Let’s talk now about another issue that has been thoroughly twisted by the plutocrats/corporate ruling class: what happens to your money when you don’t need it anymore.
They have a vested interest in twisting this, and they work the average American into a twirl about it, even though it will probably never be a consideration for that American. For example, they let that American think that the life insurance proceeds he is leaving his kids will be subject to the estate tax (in almost every instance, they won’t).
Warren Buffet, the 2nd richest man in America, Bill Gates, the richest man in America, and Andrew Carnegie, the richest man who ever lived: Know what all of them believe and believed? In the estate tax. You know, that “death tax,” in the lexicon-twisting language of the corporate class.
Why do they believe in it when most of the rich don’t? Because they believe that inherited wealth is a danger to this democracy. And because they believe that the very wealthy who do not give a large portion of their wealth away for the public benefit before they die should give away up to around half of it to the people (through their government) when the wealthy don’t need it anymore [am assuming here that there is no need for money in the afterlife, nor any way to get it there if there was :)].
I say up to around half, because for the vast majority of Americans, their estates won’t pay ANY estate tax when they die. The exemptions are so large ($1 million plus), and with this being a net figure (that is, assets minus debts—including mortgages), this exemption is even more significant. And I say UP to around half, because the rate starts out low and only gradually moves up.
And this is the least burdensome tax there is. It only affects your money after you don’t need your money anymore. And only the money you didn’t already give away, to people (you can give thousands away a year to each person with no complications) or to organizations (effectively unlimited).
Buffet has been lucid in articulating what Carnegie implicitly feared: concentrated, inherited wealth’s effect on democracy and democratic processes. Unearned money buys power, arrogance, and self-service. It siphons the life out of democracy, leaving the appearance, the shell, of democracy while the amorphous plutocracy rules. 10-20% of today’s multimillionaires inherited it—and the percentage is rising.
Buffet also feels that those who have done so well because of the rules, the laws, the support, the work, the productivity, the freedom, the protection of the American system and society should give back. So did Carnegie, obviously, and so does Gates. As Buffet has said many times, he would not be “Warren Buffet, Billionaire” if he had been born in Bangladesh (no offense to Bengalis intended).
Robert H. Frank, professor at Cornell, has argued in the Huffington Post that luck contributes heavily to success, and that “well-paid Americans owe an enormous, if rarely acknowledged, debt to the social investments that supported their success.”
Well over one-third of the self-made wealthy say they were just in the right place at the right time. Yes, hard work and talent increase the odds, but the chance of success is still small—so many incredibly able and dedicated individuals do not become wealthy. And since genes and environment seem to largely account for all significant differences among individuals, someone born talented and raised to be hard-working and diligent is, as someone has said, pretty incredibly lucky to begin with.
There are other reasons that unearned (inherited) wealth has bad effects too. Unless great care is taken, inherited wealth often enfeebles or corrupts the succeeding generations, whose privilege guts their innovative drive for anything except perverting the system to hold onto and accumulate more wealth and power. This makes them individual tragedies in many cases, but the danger to the society is the greater concern. The three very wealthy gentlemen recognize and recognized that concentrating wealth into the hands of the very few is a prescription for plutocratic oligarchy, not a democracy, and that oppression could even result. Money buys influence. If the money is not shuffled around sufficiently and regularly, then the idea of equal opportunity goes from being the American dream to the never possible. Interesting that these three gentlemen all came from unwealthy backgrounds (although Gates had an upper middle class background, which could be considered wealthy).
