Suitably Flip

No Taxation Without Respiration

Ben Franklin’s two certainties took a step toward disenmeshing yesterday, as the House voted 272-162 to permanently repeal the federal death tax (officially H.R. 8, sponsored by Missouri Republican Kenny Hulshof) after voting down Rep. Earl Pomeroy’s (D-ND) substitute bill that proposed raising the exemption threshold.

Enjoying a 62% Yea vote in the House, the Senate will need to deliver a similar bi-partisan supermajority to fend off threat of a filibuster. Past efforts have thrice failed to get through the upper house, but this will be the first such attempt since the recent expansion of the GOP majority.

William Beach at Heritage offers a nice treatment on the economic lunacy of the decades-old system, which would revert to filching up to 60% of estates over $1 million in 2011 if not repealed:

The death tax hinders economic activity in the following ways:

          1. Discourages savings and investment;
          2. Undermines job creation and wage growth;
          3. Prevents economy from achieving investment potential;
          4. Contradicts central promise of American life: wealth creation.

Indeed, any component of the tax system that prizes the voracious harvesting of wealth over encouraging its growth will suffer similarly fatal flaws. Would you rather have 50% of a pie that grows at 5% annually or, say, 25% of a pie that grows at 4%? The former might help you cover a budget shortfall this year, but the out years prove the case for the latter.

But a less numerical, more fundamental flaw of the existing system is the entrenched presumption that death is a rightfully taxable event - that an individual’s wealth, already duly burdened by income taxes and capital gains taxes, owes an additional toll simply because its proprietor underwent the indulgence of blinking out of mortal existence.

Perhaps part of the difficulty of this argument owes to the fact that the dearly departed aggrieved parties in question don't make a habit of testifying before Congress or responding to phone polls. Then again, given the overwhelming tendency of deceased individuals to vote Democrat, this could become an important wedge issue in the next election among the post-mortem demographic.

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No Taxation Without Respiration

Ben Franklin’s two certainties took a step toward disenmeshing yesterday, as the House voted 272-162 to permanently repeal the federal death tax (officially H.R. 8, sponsored by Missouri Republican Kenny Hulshof) after voting down Rep. Earl Pomeroy’s (D-ND) substitute bill that proposed raising the exemption threshold.

Enjoying a 62% Yea vote in the House, the Senate will need to deliver a similar bi-partisan supermajority to fend off threat of a filibuster. Past efforts have thrice failed to get through the upper house, but this will be the first such attempt since the recent expansion of the GOP majority.

William Beach at Heritage offers a nice treatment on the economic lunacy of the decades-old system, which would revert to filching up to 60% of estates over $1 million in 2011 if not repealed:

The death tax hinders economic activity in the following ways:

          1. Discourages savings and investment;
          2. Undermines job creation and wage growth;
          3. Prevents economy from achieving investment potential;
          4. Contradicts central promise of American life: wealth creation.

Indeed, any component of the tax system that prizes the voracious harvesting of wealth over encouraging its growth will suffer similarly fatal flaws. Would you rather have 50% of a pie that grows at 5% annually or, say, 25% of a pie that grows at 4%? The former might help you cover a budget shortfall this year, but the out years prove the case for the latter.

But a less numerical, more fundamental flaw of the existing system is the entrenched presumption that death is a rightfully taxable event - that an individual’s wealth, already duly burdened by income taxes and capital gains taxes, owes an additional toll simply because its proprietor underwent the indulgence of blinking out of mortal existence.

Perhaps part of the difficulty of this argument owes to the fact that the dearly departed aggrieved parties in question don't make a habit of testifying before Congress or responding to phone polls. Then again, given the overwhelming tendency of deceased individuals to vote Democrat, this could become an important wedge issue in the next election among the post-mortem demographic.