Wealth and Our Commonwealth by William H. Gates

Author:William H. Gates [Gates, William H.; Collins, Chuck]
Language: eng
Format: epub
ISBN: 978-0-8070-9588-1
Publisher: Beacon Press
Published: 2003-03-14T16:00:00+00:00

IS THE ESTATE TAX UNFAIR BECAUSE IT PUNISHES SUCCESSFUL PEOPLE?

Estate tax supporters are sometimes accused of wanting to punish successful people. This is a tired canard that is invoked around any form of progressive taxation, not just the estate tax. The accusation suggests that if you advocate higher taxes on wealthier individuals, you are antagonistic to people becoming prosperous and want to punish those who have worked hard. This is patently not true.

Over twelve hundred future estate taxpayers signed the Responsible Wealth petition to preserve the estate tax, attesting that there are plenty of people who believe that those with the greatest ability to pay should pay a higher percentage of taxes. As we will discuss later, society plays an enormous role in creating the fertile soil for wealth creation, and society has a substantial claim, particularly on the most wealthy among us. This is not anti-success; it is pro-responsibility.

From those to whom much is given, much is expected. For us, the progressivity of the tax system is a core principle. The notion that the greatest tax burden should fall upon those with the most resources is a matter of fundamental fairness.

State and local taxes are already extremely regressive. State sales taxes, property taxes, and sin taxes—all fall disproportionately more on those least able to pay. On average, U.S. families in the poorest one-fifth of the population paid 12.5 percent of their incomes on state and local sales, excise, property, and income taxes. The wealthiest 1 percent of households paid an average rate of 7.9 percent of their incomes.76

The progressive nature of the federal tax system, though it has diminished over the last twenty years, is necessary to offset the regressivity of state and local taxes. The estate tax is one of the components that make the overall tax burden fairer.

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