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< | The Estate Tax and Incentives for Charitable Giving |
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> | Community, Class and the Estate Tax |
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> | Economically Perverse Opposite to the Estate Tax: A Conventional Account |
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< | The estate tax is a tool that combats the dynastic concentration of
wealth among a small subset of society while raising revenues that
fund important government social services. It will in all probability
never be levied upon the majority of estates in the United States.
However, the majority of Americans support the repeal of the so-called
“death tax”,
in effect acting to thwart their own economic self-interest. |
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> | The estate tax is a tool that combats the dynastic concentration of wealth within a small subset of society while raising revenues that fund important government social services. It has always been levied only upon the estates of the highest-income individuals, and yet the majority of middle and low-income Americans have in the past opposed it, thus undermining their own economic self-interest. |
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< | In The Folklore of Capitalism, Arnold proposes that people act in ways that are counter to their own self interest “out of pure mystical idealism” that is “divorced from practical issues”. In the context of Arnold’s theory, one plausible explanation for the paradox of majority support for the repeal of the estate tax is the myth of the American Dream. The idea of America as a pure meritocracy where hard work allows individuals entry into the upper classes is deeply entrenched within our communal psyche. This emphasis upon aspirations towards upward class mobility provides a possible account for why people so overwhelmingly disfavor the estate tax, i.e. that they support its present repeal in the hope and expectation that either they or their children will one day have an estate large enough to be affected by it. |
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> | One conventional explanation for this opposition has been a variant of the “pure mystical idealism” that Arnold attributes to subjects in a capitalist society: the rags-to-riches American Dream narrative that supposedly drives every Americans to view the structure of society through the eyes of a millionaire. Others point to a more practical problem of imperfect information; Larry Bartels cites a 2003 survey in which over 50% of respondents drastically overestimated the number of Americans subject to the estate tax, while David Brooks cites a figure of 19% of Americans who believe themselves to be in the wealthiest 1% of the population. Yet neither forsaking the notion of the American Dream nor acquiring more complete information seems to eliminate economically perverse opposition to the tax. Bartels found that even people with a proper understanding of the scope of the estate tax and an accurate perception of the current trend toward increasing economic stratification were nevertheless “no less likely than less-informed citizens to support repealing the estate tax.” |
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< | The rhetoric utilized by opponents of the estate tax frames it
as tax upon dying instead of a tax upon the transfer of wealth. One
aspect of this rhetoric is that it contributes to perceptions of the
estate tax that are not aligned with reality - renaming it as the
“death tax” alters people’s point of view without
altering the reality of the tax itself. Indeed, the gap between
perception and reality plays a role in other ways. For instance, in
analyzing data from a 2003 opinion survey, Larry Bartels found that
half of the respondents thought that most families would have to pay
the estate tax, while another 18% did not know whether the federal
estate tax applies generally or just to a few families. [[http://query.nytimes.com/gst/fullpage.html?res=9B01EED61F3EF931A25752C0A9659C8B63&sec=&spon=&pagewanted=1][People
overestimate the actual scope]] of the estate tax by miscalculating
their place in the wealth hierarchy as well as through placing faith
in a statistically unlikely rise into a higher class:
“ nineteen percent of Americans say they are in the richest 1
percent and a further 20 percent expect to be
someday.” |
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> | Another View: America-as-Community |
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< | However, placing complete responsibility for the widespread irrational behavior towards the estate tax at the feet of the myth of the American Dream is an oversimplification. While it is clear that there is a gap between how people visualize the estate tax and its actual impact, decreasing the knowledge gap does not necessarily effectively combat distaste for the estate tax. In analyzing data from the 2002 National Election Study survey, Larry Bartels found that even people who are well-informed about politics and are much more aware of growing class stratification (and more likely to view economic inequality negatively) are “no less likely than less-informed citizens to support repealing the estate tax.” Thus, people who understand the mythological aspects of the American Dream are just as likely to oppose the estate tax as those who place their faith in the fiction of a permeable class barrier. |
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> | Brooks presents an alternative account: Americans have resisted thinking about wealth redistribution because they prefer to imagine the nation as a community of individuals rather than a hierarchy of economic classes, a unifying outlook that is “incredibly inhospitable to class-based politics.” Brooks’ lens of community is a powerful explanatory resource for one of the more puzzling elements of Bartels’ data: even controlling for fiscal ideology, individuals who feel as if they pay too much in federal income tax, but who would not be subject to the estate tax, are particularly likely to support the repeal of the tax. Brooks’ notion of America-as-community provides for a middle-income taxpayer whose burdensome taxes, far from making him wish that this liability could be transferred to someone more economically advantaged, instead make him empathize with the well-heeled neighbor who is analogously afflicted by the estate tax. In the context of this folksy vision (within which the rhetorical label of “death tax” has particular power), it is difficult to present the estate tax in favorable light even to those whom, considered as individuals, it would strictly benefit. |
