Opinion
No repeal for estate tax
EDMOND — It is a fact of life that some people have more money than others. This wealth inequality is a funny thing. On one hand this inequality encourages people to work more so they can get more. On the other hand though, this inequality sometimes discourages work effort.
Clearly, income inequality can be a good thing. People make more money generally when they are more productive at producing the items that society values. I teach students about the perils of price controls. Alex Rodriguez plays third base for the New York Yankees. He makes more money than I do because he generates more happiness for society — just ask my students on exam day.
Bill Gates made huge sums of money by revolutionizing the way we run our computers, and as a result the way we do business. Michael Dell revolutionized the way we buy computers. Jack Welch revolutionized the way General Electric operated. Each of them is wealthy because each of them was extremely productive.
It is the promise that a person can earn more if they do more that drives us to try to do more in the first place. After all, if everyone could earn a decent living without completing high school, few people would earn their high school diploma.
Likewise, if earning a college degree had little effect on one’s earning potential, few students would enroll in our universities.
It is the inequality of incomes — more productive people earn more, less productive people earn less — that gives people the incentive to work harder, to be more innovative and to invest in their futures. In short, inequality is a powerful force for good in our society.
However, sometimes wealth is tied not to a person’s productivity but to their circumstances. Some people did not create their wealth … they inherited it.
What is problematic with this is children from wealthy families have greater opportunities available to them. Parents of wealthy children have the financial resources to send their children to the best schools. They have the societal connections to open the doors of opportunity. In short, children of wealthy parents have an easier path to success. In baseball terms, some people were born on third base and as a result find it easier to score.
But opportunities to succeed should not belong only to the wealthy. We should strive to ensure every child has an equal opportunity to succeed. This is why I do not want to repeal the estate tax.
The federal estate tax is a tax paid by only the wealthiest families as only estates valued at more than $2 million must pay the tax this year — this amounts to one-half of 1 percent of all estates. Ninety-nine and a half percent of families will never pay this tax. Even those families who pay the tax still retain much of the value of the estate.
Consider an estate valued at $5 million. This year $2 million of the estate is exempt from the federal estate tax and goes directly to the heirs. This exemption will increase in the coming years.
Thus, only the remaining $3 million is taxable. Of that $3 million, the estate must pay a tax of $1.38 million. Thus, out of the original $5 million estate, the heirs still get to receive an after-tax inheritance of $3.62 million. They will hardly be destitute.
Of course some argue that taxing estates is immoral. Well, I think having nine million children in this country without health insurance is a moral issue. I think it is immoral that middle-class families cannot afford to send their children to college. Taxing the estates of multi-millionaires allows us address these problems, and open up the doors of opportunity to millions of poor- and middle-class children.
This last week, the “Oracle of Omaha” Warren Buffet announced he will give more than $37 billion of his personal fortune to charity and not to his own children.
But what surprised many was his defense of the estate tax as an “equitable tax” that is “in keeping with the idea of equality of opportunity in this country, not giving incredible head starts to certain people who were very selective about the womb from which they emerged.” Buffet, the second richest man in the world, understands more productive people should earn more money. But he also knows hope and opportunity should belong to everyone.
(Mickey Hepner is an economics professor at the University of Central Oklahoma.)
- Opinion
-
-
Edwards book missing some perspective
During his run for the Democratic Party’s presidential nomination in 2008 John Edwards often spoke about the plight of the less fortunate in our society. At campaign events the former senator from North Carolina told of how American workers whose jobs had gone overseas as a result of globalization were unable to support their families and were now living in poverty.
-
Government purchasing process needs more transparency
In last week’s legislative update, I talked about how social media can be used as a feedback mechanism by businesses. I posited that state government should be allowed to take advantage of these same techniques, and I have heard from state officials how they need a clear set of policies to govern their actions in using social media projects.
-
Preparing for a Rainy Day
This year, Oklahoma faces one of the worst budget crises in our state’s history. The decisions that lie ahead for state leaders will be difficult, but I have no doubt that Oklahoma will weather this storm and emerge stronger.
-
HB 2914 could create jobs, expand economy
This last week the 2010 Legislative Session kicked off at the limestone palace on 23rd and Lincoln. While the Legislature will consider hundreds of bills in the next four months, there is one that is my favorite — HB 2914 by Rep. Danny Morgan.
-
Moving up in national testing scores
A long history of education reform is positively impacting our public schools, earning Oklahoma high marks on two recent national report cards. The U.S. Chamber of Commerce’s “Leaders and Laggards” national report card in late 2009 gave Oklahoma an “A” (second in the nation) for “Technology” for the use of Web-based programs and computer-based assessments, which was one of six categories graded. Our state received a “B” in the “Data” category for our state’s educational data system, ranking 11th in the nation.
-
Staying alive: The legacy of Will Rogers
Recently, I received an e-mail from a theatrical producer in Chicago. David happily shared with me the script of a new one-man show set to premiere at a theater in suburban Oakbrook in late March. Ticket sales are going great, he reported. People are excited, and two matinee performances are already sold out. The subject of the production just so happens to be a gum-chewing, lariat-tossing, wise and witty cowboy by the name of Will Rogers.
-
For Oklahoma: Less can really mean more
While Oklahoma digs out from massive winter storms the governor and Legislature are faced with digging Oklahoma out of a severe fiscal crisis.
The governor in his state message vowed to protect education and Oklahoma’s most vulnerable. This is an immediate challenge, but solutions must go beyond protection to implementation of long-term reforms for Oklahoma’s future. -
Cities attempt to eliminate accountability notices
Little things can make a big difference. Printed public notices in newspapers are little things, but they make a big difference when keeping government accountable to citizens and taxpayers.
It is no surprise the Oklahoma Municipal League has introduced legislative proposals to eliminate printed notices in newspapers. -
Brotherly love just as important as prayer
You hear a lot about prayer these days and it brings a story to mind. There are several versions of this old tale drifting around in different cultures but they all have the same basic outline.
A certain farmer found himself harvesting a crop that exceeded his wildest expectations. After years of living on the edge of poverty, his ship finally had come in and he was on the road to prosperity at last. -
Can the president reconnect with Americans?
You could tell President Obama’s State of the Union speech was shaped by public opinion polls. That’s not necessarily bad, especially when it comes to a presidency that has been veering off track, and losing key political battles.
- More Opinion Headlines
-
Edwards book missing some perspective