Buffet believes abolishing the estate tax “would encourage an aristocracy of wealth rather than merit.” Obama 190
“When you get rid of the estate tax,” Buffet says, “you’re basically handing over command of the country’s resources to people who didn’t earn it. It’s like choosing the 2020 Olympic team by picking the children of all the winners at the 2000 Games.” Obama 191
The rich who want to keep every penny for themselves and their descendants don’t take into account “all the public investment that lets us live the way we do,” Buffet says. “Take me as an example. I happen to have a talent for allocating capital. But my ability to use that talent is completely dependent on the society I was born into. If I’d been born into a tribe of hunters, this talent of mine would be pretty worthless. I can’t run very fast. I’m not particularly strong. I’d probably end up as some wild animal’s dinner. But I was lucky enough to be born in a time and place where society values my talent, and gave me a good education to develop that talent, and set up the laws and the financial system to let me do what I love doing—and make a lot of money doing it. The least I can do is help pay for all that.” Buffet, in Obama 191
“We will have to stop pretending that all cuts in spending are equivalent, or that all tax increases are the same. Ending corporate subsidies that serve no discernible economic purpose is one thing,” (Obama 191) batting away the hands that want help getting back up after being knocked down is another thing entirely. Calling a rescinding of tax CUTS (to those who benefitted the most) an INCREASE is self-serving duplicity, conflating “in the minds of voters the very real tax burdens of the middle class and the very manageable tax burdens of the wealthy.” Obama 192
As Obama relates, given the large exemptions, not a single family farm in the country has been lost as a result of the estate tax. But the super-rich shouters want you to think so, because they want the break, and they need your emotional ignorance to get it.
Since 1970, income of the average worker has been flat or has declined after inflation. Yet the top .01 percent have seen their income average quintuple. Distribution of wealth is now so skewed that levels of inequality are now higher than they were in the time of the Robber-Barons of the late 19th century.
Except the shouters say you can’t talk about this stuff. “Stirring up class conflict” is how they put it. Interesting that most of them are part of, or highly connected to, the moneyed elites. And those moneyed elites have generally gone to the same schools, generally moved in the same circles, and generally are out of touch with most of America. There’s a reason you can’t find anyone to really regulate Wall Street. It’s because nearly everyone is from the same general mold.
No one should begrudge wealth honestly earned. Government should not cast greedy eyes at anywhere near the majority of a living person’s wealth. But as Buffet and Obama intimate, it is important to know when is enough. Ostentatious wealth and crass materialism serve neither individuals nor society, and the underlying yearning for more, more, more, when someone already has enough, can be destructive. To earn more, often as a side benefit to productive activity, as Buffet does, is no danger. To crave more and manipulate more, to be utterly selfish and often ruthless, can be a danger.
“Once your drapes cost more than the average American’s yearly salary, then you can afford to pay a bit more in taxes.’ Obama 193. Yet even that “bit more” sends the howl meter off the scale. Howling from a class that have benefitted fantastically disproportionally from the events of the last 30 years.
Those clamoring for a total end to estate and gift taxes never talk about how that revenue would be made up. It's a question that needs answered, because those taxes raise considerable revenue, several tens of billions a year at the federal level alone, not to mention at the state level.
Is there no societal or communal fellowship, no responsibility to our fellow citizens and society? If so, we are all free-riders on the financial, material, infrastructure, institutions, and social structures created by our forebears, and if we do not care for and reinvigorate all that, it will dissipate, and we will stricken our descendants.
I wouldn’t think we’d want that. We are already on track to be one of the most selfish societies ever. Surely we can come to see our common interests, and surely we love our children and grandchildren and their society—and by extension our future generations—enough to think of them and not just the short-term and our own particular families.
Here’s a revelation: You don’t owe your descendants any wealth. What you owe them is a society and hopefully world that is at least as good as it was when you came into it, and you owe them opportunity. If everyone knew that was the case, inherited wealth would lose most all its divisive and destructive qualities, because there wouldn’t be any, save some basic heirlooms or modest land and other things—essentially the exemption limits we have now. It would transform much selfishness, much fixation on the transitory things of this life. And our society would benefit. For when a person would know that, yes, they can enjoy the fruit of their labor for their life, and then, when they don’t need it anymore, it largely goes back to the society from which it sprung, they will look at life very differently. The perpetual, ruthless struggles to advance one’s family over others will largely dissipate. Of course, that will require a change in cultural values to successfully effect.
Obama quotes Ben Franklin’s words to his mother on why he devoted so much time to public service: “I would rather have it said, ‘He lived usefully,’ than, ‘He died rich.’” (361)
Ah Ben, we need heed your wisdom.
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