In an August 31, 2010 article in the USA Today (“Mickey Mouse, the estate tax and me”), Abigail Disney makes the case that the estate tax “is not the bogeyman you might think it is.” In the last paragraph of her article, she states her real premise: "the estate tax is the cornerstone of a progressive system that leaves wealthy heirs with ample funds while providing the government with the resources it needs to build an environment for the common good. By preserving it, we not only restore billions in revenue to the national treasury – we also restore our most cherished collective ideals as a nation." [emphasis mine] Restated: government is the source of the common good and must be amply funded by the “wealthy.” I think not. The source of the common good is individual, unalienable rights endowed by our Creator. Through exercise of each individual’s personal rights – among these, life, liberty, and the pursuit of happiness – comes the creation of individual wealth, which in turn benefits society, not vice versa, as Ms. Disney would lead one to believe. It is government’s role to protect those rights not redistribute wealth these rights produce, in the pursuit of the greater good.
Ms. Disney supports her argument with what she calls three “truths:”
• First, the estate tax is not a double tax. “People like me and, who inherit assets, such as Disney stock, can spend our lives watching [emphasis mine] those assets grow, and when we pass them along to our children, they have not been touched or diminished at all by the tax system. The only thing I have paid taxes on is the interest from these assets, not their increased value.”
• Second, “opponents of the estate tax claim family farms will have to be broken up to pay the tax, but good luck finding an example of this."
• Third, “the estate tax incentivizes people like me to do good [emphasis mine] with our wealth because there is no estate tax on donations to charity. My filmmaking and foundations rely [emphasis mine] on a tax code that supports a vigorous non-profit sector, a vital part of our society..."
Ms. Disney, like most progressives starts her argument in the middle. She does not discuss the creation of wealth. Unlike most of America, she inherited her wealth: more than 80% of all Americans who have a net worth of more than $1 million, earned it in their lifetime. When I sold my first business, because I had no access to financial capacity, I had to liquidate 51% of the stock value I had created to pay the capital gains tax. I had worked for 12 years to build a very profitable business, and over a period of two years, wrote checks to the IRS that represented 51% of the value of the portion of the company I had built. It took 12 years to earn back this money through Ms. Disney’s “investment in the stock market” approach, while paying taxes on the interest, dividends, and capital gains earned (notice she conveniently left capital gains out as a tax). This is a triple tax: first on the wealth that is created, second on the earnings that flow from future investment, and last at death through the estate tax. So much for her argument on double taxation.
As for her second point, most small business persons have their fortunes inextricably tied up in their business. While I know little about farming, I know a lot about service-oriented small businesses. Most of them are “S” corporations, which are taxed at the personal income tax rate. So, each year, after deducting employee salaries, benefits, corporate payroll taxes, and legitimate operating expenses, the remaining income is taxed at the individual income rate. Retained cash – that which is left after paying taxes at the individual rate – is then used in the business to buy equipment and grow the business. If the small business person dies, his or her ownership in the business is included in his or her net worth and is subject to estate tax. If that tax cannot be paid with cash – not equipment or investment – then the business’s assets will be sold and the business closed. So much for her argument about losing the farm.
Last, I find it amusing that Ms. Disney believes a progressive tax code is both a necessary and sufficient condition for individuals, wealthy or otherwise, to “do good” in the world. In fact, she states her own “filmmaking and foundations rely on the tax code.” Implicit in her statement is that government must be funded because it is the principal agency through which “good” – as she defines it – is effected. Not necessarily: moral people do moral things, independent of the government and its tax code. Personally, I tithe because God, not government, has placed this burden on my heart. I only hope that the government allows me to keep enough of the wealth I created to meet the needs I find around me. So much for her argument about taxes as moral force for good.
Subscribe To
Posts
Comments
