The Estate Tax Is a Meritocratic Necessity
Eliminating the estate tax makes no sense in a meritocratic system, yet most Americans are against the so-called "death tax." The reasons why range from the hypocritical to the woefully ignorant.
Even the most cynical American has to admit that the so-called American Dream, which purports itself to be the pinnacle of free society and new-world meritocracy, is a lovely little idea. Everyone begins on an even playing field; you're offered an equal chance as anyone else to succeed; and if you're tactful and lucky, you'll achieve prosperity. It's the antithesis of old-world aristocratic values. It's all the theoretical good of capitalism wrapped up in a pretty little bow.
Of course, we know the world is far too variable and cruel for the rawest idea of the American Dream to exist. Yet the beacon of meritocracy must necessarily be the guiding light for an egalitarian society such as ours. This is why, in theory, even those Americans who consider themselves vehemently anti-taxes should at least embrace one manifestation of governmental levy: the estate tax — or, as it's often called, the death tax.
I'm sure you know where this is headed.
Today over at Slate, Jordan Weissmann explored why — for some mindboggling reason — the estate tax is so frequently unpopular among Americans. Weissmann offers one major reason. I'll offer a second afterward.
Weissmann posits that the public is simply ignorant of how the estate tax works:
"The government only taxes estates worth at least $5.43 million. In 2013, 2.6 million people died in this country, and only 4,700 of them had to pay any taxes as a goodbye gift to the government. We're talking about a levy on the 0.2 percent. ... Americans seem to vastly misunderstand how many families are subject to the tax. And it's possible that simply providing them with better information might actually boost support for increasing it."
Weissmann notes that a majority of Americans support higher income taxes for the wealthy because it's a simple concept to understand. In a non-regressive tax structure, the wealthier pay a higher percentage in taxes because they can afford to do so and still maintain affluence. But, as evidenced by a recent experiment by a team of economists, the public's opaque perception of who gets targeted by the estate tax causes it to distrust the tax overall.
Weissmann suggests that the American public would embrace the estate tax if given a rational explanation of the who, what, when, why, and how of its practice. My thoughts are somewhat contrary. Americans love the theoretical elements of economic egalitarianism and equality, but put into practice, not so much. It's sort of like how the American mouth rallies for world peace while the American hand stirs up trouble wherever it reaches.
I think a major reason the death tax remains unpopular is because Americans believe that one day they themselves could be the person with a $10 million estate. And they wouldn't want their own fledgling aristocratic family to take a hit, even if such a belief runs contrary to the American Dream, meritocracy be damned.
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