Social Security Tax Cut for Estate Tax Cut
I've written about this before and my position hasn't really changed much. I think what President Bush is proposing is a great idea. He has been monotone on most all domestic issues. Tax cuts, Tax cuts, Tax cuts. As a tax payer I can appreciate that.
Until this term his tax cut proposals have invariably favored the inheritance/leisure class over workers. For example, the estate tax cut was an effort to institute a new American royalism. The tax cuts from his first term were successful in securing his large donors for his re-election. In contrast, this is his first gift to those of us who still work for a living. Even those of us who choose to work and could survive quite a while without working will benefit from this.
Keep in mind that the social security tax is a "regressive" tax on the working poor and middle class, but has little effect on the richest Americans: 6.2% of payroll on the first 90 thousand earned per year. This tax was originally sold to the American public with its purpose to support the old and infirm, so the benefit is "progressive" even if the tax itself is regressive. This combination is a big part of what has made it a popular tax over the years. So it baffles me as to why the "progressives" are fighting the President's proposal to cut the regressive tax but not the progressive benefit. Progressives have a big win with this proposal provided it accompanies a series of bills that can balance the budget and still include the full progressive benefits as the President hopes.
He has made it a non-negotiable item of any proposal to cut it by about 30% for those who choose it. Who wouldn't choose it, those who are bad at math?
The President has offered us a great deal and we ought to accept it. We also ought to freeze the Estate tax before it sunsets until such time as our national debt is paid off, or at least shrinking at a duration and rate sufficient to re-stabilize the dollar so the retirement benefits will at least be meaningful, lest they depreciate away. I think my fellow Democrats should offer this as their own non-negotiable item to place on the table next to the President's non-negotiable of a social security tax carve out. It would set the appropriate incentive for those with control of capital to be responsible for the good of us all and not just their own special interests.
When young people think of the Estate tax or “Death Tax” they think that they might inherit something from someone and resist government seizing some of that (even if it does go to the widows and orphans). But only very few of these young people, (a tiny percentage of one percent) are really in the category of the super rich who would see these taxes anyway.
Kiplinger breaks it out for us: If you have already received a US$1,000,000 in gifts + US$11000/year you have been alive, and are going to receive another US$3,500,000 in inheritance, then you might lose some of that to the widows and orphans if your dearly departed rich relative did not have the foresight to hire a few estate tax attorneys to preserve their wealth for their bloodline. How many of even well to do families are really in that situation? Is what could approach US$5 million enough of a head start for a child of privilege before the first dollar goes to support the nation that set the free environment for such wealth accumulation? The interest alone on US$5 million invested is about US$1000/day. All billionaires will still be able to pass on tremendous wealth to their heirs, but some of it should still go to manage the debt accrued by the nation their money has helped shape. This simple backstop has helped deter some of the power of capital that drives our Capital and is an thereby an element of democracy.
The balance of power between the money and the voters was thrown off by the removal of the estate tax. Modern memetic marketing and near complete information mediation allows monetary investment to sway vast segments of voters and confuse issues. This has always been true. But what has been more true is that America must always be the vanguard of valuing the vote. Making everyone a shareholder and decision maker in how our nation is run has given us a tremendous strength in attracting the best and the brightest to our shores. We must continue in that as well, and not just attracting the investment class.
So on behalf of this moderate Democrat, thank you Mr. President for your kind offer of finally cutting taxes specifically for low and middle-income workers. We accept your offer, now please accept my offer of freezing the estate tax until the budget is balanced?
Until this term his tax cut proposals have invariably favored the inheritance/leisure class over workers. For example, the estate tax cut was an effort to institute a new American royalism. The tax cuts from his first term were successful in securing his large donors for his re-election. In contrast, this is his first gift to those of us who still work for a living. Even those of us who choose to work and could survive quite a while without working will benefit from this.
Keep in mind that the social security tax is a "regressive" tax on the working poor and middle class, but has little effect on the richest Americans: 6.2% of payroll on the first 90 thousand earned per year. This tax was originally sold to the American public with its purpose to support the old and infirm, so the benefit is "progressive" even if the tax itself is regressive. This combination is a big part of what has made it a popular tax over the years. So it baffles me as to why the "progressives" are fighting the President's proposal to cut the regressive tax but not the progressive benefit. Progressives have a big win with this proposal provided it accompanies a series of bills that can balance the budget and still include the full progressive benefits as the President hopes.
He has made it a non-negotiable item of any proposal to cut it by about 30% for those who choose it. Who wouldn't choose it, those who are bad at math?
The President has offered us a great deal and we ought to accept it. We also ought to freeze the Estate tax before it sunsets until such time as our national debt is paid off, or at least shrinking at a duration and rate sufficient to re-stabilize the dollar so the retirement benefits will at least be meaningful, lest they depreciate away. I think my fellow Democrats should offer this as their own non-negotiable item to place on the table next to the President's non-negotiable of a social security tax carve out. It would set the appropriate incentive for those with control of capital to be responsible for the good of us all and not just their own special interests.
When young people think of the Estate tax or “Death Tax” they think that they might inherit something from someone and resist government seizing some of that (even if it does go to the widows and orphans). But only very few of these young people, (a tiny percentage of one percent) are really in the category of the super rich who would see these taxes anyway.
Kiplinger breaks it out for us: If you have already received a US$1,000,000 in gifts + US$11000/year you have been alive, and are going to receive another US$3,500,000 in inheritance, then you might lose some of that to the widows and orphans if your dearly departed rich relative did not have the foresight to hire a few estate tax attorneys to preserve their wealth for their bloodline. How many of even well to do families are really in that situation? Is what could approach US$5 million enough of a head start for a child of privilege before the first dollar goes to support the nation that set the free environment for such wealth accumulation? The interest alone on US$5 million invested is about US$1000/day. All billionaires will still be able to pass on tremendous wealth to their heirs, but some of it should still go to manage the debt accrued by the nation their money has helped shape. This simple backstop has helped deter some of the power of capital that drives our Capital and is an thereby an element of democracy.
The balance of power between the money and the voters was thrown off by the removal of the estate tax. Modern memetic marketing and near complete information mediation allows monetary investment to sway vast segments of voters and confuse issues. This has always been true. But what has been more true is that America must always be the vanguard of valuing the vote. Making everyone a shareholder and decision maker in how our nation is run has given us a tremendous strength in attracting the best and the brightest to our shores. We must continue in that as well, and not just attracting the investment class.
So on behalf of this moderate Democrat, thank you Mr. President for your kind offer of finally cutting taxes specifically for low and middle-income workers. We accept your offer, now please accept my offer of freezing the estate tax until the budget is balanced?
posted by joseph at 8:58:00 AM
3 comments
