., Eastern Europe, and China all abandoned the notion of socialism as a viable economic model. Cuba, North Korea, Venezuela, Bolivia and the left-wing of the Democratic Party are the only Socialists left on Earth. The estate tax is a holdover from those halcyon days of 1916 when conventional wisdom held that the rich should be punished for their excessive wealth and their selfish consumption. We have subsequently learned (for example) that if you tax luxury goods at a higher rate, sales of luxury goods decline, and rising unemployment at luxury goods manufacturers are the inevitable result.

As demonstrated by the Laffer Curve, there is a theoretical optimum on the tax rate/tax collection chart: if taxes are too high, people find ways to avoid them or reduce their income. If taxes are viewed as fair and reasonable, then tax avoidance declines, and the taxpayer is more likely to increase their income (becuase they expect to keep a larger portion of it).

Jennifer, I suppose you know better than to conflate Soviet style socialism with democratic regulation of our economy. So why do you do it?

Taxing all estates, no matter their size, would be "democratic regulation". A punitive tax on a tiny minority of estates simply because they are much wealthier is anti-democratic and anti-capitalist. To make death the triggering event only adds insult to financial injury.

If you believe that we need to increase taxes on the wealthy, then why not implement a progressive capital gains tax structure, with a top marginal rate of 50%? Better yet, eliminate the cost basis step up on inherited assets, and there will be less incentive to pass highly appreciated assets on to heirs.

The death tax enjoys broad political support simply because it impacts so few voters. Plus, nearly everybody likes the idea of jacking up taxes on some rich SOB who probably never worked nearly as hard as the rest of us. Yeah right.

The rich are different than you and I: they have more money.

Jennifer, It may come as a shock to you, but the Laffer Curve (which was a foundation of Reaganomics) does not impress everyone.

There are those of us who believe in Rubinomics--the policies of former Treasury Secretary Rubin.

Who had lower debt and a more vibrant economy at the end of his 2 terms: Reagan or Clinton?

And what exactly is Arthur Laffer doing these days? As I understand it, nothing in his famous curve saw tax cuts AND increased military spending adding up to a balanced budget--maybe that is why deficits grew under Reagan (who did increase taxes at least once, as I recall).

I have extensive comments on my blog, but to respond to specific comments above:

Jennifer W: The Laffer Curve was terribly misunderstood and misapplied by Reagan. Even Laffer himself was dismayed to have his work claimed to mean something it didn't.

Jody: I think you're a bit off on the purpose of the estate tax (my blog entry has an extensive history of the tax and reasons for it). As for what has changed since 1916... well, we're no longer facing reduced tariff revenue because of WWI, for starters. ;-) Also, do you realize that as originally implemented (at least, "originally" for the fourth time in our history that we've had such a tax) the top rate was only 10% on estates valued over $5M? Adjusted for inflation, that would put our taxes at only 10% on estates valued over $91M. I'm sure that Phil Knight and every other wealthy person in America would be thrilled to go back to the "original" 1916 estate tax plan! It's true that later rates (in 1941) were as high as 77% on estates over $50M. That would be over $650M today. Setting aside the "fair share" arguments which are highly subjective, certainly the facts show that the rates are relatively much higher and exemptions relatively much lower than when the current estate tax was originally implemented.

Torridjoe: "When money changes hands, the government has a legitimate interest in levying a tax." Based on what, exactly? That's a pretty broad statement.

Also, TJ: "In the end, it's not about raising or lowering taxes, it's about taxing unearned income from estates consistent with other unearned income."

So I take it that you're thrilled with this bill, as it taxes estates based on the capital gains tax rate, and thus DOES tax estates consistent with other unearned income? ;-)

torridjoe- "When money changes hands, the government has a legitimate interest in levying a tax."

Says who? Is there a limit? Jealosy doesn't become you. Work harder, blog less.

Torrid Joe wrote:

The tax is not on Knight; it's on his HEIRS.

Wrong again, T.J.

The wealthy invest significant resources in estate planning attorneys, CPA's, financial advisors, and insurance brokers to deal with the estate tax. To suggest they don't worry about it because it's payable after the're dead indicates you have no experience with this topic.

The easiest way to avoid the estate tax is to give your money away to friends, family, and/or charities. The alternative (for couples) is to invest excess cash in a "second-to-die" life insurance policy that absorbs excess cash flow (that would normally inflate the estate even further) and returns it to the estate/heirs in the form of tax free life insurance proceeds that is used to pay the estate tax.

It's great for insurance brokers, but not so good for the broader economy, which would have benefitted from investments in more productive assets (or even consumption).

