• The Death Tax and Barney Frank

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    by Stephen Cox: Finding
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    Yesterday I
    watched one of my favorite movies, The
    Bishop's Wife
    (1947). It's the story of . . . well, never
    mind; I don't want to reveal the plot. Anyway, at the end of the
    movie, the bishop (David Niven) gives a brief Christmas sermon,
    in which he says that the best presents are "loving kindness,
    warm hearts, and the stretched out hand of tolerance — all the shining
    gifts that make peace on earth."

    It's a noble
    sentiment, nobly expressed. But this year, when I heard it, some
    curious, speculative questions occurred to me. It's good to be a
    giver of gifts — but what about the receivers of gifts? Is it morally
    right for the receivers to get and keep what others bestow on them?
    If not, should they be forced to surrender their gifts to others?

    If you have
    any common sense, I'm sure you're thinking, "This is crazy.
    Gifts are gifts. By definition, they are freely given, to people
    whom the givers want to have them. Why worry about that?"

    The reason
    I started to worry was something that Barney Frank said.

    In a Dec. 17
    interview with CNBC, Frank, who is the outgoing chairman of the
    House Financial Services Committee, went into a tirade about the
    moral justification of the death tax — the tax that people pay for
    the wealth they receive in the estates of friends and family members.
    Looking and speaking like Elmer Fudd in a fit of hysterical anger,
    Frank shrieked the following: "Heirs, who now inherit, they
    haven't done this on their own, they haven't worked hard; that's
    a pure gift to someone who is lucky enough to be related to someone
    or very friendly with someone, who's [inaudible, perhaps lending]
    them the money."

    Frank has enjoyed
    great political power. He is famous for his intelligence. He is,
    perhaps, a person who deserves to be taken seriously. So I did take
    him seriously. I didn't just think, "Here's a politician who's
    trying to extract more money, even if he has to get it by robbing
    the dead." I started thinking about this idea of working
    hard for things and earning them, and thereby coming
    to deserve them.

    Granted, Frank
    was wrong on some of the facts. He denied that any heirs have "worked
    hard" for what they get. Tell that to the heirs of some crotchety
    old person who tortured them for decades, demanding their service,
    repressing their criticism, and ignoring their wishes, but who finally
    forked over some wretchedly small bequest to them. These people
    worked. Or, to go to the opposite end of the spectrum, tell
    that to the people who devoted themselves to the care of a beloved
    friend or relative, expecting no reward, and were then surprised
    by a kindly remembrance in their loved one's will. There are indeed
    heirs who work and deserve.

    So Frank was
    mistaken about a lot of things that really happen, that often happen,
    that usually happen in human life. You would think that an intelligent
    person would be well acquainted with these things. But it's easy
    to confuse being verbal with being intelligent. Rep. Frank is certainly
    verbal; intelligence is another matter.

    At any rate,
    you would expect a conscientious person, of whatever degree of intelligence,
    to reflect on the strange contradiction involved in denying people
    the right to unearned wealth, while supporting programs that give
    people unearned wealth. Congressman Frank is a great proponent of
    welfare. His insistence that people should be enabled to buy a house
    even if they don't earn enough to afford it was partly responsible
    for the disastrous bust in the housing market. Of course, he's not
    the nation's only would-be redistributor of wealth. Modern liberalism
    (and a great deal of modern conservatism) would not exist if it
    weren't for the idea that people who haven't actually earned something
    should get it from the government.

    But putting
    Frank's intellectual contradictions aside, what about the general
    principle, the principle that he suggested in his interview — the
    idea that if you haven't worked hard for something, you ought
    to be prepared to give it up?

    I'll ignore
    one obvious issue, an issue that libertarians often bring up (and
    it's a good thing they do): the question of why the government
    should be the entity that takes people's "unearned" wealth
    away. Surely the government didn't work hard for anything
    I inherit from a friend or relative, or even from someone I never
    heard of. If working and earning are the justifications for the
    possession of wealth, what justification does the government
    have?

    As I say, however,
    let's put this particular issue aside, and return to the basic problem:
    What is the moral status of my unearned wealth? Should I feel guilty
    about possessing it?

    I'll be honest
    with you: I have a lot of this stuff. When it comes to unearned
    wealth, I am rich beyond the dreams of avarice. I didn't work
    to gain the jewel of life, love and friendship. Friendship is
    a gift. True, it's not a gift that is randomly bestowed. Few gifts
    are. My friends presumably have some reason, however eccentric,
    for giving it to me. Nevertheless, it is a gift.

    I did work
    to get my job, and succeed in it. But my work has never been
    equal to the enormous pleasure my job provides. And I certainly
    never worked to create such things as electric lights, motion
    pictures, books, computers, the paintings of Andrea del Sarto, the
    glory of the summer constellations, or a human history rich with
    interesting events and inspiring personalities. I didn't work
    hard to be born in America. I didn't earn the constitution
    of the United States.

    Virtually all
    of my life has been a gift, a shining gift. If I have no right to
    such gifts as I've received, I have no right to life.

