The Moral Sense in Estate Tax Repeal
Alan Wolfe is director of the Center for Religion and American Public Life at Boston College and is the author of "One Nation, After All."
The original version of this article can be found here as an op-ed piece for the New York Times on July 24, 2000.
CHESTNUT HILL, Mass. -- Since the supply-side revolution of the Reagan years, the Republican Party has vigorously advocated tax cuts. The idea seemed to make sense both as policy and as politics. Lower taxes, supply-side theorists argued, would stimulate economic growth, thereby avoiding budget deficits. And the appeal to voters would turn the Republicans into the majority party, for few people would be able to resist the notion that government's money is really their own, best left in their pockets.
The policy behind tax-cutting never quite worked as expected; until recently, deficits plagued the American economy. Neither did the politics. To be sure, Walter Mondale lost badly to Ronald Reagan in 1984 after he talked about raising taxes, but then Americans began to tell pollsters that tax-cutting was not a high priority with them. A program of slashing federal spending -- even shutting government down -- wound up harming the Republican Party's hopes for majority status. Steve Forbes made tax cuts the linchpin of campaigns for his party's nomination and got nowhere. New Hampshire, the most tax-resistant state in America, began to consider an income tax.
It therefore seemed to be one more example of political folly when Senate and House Republicans decided to take on the estate tax. First passed by Congress in 1916 to help pay for World War I, the federal tax on estates kicks in when a person leaves assets valued at $675,000 (rising to $1 million in 2005). Because only 2 percent of American estates are taxed, Republican calls for repeal reeked of the party's proclivity to reward its wealthy donors, even at the risk of alienating individuals whose more modest estates would never be taxed.
President Clinton responded by insisting that any tax relief should go not to the very rich, but to those who have fallen behind in these dizzying economic times. Democrats have discovered that when it comes to tax policy, class warfare works; Americans are receptive to the notion that Republicans appeal too much to selfish motives to be fully trusted with the common good.
Yet as the estate tax issue played itself out, both parties found themselves surprised. Democrats, realizing that they are on the defensive, are trying to fashion a compromise that would benefit farmers and small businessmen. Republicans, not used to capturing the moral high ground on any issue, sense blood and would like nothing more than a presidential veto.
One possible explanation of this reversal of fortune is that even poor Americans someday hope to be rich enough to have an estate; these days, after all, anyone owning a house in a desirable neighborhood is already within sight of the tax's minimum. But this assumes that Americans are selfish enough to want to hold on to their money even when they do not make much of it. The problem with this explanation is that because the estate tax is paid after you are dead, you cannot hold on to it. You can, of course, spend it before you die. But once you are dead, there are only two options: It can be left to those you designate, usually your children, or it can be left to everyone in the form of general tax revenue.
The philosopher Immanuel Kant taught that the more just solution would be to leave your estate to everyone; we are obligated to others, Kant believed, irrespective of whether we know them personally. It follows that if you are rich enough to have an estate eligible to be taxed, needy people unknown to you are more deserving of your largess than the few children you happen to have had. But while Americans do not mind being taxed, they do not trust government to do what is right. Uncertain that the money they have earned will go to all, they would rather make sure it goes to some. And who better to pick those to whom it will go than the person who made the money in the first place?
This instinct to leave your own money to your own children cannot be called selfish. Sociobiologists, in fact, would call it altruistic, for in their view the willingness of an organism -- usually a gene -- to sacrifice so that its offspring flourishes is the very definition of altruism. Whether or not one agrees with them, repeal of the estate tax taps into very strong family feelings.
Paying for college illustrates the principles involved. It is grossly unfair that rich Americans can send their children to better universities than those that poor Americans can afford. The unfairness is compounded when the best colleges admit so-called legacies -- students whose parents attended these same colleges. Should we therefore encourage parents to forgo all advantages for their own children, giving the money they save instead to a scholarship fund for any needy students? Or should we be happy that people will go to such lengths to ensure that people other than themselves get ahead, even if those others are related to them by blood?
In a way that makes sense to them, even if it does not make sense to philosophers, Americans who support repeal of the estate tax, like Americans who deprive themselves of vacations in order to send their children to first-rate colleges, are expressing a generous urge.
Repeal of the estate tax gives Republicans the opportunity to speak about solidarity. To be sure, the solidarity that repeal encourages, because it focuses on the family rather than society as a whole, is limited in scope. But it is broader than the extreme individualism of the free-market Republican rhetoric Americans find less than ennobling.
Americans prefer strengthening ties among people they know to the alternatives of either looking out for no one or looking out for everyone. Estate tax repeal corresponds to the basic moral instincts of most Americans. That is why, unlike tax-cutting across the board, it is a winning political issue.
Why does Wolfe say that estate tax repeal appeals to the moral instincts of most Americans? Do you think his judgment of Americans' moral impulses is sound? Provide examples from any of your reading or your experience to support your evaluation of his judgment.