Jennifer W,

Wealthy people really don’t spend huge amounts on accountants and lawyers for estate tax planning, only a few thousand every decade, according to two who answered that question for Senator Wyden. That’s hardly onerous for families who need to worry about such things—those with significantly more than $4 million in assets. Further, that money is not wasted; it supports lawyers and their staffs, phone companies, building owners, custodians,etc.

Some wealthy families do invest in life insurance, as part of estate tax planning, especially when there is a business that they hope to transition to another generation. But life insurance is not a cost; it’s an investment -- one with a guaranteed return. I agree, the gains from that investment should be taxed like the returns on other investments.

But was is most surprising is your contention that insurance companies do nothing productive with the money invested in insurance policies? From my personal experience, I know that Prudential sells life insurance and also owns citrus orchards and makes mortgage loans to farmers. Their employees and the farmers who borrow from them find this productive investment.

Dale,

I’ll send along what I've learned of the history of the estate tax and who pays is since 1934. I’ve been unable to get good numbers for before that. But basically, its been paid by the wealthiest to 1-2% OR MORE of estates since 1934. Now only the top half a one percent is paying.

Jody: I have many affluent clients and friends who spend much more than a "few $1,000 per decade" in estate planning and tax reduction strategies. I believe those costs are considerably higher with complex estates than the average family business. Eight figure estates are generally much more complex than seven figure estates, and multiple business ventures with cross ownership makes the task (and insurance planning) more difficult.

Most whole life premiums are invested in U.S. Treasury bonds and similar low risk/steady return investments. I don't consider Treasuries a "productive" use of capital, at least in terms of job creation or any multiplier effect.

I don't consider whole life insurance to be an investment: any investment that requires you to die in order to collect it is a lousy investment. It's more like a return of premiums paid (with interest) on a tax free basis. What makes life insurance (especially a "second to die") policy so useful is that it "matures" just as the estate tax bill comes due. Did I mention that death benefits are not subject to the estate tax (or any tax), assuming the policy is appropriately titled and includes a beneficiary. Receiving more death benefit premiums paid (plus accrued interest) is the only way to view life insurance as an investment: but you have to die before your anticipated life expectancy to keep any of the "house" money.

The biggest argument against whole life are the ungodly premiums (90% of which is typically paid to the broker in the form of his/her commission on the first annual premium).

Of course, the broker's commission and the insurance companies profit/investments do go back into the economy. My argument is they would be more efficiently deployed by the person who paid the premium than the person who received the premium. Perhaps "efficiently deployed" should say "rightfully belongs to"...The only reason life insurance works is because of the ability to synchronize the "maturity" of the death benefit with the obligation to pay the estate tax, while the TAX FREE DEATH BENEFIT IS ANOTHER HUGE INCENTIVE.

Why aren't gold bullion profits TAX FREE upon settlement of an estate? Why not buy gold to insure against the depreciation of your estate's purchasing power? Because the insurance company has better lobbyists!

First, to Chuck's original points, I'd also like to congratulate Rep. Hooley for coming around on the Estate Tax and maintaining her new-found principles. Let's just hope she has a similar wake-up call and pulls her egregious ID Theft bill this week before it gets passed and hurts consumers in 18 states!

As to Rep. Baird, any answers anyone?

Jennifer's vociferous defense of Phil Knight notwithstanding, she makes a good point about the avoidance of Estate Tax by wealthy individuals. It's always important to mention that one of the great effects of this ultra-progressive taxation is that it has done more to encourage philanthropy than probably any other piece of legislation in US history.

Given Warren Buffett's announcements this weekend, on top of Bill Gates' recent stated intention to retire from Microsoft (for full-time philanthropic work), I believe these are pretty healthy rebuttals to the so-called "punitive" nature of the tax.

It's also worth noting that Buffett and Gates are full-scale supporters of leaving the Estate Tax as is!!

Stupid rich people who don't want to support the foundation they grew their money on. Government allows them to exist and create business. (without government business would be difficult). Give back damn it.

On topic, Baird is selling out to Big Timber. Cosponsorship of HR 4200 and now this - a turnaround in the way Baird has been. And they are both timber related.

Clark:

Stupid Rich People.

This thread has helped me to understand why income is such a reliable indicator of why Democrats will cross party lines to vote for Republicans. Priceless.

Kaza: Gates and Buffett's philanthropic work reveals much more about their character than the estate tax. That said, every dollar that is given to a charitable trust is a dollar not subject to the estate tax.

T.J. questioned: explain to me how they will force him to pay (if he's dead).

