Estate tax isn’t a new invention
RALEIGH — It is a debate that has been going on for a long time.
In fact, politicians were arguing about it during the nation’s founding.
Estate and inheritance taxes have always prompted bitter words.
On one side are those who see the taxes as dual taxation, an unfair levy on the sweat of those who spent a lifetime working and saving. They argue that the tax forces families to split up family businesses and family farms.
Supporters of the tax argue that only larger estates are affected, and only a fraction of estates are ever subjected to the tax.
Today, the Republican-controlled General Assembly is looking at getting rid of the tax, more than a decade after dropping a separate inheritance tax.
The difference between the two is that the estate tax is applied to the estate before it is distributed among heirs; the old inheritance tax applied to the individual inheritances of the heirs.
Current state law applies the estate tax only on estates valued at more than $5.25 million. The tax ranges from 0.8 percent to a maximum of 16 percent for estates over $10,040,000.
The tax pulls in $52 million a year, which is a drop in the bucket of the state’s $20 billion general operating budget.
Still, those state lawmakers who favor rescinding the tax might be a bit surprised about how our forefathers saw this business of taxing estates.
A 1784 North Carolina statute found that abolishing some forms of inheritance would “tend to promote that equality of property which is the spirit and principle of a genuine republic.” Keeping large estates together for several generations would give some families “unequal and undue influence in a republic.”
In other words, these folks didn’t want North Carolina to turn into merry old England, with its landed aristocracy.
That radical Thomas Paine went further. He proposed an estate tax that would be applied, not to raise money for the government treasury, but to be redistributed to all citizen at age 21.
Estate taxes became an especially hot topic during the Progressive Era, as robber baron-types amassed huge fortunes.
By then, supporters of the tax touted it on moral grounds. In their minds, inheritances undermined the national work ethic. (It is an interesting idea in light of current-day arguments that the tax itself penalizes frugality and the work ethic of those amassing the estate.)
One of those famous robber barons, Andrew Carnegie, wrote, “The parent who leaves his son enormous wealth generally deadens the talents and energies of the son and tempts him to a lead a less useful and less worthy life that he otherwise would.”
Teddy Roosevelt made similar comments.
When Congress considered, and finally approved, the federal estate tax in 1916, opponents had a different take.
One Nebraska congressman noted that if supporters “cannot reduce the cost of living, they demonstrate to the public their ability to raise the cost of dying.”
Others called it class warfare.
Somehow, this all sounds kind of familiar.
Scott Mooneyham writes about state government for Capitol Press Association.
The wooden teeth. The cherry tree. The white hair. Our contemporary — and largely incorrect — picture of George Washington... read more