Cutting inheritance tax a bad idea in Washington, Albany
Santa came a little early this year for U.S. citizens, courtesy of the busy elves in Congress. Earlier this year, lawmakers voted to set the 2014 level at which estate taxes kick in from the previous level of just over $1 million to $5.34 million. And if you’re married, that’s $5.34 million for each of you.
Gov. Andrew Cuomo has responded to this legislation by recommending the same threshold-raising in our state — up to $5.25 million from $1 million and lowering the tax rate to 10 percent from 16 percent.
Now, this may not affect you or most people you know, so why is it important? It matters because the estate, or inheritance, or “death” tax the folks in the last presidential campaign got so worked up about reflects how we as a society value our citizens.
The average Joe listened to the debates and may have thought “I get taxed when I make money, taxed when I spend money, taxed when I own property, and now they want to tax me when I die! Enough!” And that’s a reasonable response.
For the rich only
But the average Joe probably doesn’t have an estate of even a million dollars, much less $5-point-something million, so why is he even concerned? It’s symbolic, that’s why, of big government out of control — taxing and spending us into bankruptcy, and giving nothing in return. The debaters neglected to mention the money spent on roads and bridges, police, health and social services, libraries, schools, and the hundreds of other services that we depend on even when we don’t know what they are. And the military, which accounts for 57 percent of discretionary spending, isn’t ever going to allow a peace dividend, embroiled as we are in an everlasting war on terror that could go on forever.
So when Cuomo and his tax commission elves recommend spending the supposed $2 billion surplus in next year’s budget on tax relief, shouldn’t we rejoice in the possibility that the 2 percent allowed increase in local taxes will stay at 2 percent?
First question: If the state already faces a projected $1.7 billion deficit, where are the governor and lawmakers going to come up with the additional $2 billion to give back to us? From other parts of the budget? We know what that means: cuts in services.
Paying for it later
Second question: If this rebate only lasts two years, what happens in 2016 when the taxes, which still went up 2 percent a year, need to be paid? Won’t the local property taxes be even more then, and how much?
Third question: Exactly how much of that projected $2 billion will go to make up for the taxes the very wealthy New Yorkers won’t have to pay in state estate/inheritance/death taxes?
Fourth question: We’ve given businesses tax credits for a very long time to entice them to improve the economy and create jobs. Has that worked so far, and if not, why are we doing it even harder? Isn’t doing something that doesn’t work very well over and over again an accepted definition of insanity?
Fifth question: Does this tax rebate program have anything to do with 2014 being an election year
When the income tax law was instituted in 1913, it was designed to build the nation and take care of its citizens by asking the very successful to pay their share. The estate tax was intended to avoid dynasty building, the establishment of an aristocracy of wealth and a landed gentry that we had fled from Europe and England to escape. Handing down wealth for generations doesn’t maintain an equal society. Nobody begrudges success, but are those who think Paris Hilton is the poster child for the death tax just being churlish?
If you look at our tax rates in years past, they have been very high for the wealthy, and that was not a bad thing. It paid for much good in our society, and we are just realizing what those good things were now that we are losing them.
Is this program going to help small businesses and farms and the middle class, as business groups say, or is it a huge giveaway to the very wealthy, as the New Yorkers for Fiscal Fairness claim? There are even number crunchers who maintain that a tiny tax (less than 1 percent) on stock transactions would eliminate the deficit entirely.
Sometimes Santa’s sack holds presents, and sometimes it holds lumps of coal. We’ll just have to wait and see what is in our stockings next year.
Karen Cookson lives in Sharon Springs and is a regular contributor to the Sunday Opinion section.