The estate tax revenue that got away

Thank you, George Steinbrenner, for demonstrating the idiocy of U.S. estate taxes — or the lack thereof. Steinbrenner, owner of the New York Yankees, died of a heart attack Tuesday, leaving an estate estimated by one source of $1.1 billion — that's billion with a "b."

Thanks to the works of Congress, dancing to the drumbeat of Republican demagogues and business lobbyists, there is no estate tax this year. Steinbrenner's heirs will pay no tax on the estate, simply because The Boss' heart choked up this year instead of last year. Had Steinbrenner died last year, heirs would have owed about $500 million in federal taxes, leaving them a paltry $600 million to live on. The estate tax expired this year, a one-year hiatus for the tax that has been around for generations, although it only applied to the country's largest estates. Last year, the tax applied only on estates exceeding $3.5 million. This year's elimination of the estate tax is costing the deeper-in-debt federal government billions of dollars.

We got into this mess because of a misleading and disingenuous campaign against what Republicans liked to call the "death tax" — a complete misnomer. The tax was not on death, which Benjamin Franklin said was one of the two things (the other being taxes) that are inevitable; it was on the estate left behind. Only the largest estates were subject to the tax. After years of gradual increases in the size of estates exempted from the tax, last year's estate tax allowed nearly all individuals and small businesses to avoid the tax. The tax applied to less than 1 percent of all estates, yet the campaign against the "death tax" implied that the tax was an offense against Everyman.

The elimination of the estate tax — and not just the one-year hiatus we are experiencing now — was the real goal of those lobbyists and anti-government wackos who beat the drums against the "death tax." Permanently eliminating the tax would not only deny the government a steady source of revenue, it would lay the groundwork for a permanent aristocracy based on inherited wealth. In today's America, it is not unusual for a family to go from working class to ultra-rich and back down again in two or three generations. Business advantages and innovations rise and fall. Work ethic or business acumen of one generation is often lost on the next or the next. The estate tax helps to enforce this natural cycle by ensuring that no one gets to coast forever on granddaddy's millions. While every parent would like to pass along the fruits of a lifetime of work, too great an inheritance can be a curse. An estate tax limits at least some of the negative impacts of inherited wealth.

Thank you, George Steinbrenner, for pointing this out. Now it's up to Congress to do something about it.