As anyone reading this is familiar, George Steinbrenner was known as “The Boss.” After his passing this week, we were reminded of all the rants, scandals, firings and championships confirming that the nickname was very appropriate. What caught my eye about this story was the implications for the Steinbrenner family and the New York Yankees because of the estate tax’s 2010 repeal window.
Meaning, the Bush Administration’s tax cuts included a single year, 2010, where the estate tax would not apply. In 2009, the estate tax was 45% and in 2011, it will become 55% but for 2010, it is 0%. 0%! In classic political form, there is no sense or moderation to this tax. My whole point of writing about this is to point out how inappropriate and reprehensible a tax that size is. But the truth is, 0% is equally ridiculous. Should inheritance be tax on some level? I guess so, yes. I mean, everything is taxed these days. Lottery winnings, discoveries, inventions, etc. That’s fine, we got to make this work and it’s the social contract we’re all born into. This is not a diatribe on taxes.
I’m just looking at this from an uneducated, uninformed perspective. By that, I mean, I haven’t done a ton of research into the logic behind the estate tax or what the bulk of the collect estate tax gets paid into (but I suspect it is redistributed to programs like Medicare or something).
Instead, just looking at this as a student, son and American, it seems counterintuitive that we’re creating obstacles or disincentives to success. Obviously, it is unlikely that an estate tax is going to keep people from making money, creating wealth or being successful. But it may keep some from reporting their wealth accurately or honestly. On the other hand, I’m sure there is something to be said for the Lockean theory of labor which says that whomever has put their labor into property is the one with the legal claim to it. Looking at it this way, the heirs of extreme wealth did not put their labor into it and did nothing other than being born in order to justify their claim to this money. Thus, the government has intercepted 55% and decided that heirs only deserve 45% of their parents’ wealth.
Yet, to think that this tax could cost the Steinbrenner family the ability to keep ownership of the New York Yankees is almost unforgivable. And this is coming from a die-hard Boston Red Sox fan! Many stories have reported that if the tax were $550 million, what it would be if The Boss had passed anytime after January 1, 2011, the family would have to cede ownership of a large portion of their holdings to pay the tax. Luckily, due to the one-year repeal, the Steinbrenners will not have to make this call. It still seems ridiculous that we’re in this battle between 55% or 0% from the Dems and Republicans respectively and these choices are having such a major impact on people’s lives, and honestly, the future of an entire sports franchise and city.
Is that the purpose of government? Is this an appropriate use of power to tax?
I can’t imagine it is. Not that I’m in a position to have any ideas or solutions. But something must be done, even the wealthiest families in the world, do not deserve to have to make impossible decisions like the Steinbrenners almost had to make. Rush Limbaugh used this as an opportunity to rail against liberals and taxes of all kinds. So, I’m hesitant to take this argument too far and start agreeing with Rush. On the other hand, did this repeal perversely incentivize death?
Just as a comical balance to Rush’s comments, HuffPo posted an op-ed column by Norman Goldman that encouraged Rush to follow The Boss’s lead, both billionaires, end it before December 31st and save his heirs any estate tax. Unlikely, but we get the point.
I know I’ve rambled on too long on this topic already, but it definitely got me thinking about these taxes and what we’re really trying to do in government. What are the implications of these dramatic taxes and repeals on both the families and the government services that need the revenue? We’ve got to a better job figuring this out. Or if we can’t figure it out, at least the Republicans and Democrats could explain these things better. We get the usual posturing, sound bites and “taxes are bad” or “taxes are a necessity to making society work” arguments without a true discussion (at least that I’ve seen) about why families like the Steinbrenners should owe this money. We need to be making better sense. Either policies that work and make sense on their face or connecting the American people to these taxes so that we understand why the policies are in place. Then these articles and blogs, like mine, would be unnecessary.