Answer: The executor of the estate is responsible for paying the taxes which are payable from the decedent's estate (not the inheritor). The IRS can and does accept tax payments from decedents all the time (including plain vanilla income tax filings): they don't need a living person, just money/assets left behind. If they aren't paid, they sue the estate first and the inheritor second. You don't have to admit you're wrong; but you're still wrong.

From Wikipedia.org:

The gift tax is a tax levied on wealth transfers during the transferor's life while the Estate Tax is levied on transfers made after the transferor's death. The GSTT is a tax in addition to Gift or Estate Tax and is levied (in rough terms) on transfers made during life or after death to individuals removed by more than one generation from the transferor, for example, from a grandmother to a grandson. Usually transfer tax liabilities are paid by the transferor or the transferor's estate.

Also from Wikipedia: ...any estate tax due is paid by the executor or other person responsible for administering the estate.

Here's a copy of the actual IRS Estate Tax Filing Form:

Notice that it says, "To be filed for decedents dying after December 31, 2004" without any reference to whoever inherited the estate.

I didn't favor a blanket estate tax. To the contrary, I said the current tax is grossly undemocratic and punitive. It rewards consumption and punishes savings.

If a family with a mere $5 million estate is able to live large for a decade or two, they could easily consume a couple million in expensive travel, restaurants, and leisure. As long as your taxable estate falls under the estate tax limit (which is rising), you'll be fine.

It's also worth noting that Warren Buffett (a proponent of the estate tax) said he believes the Bill and Melinda Gates Foundation will use his bequest far more efficiently than the Federal Government. He's against dynastic wealth, but he doesn't think the Feds would do much good with an extra $30 billion either. Food for thought, especially for all the "government needs more tax revenue" crowd.

Kari:

It really depends on what your goals are...

If you want to increase Federal Tax collections, then clearly the "strong, high, unavoidable" estate tax failed in the case of Warren Buffett. If the estate tax were a mere 15%, the total revenue generated may actually increase, assuming fewer estates took the charitable giving solution. The Laffer curve speaks to this point (note I said nothing about Reagonomics or getting trickled on).

If your goal is to reduce the amount of wealth that can be passed from generation to generation, the Federal estate tax is generally ineffective. In the case of middle tier estates (under $20 million taxable), there are still many ways to protect wealth transfers (life insurance, trusts, land/mineral rights) without actually "losing" much to Uncle Sam. The wealth protection strategies are not always scalable, but the uber-wealthy have other alternatives (including citizenship in a less taxing country) that are generally not available to the middle tier estates.

In the long run, we're all dead. Which is (I think) the point that Torrid Joe was trying to make. I would prefer to see the Feds trying to incubate wealth creation strategies for the poor with the proceeds of the estate tax: imagine a federal subsidy for Habitat for Humanity (ownership instead of Section 8) or an "Inner City Amway" (which Procter & Gamble would surely object to). Teach a man to fish...Blah, blah, blah.

In short, don't confuse what's politically expedient with good policy. Taking from the rich and institutionalizing the poor does not benefit rich or poor.

TorridJoe:

I sympathize with your wife: you clearly can't tolerate being wrong.

Here's a link to IRS Publication 950 (Introduction to the Estate and Gift Taxes) which says:

No tax on the person receiving your gift or estate. The person who receives your gift or your estate will not have to pay any federal gift tax or estate tax because of it.
Also, that person will not have to pay income tax on the value of the gift or inheritance received.

If you think you may receive a multi-million dollar inheritance, you should make an appointment with an estate planning attorney, and invite your benefactors to attend. Spending a few hundred dollars for an initial consultation could save you ten of thousands of dollars in taxes.

Ask them about opening a 529 college savings plan for any children grandchildren that would like to attend college/university. It is possible to shelter up to $110,000 per grand child and (assuming two living grandparents amortize $11,000/annual gifts/each over 5 years) that money is not included in the grandparent's taxable estate. Perfectly legal, and any 529 plan gains are completely tax free (forever) if spent on approved higher education.

TorridJoe: I am assuming you are the same TorridJoe who posted 10 comments ago and that you don't have multiple personalities. Quoting you from above:

Posted by: torridjoe | Jun 26, 2006 9:08:08 AM I stand to gain a fair amount of money if the estate tax is repealed, if you want to know the truth. I'm just not greedy enough to believe it belongs to me outright.

You first introduced your personal situation into the discussion, not me. I merely suggested a method to save your family roughly $50,000 worth of estate taxes (per child or grandchild) by contribuing $110,000 to a 529 college savings account, and you have accused me of an "ad-hominem" attack. Do you even know what those words mean?

For example, if I said, "You debate like an 8th grader" that would be ad-hominem attack.

