No. 144: Wealth and Our Commonwealth: Estate Tax and the Grateful Dead

• William H. Gates Sr. and Chuck Collins: Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes; Beacon Press; 2003; 166 pages $15 paperback

TRENTON, N.J.—When the father of the world’s richest individual and the cofounder of an outfit called United for a Fair Economy get together to write a defense of the estate tax, the result is one of the worst books ever written in American history about a public policy issue.

Although William H. Gates Sr. and Chuck Collins have written a tract that pays lip service to individual achievement, liberty, and free enterprise, the foundation of America’s prosperity, they nevertheless embrace egalitarianism, the redistribution of wealth, and the welfare state as indispensable policies and institutions. Moreover, in their passion to maintain the estate tax they assert, “The estate tax helps make America great.” This is the first time, to my knowledge, that anyone has gone so far to state that the estate tax has been partly responsible for the American people’s prosperity since 1916, when the federal estate tax was instituted.

The authors’ defense of the estate tax rests on several dubious, to say the least, assertions.
• The estate tax will reduce the “concentration of wealth and power” in the United States.
• The estate tax forces individuals of great wealth to “pay back society” for the enormous “investment” in our public institutions.
• The estate tax strengthens “equal opportunity” in our society by putting a “brake on the accumulation of hereditary wealth.”
• The estate tax will reduce the disparity in income levels that is so corrosive to democracy.
• The estate tax will “level” the playing field, so that “runners start at the same starting line.”
• The estate tax is a good tax, because “for us, the progressivity of the tax system is a core principle.”
• The estate tax provides an incentive to charitable giving. Without the estate tax, wealthy families will reduce their charitable contributions.
• The three great religious traditions, Judaism, Islam, and Christianity, support the estate tax.
• The estate tax must be maintained because after all “taxes are a privilege in a democratic society, a necessary component for sustaining the common good.”

Gates and Collins repeat ad nauseam throughout their book that the “concentration of wealth and power” is a grave threat to the Republic. In reality, it is the concentration of political power in Washington, D.C. that is undermining the American people’s natural rights and prosperity.

The authors believe that the wealth of the “rich” could not have been created without the “investment” made by governments at all levels, particularly the federal government. In fact, the creators of wealth pay for so-called public services throughout their lifetimes in the form of income, sales, property, excise, and other taxes. Should the federal government also be able to confiscate up to 50 percent or more of their estates when they depart this world? How much is enough for the federal Leviathan? Apparently, for Gates and Collins, an estate tax on the assets of the very wealthy ($15 million or more) is appropriate.

Moreover, Gates and Collins assume that property rights, primary, secondary and higher education, libraries, hospitals, roads, and other infrastructure can be provided only by or must be assisted by the state. That is a myth of Titanic proportions.

To argue, as Gates and Collins do, that charitable giving is driven by the estate tax, and that its repeal would be the death knell for many charities, speaks volumes about the givers. If charity does not come from the heart, then it’s not charity, but vanity.

The authors’ true colors are revealed when they say progressive taxes form the core of their beliefs. Marx is smiling in his grave. In the economy, the law of one price governs virtually all market transactions. Only when it comes to taxation do seemingly intelligent individuals parrot the “ability to pay” mantra as if it were a divine decree.

In the final analysis, William Gates Sr., Bill Gates Jr., Warren Buffet, George Soros, and the other wealthy supporters of the estate tax should keep making money and creating wealth, and giving away as much of their fortunes as they see fit. America does not need an estate tax. America needs more economic freedom and the restoration of the liberties that Gates, Collins, and others are all too willing to compromise in the name of the “common good.”