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< | One factor may be an alternative mythology that pushes issues of class distinctions and barriers, whether permeable or not, to the side. As noted by David Brooks, Americans resist thinking about wealth redistribution because they prefer not to focus upon the existence of wealth stratification and or upon divisions along lines of class. Instead of thinking about American society through the lens of hierarchy, they prefer to use the lens of community. Thus, Brooks hypothesizes that the political landscape is “incredibly inhospitable to class-based politics” which are seen as “combative rather than unifying.” |
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> | Toward a Contemporary Frame |
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< | Brooks’ theory is useful when placed alongside data from Larry Bartels’ article Unenlightened Self-Interest. Bartels notes that people who feel as if they pay too much in federal income taxes are substantially more likely to support a repeal of the estate tax. Individuals who feel that their own taxes are a burden may feel a sense of empathy towards those affected by the estate tax. Although this could be attributed to lack of information, since at least in some cases it appears that misinformation does not sufficiently account for lack of support for the estate tax, it is useful to return to Brooks’ theory of a preference towards a community-oriented vision of society. |
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> | Upon such a field proponents of the estate tax have fought a losing battle for the last decade. But the very different perspectives on society that have suddenly been (re)discovered by the American people in the contemporary moment offer an opportunity radically to reframe the issue of the estate tax. The finance crisis has revealed a mysterious, monolithic Other – big finance and its bosses – that can be positioned at the root of troubles that have touched most Americans, many severely. Even more conceptually powerful is the most prevalent locus of these troubles: one’s own home, the very symbol of membership in the “community” of mainstream America. Thus have Americans been provided grounds to exclude from their community the financial elite (an exclusion which has become extreme indeed in the case of some AIG executives). In effect, the finance crisis has created at least a subset of the wealthy class toward which the middle- and lower-classes might consider themselves opposed. |
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< | Given a preference for the myth of a community that is not divided by class, one possible way to advocate for the estate tax is to frame supporting it as a decision that strengthen the bonds of community, not just as an effort to fight inequality between members of society. One possible way to do this would be to emphasize that the estate tax incentivizes people to give to charity both during their lifetimes and within their wills, and to point out evidence that repealing the estate tax causes a decline in charitable giving. Charitable giving is not just about redistributing wealth – it strengthens communal ties and allows for cultural, scientific and technological growth and innovation. |
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> | The implications for the estate tax are clear: with the notion of a distinct class of wealthy individual reconstituted as a set of outcasts from an American community, the estate tax may now be reframed as a tax by this community on a group outside of it. Such a framing is particularly important if, as Brooks argues, Americans continue to find the uniting notion of community more palatable than the divisive ideology of intra-national class struggle. Put another way, this is a moment at which a tax on the wealthiest might be framed not as a tax upon another community member but as a tax upon an Other. |
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< | Framing the estate tax not only as an attempt to prevent the solidification of the vast concentration of wealth among a small subset of society, but also as an effort to incentivize behavior that strengthens communal bonds may decrease support for its repeal even among those who are uninformed about the actual impact of the estate tax and who are uninformed about the increasingly limited possibilities of upward social mobility. |
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> | Subsidiary methods of articulating the benefits of the estate tax within the context of an American community suggest themselves. The dearth of charitable giving in 2008 has led to funding crises for many organizations of clear benefit to the American community. No income for the rich and their corporations means no income taxes and no deductible contributions, so the current financial climate has created a relative disincentive for once-a-year charitable gifts. While people might not impose a tax on itself strictly in the hope that charitable giving will flow from it, the non-cyclical burden of the estate tax may nevertheless be framed within the collection of taxes in general as a bulwark against acute hard times (such as today) for organizations that depend on tax-deductible philanthropy. |
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> | Conclusion |
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- I cleaned up your citations. Please study the raw version of this page in order to see how to use the link aid in the topic editor.
- This could be much compressed. You say this is an issue in which framing has made a major difference. You are hardly the first to observe this, and it can be said in a sentence. You think pointing to the value of charitable giving would help with reframing. No doubt you are right, and that too can be said in a paragraph. Further thought will convince that this reframing can be no more than subsidiary: people have never been convinced to impose a tax on the basis of the good works that will flow from the attempt to find a deduction. This can be no more than a secondary argument in support of retaining a tax that has been otherwise justified. So the nature of the primary reframing has gone unsuggested in this draft, and to that end radical compression would permit some further explication. Surely contemporary events suggest a number of possible approaches.
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> | Secondary arguments aside, however, the partial resurrection of American class-consciousness that has accompanied the finance crisis provides the most favorable conditions in recent memory for the positive reception of the estate tax. Within such a frame, the political perspective of those who will strictly benefit from the funds generated by the estate tax may become aligned with their economic interests without demanding that they relinquish a community vision of America. |
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| META TOPICMOVED | by="IanSullivan" date="1235766010" from="LawContempSoc.TWikiGuestFirstPaper" to="LawContempSoc.JamieGottliebFirstPaper" |
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| META TOPICMOVED | by="IanSullivan" date="1235766010" from="LawContempSoc.TWikiGuestFirstPaper" to="LawContempSoc.JamieGottliebFirstPaper" |
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