May We Just Put The Double-Taxation Whine about the Estate Tax to Rest?

One of the infuriatingly stupid arguments made by advocates for repeal of the Spoiled Brat Tax is that it amounts to double taxation, because the creator of the estate may have paid income tax while building a windfall for his or her heirs. As stated by one of Ladue's favorite lapdogs, Jim Talent: "Moreover, taxes on estates represent a form of double and sometimes triple taxation because everything taxed when you die has already been taxed at least once.

There are two problems with this argument. One is factual and one is theoretical. Let me start with the factual.

"Real Wealth and "Salary Trash"" Wealth may be earned, but real wealth is inherited, and repeal of the Spoiled Brat Tax will exclude real wealth from any taxation. Here's an anecdote to make that point more clear. We were at a garden party at the home of one of the wealthiest families in Kansas City, and we were talking with a senior partner of one of Kansas City's silk-stocking law firms. I was surprised to hear him voice some discomfort at being surrounded by such wealth, and I assured him that his income was probably in the upper quartile of the party. He laughed at my lack of understanding, and explained that he was "salary trash", one of the lower class who relies on income - rather than wealth - to live.

The estate tax, in its most aggressive modern forms, has impacted only the top 2 percent of estates. While the spoiled brats and their lapdogs like to talk about the tax in terms of scrappy mom-and-pop stores and family farms, the undeniable truth is that the only people who pay estate taxes are the offspring of multi-millionaires - and most of them inherited the country-club memberships they seek to pass on without contributing to the country that has afforded them their wealth.

Truth is, inheritances are not created from money that anybody has paid income tax on for generations. Only a few insanely overpaid individuals, like Ken Lay, manage to salt away enough income to approach the estate tax.

It's Not Double Taxation if the Heirs are Only Paying Once: On a more theoretical level, when money changes hands in our society, that is normally a taxable event. People who want to see the Spoiled Brat Tax eliminated act like taxation is an extraordinary burden if it is heirs, rather than than strangers, who "suffer" from having to pay Uncle Sam when they inherit millions of dollars.

Perhaps this can be made more clear by a hypothetical. Assume that Scrooge McDuck has a hundred thousand dollars in his bank account. He faces the choice of adding it to the billions of dollars he is passing on to Donald Duck, his spendthrift nephew, or hiring me to act as a political consultant, to help him see through the hypocrisy of the Republican party.

He chooses to hire me. Now, by the logic of Jim Talent and the anti-Spoiled Brat Tax brigade, I should not have to pay income tax. If Scrooge McDuck paid income tax when he "earned" his wealth, I should not have to pay tax on that same money when he passes it on to me, right? Perhaps we should devise some sort of indelible stamp we could press on to our dollar bills when we earn them, so that they could never be subjected to Jim Talent's theoretical "double taxation".

To be fair, Jim Talent doesn't take it this far. He's not actually arguing that someone who works for the money shouldn't be subjected to taxation. That would be absurd. He's only arguing that people who don't earn the money - the people who "earn" their money through inheritance - should be able to dodge their obligation to support our country.