    Maybe Barney
    Frank would acknowledge the same thing about himself, if he were
    thinking calmly. I well remember my only sighting of Mr. Frank.
    It was years ago, at Washington National Airport. At that time,
    he wasn't as fat and self-satisfied as he is today, but he was self-satisfied
    enough, and fat enough, and it was amusing to see him strutting
    across the concourse, holding a triple-scoop ice cream cone in his
    outstretched hand, watching it as admiringly as if it had been the
    Hope Diamond. In every aspect of his being he projected the sense
    that he deserved that tower of ice cream. And he did, in
    the sense that he'd paid for it.

    But in a larger
    sense, according to his own theory, he didn't. He hadn't worked
    to invent ice cream, or airports, or congressmen, or congressional
    salaries. He hadn't earned his birth in a free and prosperous
    America, a land flowing with ice and cream. Yet none of these considerations
    prevented him from enjoying his dessert. There was no appearance
    of guilt, no attempt to share the feast with others. I'm confident
    that if an agent of the government had turned up to take some part
    of Mr. Frank's ice cream cone, he would have fought like a tiger
    to keep and devour it himself.

    But wait, you
    may say — in his interview on CNBC Frank intended to speak only
    of money, not of the less abstract gifts, such as ice cream cones,
    that we gladly receive from friends or relatives or providence (or
    luck, as he would have it).

    Well, here
    again there are some facts that ought to be respected. The estate
    taxes that Mr. Frank supports require more than just surrendering
    some money that was bequeathed to you. People don't ordinarily inherit
    huge chunks of cash; they inherit other forms of property. To pay
    the taxes on this wealth, they have to sell the property, often
    at the sacrifice of much of its value. So Frank wasn't talking just
    about money; he was talking about farms and businesses and your
    grandmother's china and everything else that may have to be liquidated
    to produce the cash he thinks the government deserves.

    But, for the
    sake of argument, suppose that money is the only thing at issue.
    Consider the following scenes from human life. Notice how strange
    they become when you try to apply Frank's ideas about unearned wealth.

    1. I want to
    treat my friend to a trip to Europe — not because he worked hard
    for it, but simply because I want him to enjoy the sights with
    me. If I give him $5,000 to cover his expenses, does he have a moral
    obligation to surrender, say, $1750 of it to the government? (We're
    looking at a 35% estate tax for 2011, for heirs who happen to receive
    more than such and such an amount. Incidentally, what other moral
    imperative is measured in arbitrary terms, by a majority vote of
    Congress — a 35% tax in 2011, a 55% tax in 2001, and who knows what
    kind of tax in 2020? ) But if I charge the trip to my credit card,
    will Barney Frank demand that my friend surrender $1750 of the money
    value of my gift, even if it means selling off some of his property?
    Or will he be allowed to claim that he is actually earning the
    trip, because he'll have to put up with me as a fellow traveler?
    Will he need to file an income tax schedule in which he itemizes
    my faults? He'll need more than one accountant to complete that
    form.

    2. Your daughter
    is getting married. You want to give her something that she can
    use in her own way. So you write her a check for $10,000. She didn't
    earn that money. Does that mean she has a moral imperative
    to surrender $3500 of it to the government? If so, you'll need to
    write her a check for $13,500, to make up the difference. Does she
    then have a moral duty to surrender the same proportion of the $13,500
    as she did of the $10,000? If so, you'll need to write her another
    check, this time for $14,725 — and so on and so on, in a weird riff
    on Zeno's paradox. Is this the way morality works?

    3. You are
    about to die. You are lying on your deathbed. You hurriedly make
    out your will. Suddenly inspired by family values, you bequeath
    $50,000 to your nephew Albert, whom you have never seen and know
    nothing about. Is Albert morally obligated to give $17,500 to the
    government, because he never earned the $50,000? Congressman
    Frank would certainly answer in the affirmative. But suppose that
    you have, like a sensible person, omitted the unknown Albert from
    your will — yet five minutes before your death, he bursts through
    the door, exclaiming, "Uncle! I'm here at last!" Impressed
    by this display of love, you write him a check for $50,000. Then
    you die. According to Frank's system of morality, was it only Albert's
    presence in your will that would oblige him to pay anything, or
    does he have a moral obligation to surrender the $17,500 that he
    received a moment before your death, because the lucky boy
    still did nothing to earn it? Or was his journey to your
    deathbed — which admittedly may have been much more arduous than
    any duties performed by a US congressman — enough like work to
    leave him free and clear?

    These questions,
    though easy enough to come up with, have evidently not occurred
    to the sagacious Mr. Frank. Maybe they will, now that his party
    is out of power and he will no longer be the head of an important
    congressional committee. He'll have time to think. And maybe — who
    knows? — he will find some answers. It would be terrible to believe
    that he had already surrendered to government service the best part
    of his unearned gift of intelligence.

    December
    29, 2010

    Stephen
    Cox [send him mail] is Professor
    of Literature at UC San Diego. His most recent books are The
    New Testament and Literature

    (Open Court Publishing) and The
    Big House: Image and Reality of the American Prison

    (Yale University Press).

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