You also wrote (above): the tax is always on the person who RECEIVES income

You are correct if you are talking about an income tax, but the estate tax is different: the estate tax is paid by the deceased person's estate. You might want to argue that employers have to pay half of the payroll taxes, but we all know that money would have been paid out to employees in the form of income if the payroll taxes were repealed. Really? Do we know that for certain? I've never heard a liberal suggest that repealing payroll taxes or preventing employers from paying health care premiums would result in everybody getting a raise.

You need to quit posting when you have no knowledge of the subject matter. Or be willing to admit that you've learned something, and move on.

There's no spin, there's no vast right wing conspiracy. The estate tax is due and payable from the estate of the deceased. Dead people have been responsible for paying income and estate taxes for a very long time. Uncle Sam can't give you a pass on your estate tax simply because you died: that's the triggering event. That's why the conservatives call it the "death tax".

How does your personal situation not include your family?

The question of who pays the estate tax is being debated exclusively between your left and right ears.

To reiterate a direct quote from page 2 of IRS Publication 950:

No tax on the person receiving your gift or estate. The person who receives your gift or your estate will not have to pay any federal gift tax or estate tax because of it. Also, that person will not have to pay income tax on the value of the gift or inheritance received.

I should have asked if you're still married. It seems more likely that I sympathize with your ex-wife.

If you decide to rejoin the reality based world, then take off the tin-foil hat and comment on something you know something about, or explain why Randy Leonard thinks the City of Portland should be creating their own boutique fuel mixture, or why you get paid to blog from work.

Amusing discussion. Devoid of much economic logic that I can grasp, though. Yes the estate tax is paid by dead people's fortunes, and no, they do not pay, for they are DEAD, and yes, their executors do. And at that point, the original fortune creator and her personal genius are not concerned with earthly matters.... but her heirs very likely are, and being Americans, probably feel that more is better. And keeping Daddy or Mommy's fortune together is seen as some sort of respect, even immortalization. All quite understandable. Not socially responsible, from some points of view, perhaps, but it contains a basic "gut logic".

Some comments remind me of Malcolm Forbes quote: "He who dies with the most toys, wins". Malcolm got it half right: He who dies with the most toys, dies. Then someone must clean up the mess that was left.

Now the dialing into economics part: Anyone who has created a large fortune knows that they did not do it themselves, they all met a payroll, hired accountants and many trusted advisors, and counted on a system far larger than than the web of their employees. They also have become familiar how fickle the fates are with regard to money and have most likely diversified. If they were planning for the estate tax, then that might involve giving a considerable amount to charity which in human terms if not an expression of 'goodwill toward men' at least an expression of control. Thus the effect of dodging the 'death tax' can be seen as good, in effect.
It is true that some people are greedy, certainly not all rich folks, but perhaps a small number, and they might pay grand sums in hopes of not "wasting" any of their mony on charity or God Forid, the Death Tax. Yet there is an economic point. Not merely that the estate tax 'inspires' charitable giving, but it also attenuates dynastic social control. Fortunes in the Billions, or even hundreds of millions are not about personal comfort but social control. Giant fortunes if let grow unchecked create concentrated markets which increase barriers to entry to those markets and which eventually cancel the regulatory effect of competetion. Examples of economies without estate taxes litter South America with their stagnant economies which have markets that do not clear. What does that mean? If the money gets so concentrated that only six families control everything then there is not enough liqidity and markets collapse or stall. The 'death tax' inhibits such concentration much to the dissappointment of the heirs with their quite understanable imperial dreams. But at a time when America is spending more than a Billion dollars a day on intrest on the national debt it is fiscally, economically and some would say morally irresponsible. Why? Because just as the last generation rejiggered the technology and the economy from the Beaver State to the Silicon Forest, the next one will have to restructure the Nano Nano Sphere to..... who knows.... the Beaver State Redux to keep adjusting to the tides of change. If we become ossified as Less Schwabland, Niketownville, Marsbug, GalloValley and Waltonia then we will sit on the sidelines as the next generation of geniusses take their opportunities in other countries because our fortunes are tied up in the hands of, to quote a rude cliche " Folks who were born on third base and thought they had hit a home run." Genius created the fortunes. Then they die. Like seasons turning.

