Posted by Jay Livingston
“God must love the common man,” goes the quote usually attributed to Lincoln, “He made so many of them.”
Greg Mankiw must love the rich. He writes so many articles promoting policies that help them. In today’s installment in the NY Times Business section (here), he writes about the estate tax.*
Not taxing inheritances is what happened when Mankiw was, as he reminds us, chief economic advisor to President George W. Bush. Bush phased out the estate tax entirely. Presumably Mankiw raised no strong objections. It’s possible that Mankiw recommended to Bush the alternate taxes he mentions in today’s Times. We don’t know. But if he did, the only item in his advice package that Bush and the Congressional Republicans paid attention to was the call to just get rid of this pesky tax on the heirs of the wealthy.
In writing against the estate tax, Mankiw pulls the same switcheroo that other opponents of the tax use. He writes about it as though the people who pay the tax are those who accumulated the fortune. They aren’t. Calling the inheritance tax the “death tax” makes it seem as though the dead are being taxed for dying. They aren’t. If you leave an estate to your heirs, you have departed this mortal plane and are safely beyond the reach of the IRS.
The people who would pay the tax are those who inherit the money. If they had gotten this money the old fashioned way, by earning it, they would pay tax on it – and nobody objects on principle to taxing the money people get by working. But money they get because someone gave it to them gets preferable treatment. Mankiw dodges this issue by talking about “families,” as though the family were still the same as it was before the death of the one who made the money – as though the money hadn’t really changed hands.
The same logic would shield income in the paychecks that someone got by working in the family business. And who knows? Maybe Republicans will propose making income from the family business tax-free. The Trump kids would get a free ride. After all, if we don’t want a death tax, why would we allow a parenthood tax?
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*Another post on Mankiw and taxes is here. Other posts about Mankiw in this blog are here and here.
(A day after I posted this, Matt Levine made basically the same criticisms of the Mankiw piece. Levine writes for Bloomberg, so his post probably had a few more readers.)