Robert Rubin, Abigail Disney, and Julian Robertson on Estate Tax
The advocacy group United for a Fair Economy convened a conference-call/press conference earlier today to try to revive the estate tax, or the death tax, or the inheritance tax, or whatever you may prefer to call it, which lapsed at the beginning of 2010.
Robert Rubin, the Goldman Sachs executive-turned Clinton Treasury secretary-turned Citigroup executive, began the call by calling the estate tax a way to find revenue for the government "with no supply-side effect." He didn't clarify, but what I think he meant is that while people may work less when taxes increase, they are not going to stop dying because the death tax increases. It's great to see Mr. Rubin emerging as a believer in supply-side economics; welcome to the fight.
Mr. Rubin urged Congress to reenact the estate tax now, before the August recess, after which it would be "complicated" by the politics of midterm elections. This seemed to be a forthright acknowledgment that the death tax is not a winning issue, politically, for the Democrats.
Mr. Rubin also said that the accumulation of wealth allowed by the lack of an estate tax is "antithetical" to America as a land of "opportunity," "vitality, and dynamism." (How forcing entrepreneurs to cede half of their businesses to the government at death would contribute to vitality and dynamism is a mystery to me, but maybe Mr. Rubin sees something I don't.)
Julian Robertson, the hedge fund manager of Tiger Management, said "America is in a situation where it needs every dollar it can raise," and he said the "fairest way" to raise revenue is to "tax the least deserving recipients of wealth — the inheritors." It struck me that there may be other people who deserve wealth less than inheritors — say, Congressmen who take the money from the children of the people who earned it and then give it away in earmarks to their campaign contributors.
Abigail Disney, whose great-uncle was Walt Disney, said that without the estate tax, "I would essentially live as a parasite." She mentioned two of her non-profit activities, the Daphne Foundation and Peace Is Loud, and said, "I would continue to do my work with or without a tax incentive."
A reporter for Dow Jones asked the speakers if they favored making an estate tax for 2010 retroactive. That way it would cover those, such as George Steinbrenner, who died while there was no federal estate tax in effect. "I think it should be very seriously considered," Mr. Rubin said, arguing that the usual point against retroactive taxation -- that people acted relying upon what they thought were the rules at the time, wouldn't apply, because no one made the decision to die based on the tax situation.
A reporter for CNSNews.com asked Mr. Rubin, since he was talking about fairness, whether it would be "fair" for him to return some of the $80 million in compensation he earned from Citigroup in the years before it needed a federal capital injection. Mr. Rubin said that Citi was a different issue than the estate tax, and noted in addition that he had waived his bonus in 2007 and 2008.
A reporter asked if anyone had any problem with the Bill Gates- and Warren Buffet-led drive to get billionaires to pledge to give away half of their fortunes to charity. No one objected, signaling that they didn't have any problem with people giving money away to strangers tax-free, just with people giving it to their heirs. "What they do is ultimately their decision," said Richard Trumka, the president of the AFL-CIO.
An official with United for a Fair Economy said the group favored indexing the estate tax exclusion amount to inflation and favored legislation offered by Senators Sanders, Harkin, and Whitehouse featuring a $3.5 million exclusion and a 45% initial rate (that escalates on larger estates), and legislation offered by Rep. Jim McDermott featuring a $4 million per couple exclusion and a 45% initial rate.
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