So this is my pike with the death tax crowd. If you look at how we got to be the biggest economy on the planet it was with the estate tax in place and the forced redistribution it caused that created the opportunity that resulted in our huge world economic leadership of the '50s and on. So may economies did not have all the constituents of the 'middle class' such as the progressive income tax and the most progressive tax of all, the estate tax. As one big market we advantaged all of us, trading with each other and multiplying our wealth from everybody to everybody. Now we are divided into tiny segments. Doctors, laborers, tradesmen, office workers, magnates. We no longer trade on the same level. It does not benefit us to trade out of our class... only down. Today the genius has to be born into the right class now to get a chance and thus the opportunity for America is less broad. I got a little long winded there. I hope the 99.5% of folks who will not pay the estate tax, and even some who do can grasp that society overall, and intergenerationally benefits from especially, the effects of the estate tax.

David:

Your "biggest economy on the planet" comment assumes the estate tax has been in place forever: it has not. Plus, you are drawing a tenuous linkage between a "fair" redistribution of wealth (via the estate tax) and economic growth. If I were looking for causality, I would compare our income tax rates to our global competitors, or take a look at the beneficial impact of immigrants on the creation of wealth. You might even argue that having the political will to assume a leadership role in achieving victory in two world wars paved the way for our status as economic superpower. The estate tax? Not so much.

If you oppose dynastic wealth, how do you feel about dynastic power? Ted Kennedy's son comes to mind: he's been to rehab more often than a heavy metal drummer, but the good people of Rhode Island keep reelecting him. Poor Rhode Island only has two U.S. Representatives, can they afford to have one of them be a drug addict?

Does anybody think Bush 43 could have achieved election beyond the local schoolboard without Bush 41 serving as POTUS before him?

Sonny Bono's wife?

Wouldn't a Constitutional Amendment to limit congressmen to 3 terms help to inhibit the corrupting influence of incumbency?

Jennifer:

Let's see, The estate tax was initiated by a Republican adminstration to pay for WWI. about 1917 or 1918 I believe. The US had 80% of its inhabitants on the farm at the time. Our economy became a world phenomenon only after WWII with the Marshall Plan and as said above really took off in the '50's. History.

Thanks for putting quotes around "fair". Who are you quoting? not me. And I picked up the "dynastic" language from you Jennifer. How wonderfully you react to your own language. Unforunately, not so ably to the points made. The economic point has really nothing to do with "fair" or "dynastic" but with opportunity. The more of it, the more prosperity. If all the funds are in very few pockets, there is less opportunity. If a business genius has no access to capital, she is just another poor farmer or cook. This is proved in history with all the non-estate tax countries (many examples in South America) with concentrated ownership and stale economies. But I repeat myself.

You sure are quite a contributer to this thread. Happy to see you have such an abundance of time with this beautiful weather. I found your last four paragraphs unintelligible. Not that I want an explanation. I just noted my name beginning the post. Signing off. D

David:

You got mad! That so cute. Our disagreement is no reason to suggest your reading comprehension was degraded. The last four paragraphs were the best part. To summarize:

If you oppose dynastic wealth, then intellectual consistency demands you oppose dyanstic power. The Kennedys of Boston, the Bushs of Texas/Maine, the Bonos of California, all passed their office/influence from one family member to the next. Sure we voted on them, but nobody really believes they would have been elected without their lineage.

If you oppose the transfer of wealth from generation to generation, do you oppose the transfer of political power from generation to generation?

Also: if the estate tax was initiated to pay for World War I (together with the income tax), why are they still in force?

" if the estate tax was initiated to pay for World War I (together with the income tax), why are they still in force?" .... let me guess.

We are in another war, even more expensive than WWI? Or to help cover the $1 Billion a Day we spend on interest on the national debt? Or to put some of the 42% of the nations wealth that the top 1% of the population controls back in circulation so that the next generation of geniuses gets a crack at creating their M thing. (Mars Bars, or Microsoft)

Jennifer you have a good point about the political dynasties. Name recognition is capital in politics. Now savor how wise you were in making that point, and apply the same intellectually consistent point to dollar capital and how that buys seats in congress. Thus the continued wisdom of an estate tax... that moderates but does not stop such a dynastation of our politics.

g' night

Wrong answer!

We've had long periods of relative peace and stability, but the income tax and estate tax were never repealed.

The correct answer: because politicians believe they spend our money better than we can! This bipartisan challenge is compounded by the Democrats knowing that a large number of "entitlement" recipients will vote Democratic in order to keep the checks coming: hence the scare tactics ("George Bush will take away your social security") and the insistence on keeping tax rates high.

If you get to spend or invest your own money, then you are less reliant on a nanny state to meet your every need. Conversely, if you are a large recipient of entitlement spending, you don't really care how high tax rates (estate tax or otherwise) may rise.

<h2>Remember the Peace Dividend? Did the Democrats start calling for an end to the estate tax? If you said no, you win the PRIZE.</h2>