Psychologists tell us the typical human brain cannot truly comprehend the figure 1 million; it is conceived only as a symbol, an abstraction. So when news reports advise us that Alex Rodriquez (known widely as A-Rod) of the New York Yankees has just combined his apartment with the one adjacent to make his abode worth about $65 million, do we even grasp what that amount really is? Are we impressed, or disgusted?
There is no doubt that A-Rod has expended great effort and discipline to earn such a sum. But coal miners and young Marines in boot camp expend great effort and discipline also. That he has been chosen by God seems unlikely – God is spending his efforts to accomplish great things in Afghanistan and Iraq. One thing we do know: Mr. Rodriquez did not inherit that 65 million bucks. Unlike most of the wealth in the U.S., which is passed from generation to generation, he earned his own. And, with the exception of an annual income tax, which represents his proportionate share of the cost of society, Americans believe he should be entitled to keep and use it as he sees fit.
But how about the little A-Rods that come after he goes to on lesser things? An inheritance tax is a standard in every world democracy, including the U.S., where, since 1916, it has varied from 35 percent to 80 percent (Mr. Rockefeller’s estate paid 70 percent in 1937). In fact, some wealth is totally exempt. Americans agree that children should be able to keep a family business or home without taxation and the law has always allowed an exemption of $7 million for this purpose. (There has never been taxation on wealth left to a surviving spouse.)
This year, however, any heirs at any amount need not worry about exemptions, nor, for that matter, about the tax itself. Among the lesser known of Mr. Bush’s contributions to America was the elimination of this tax entirely for 2010
Those of Mr. Bush’s philosophical persuasion claim an inheritance tax to be double taxation – claiming that the money had been taxed when earned, no matter how many generations ago. Most economists, however, consider an inheritance tax little different than a tax on a used car or a restaurant meal or, for that matter, on capital gains. They consider it a tax on the heirs who, after all, had not previously been taxed.
Two months ago a “soft spoken gas and oil man,” Dan Duncan of Texas, passed on to his reward, leaving the bulk of an estate of $9 billion to his children and grandchildren. Unless Congress acts to change the law, his heirs avoid contributing around $2 billion to the common good, leaving them with only $7 billion to secure their old age and comfort.
Money is power – and power passed for generations tends to create an aristocracy of wealth and privilege. Although the class system of England was rejected by the American colonies well over two centuries ago, the power of inherited money – in its own way as iniquitous as the English peerage – now permeates the U.S.
And is unrealized by most Americans.
Marie Antoinette ate cake only as long as Frenchmen were willing to “believe” she should. Czarist nobility used to inherit human beings known as serfs – until the Russians no longer believed that system to be proper. A-Rod is entitled to his large apartment because we believe he is. But how far does this belief extend beyond A-Rod? To what degree does America believe a self-propagating and protected class of power should be maintained? What kind of society will a super class of inherited power and influence eventually produce?
Money calls the tune in America, and $65 million here and a few billion there soon add up to a great many gated estates and bodyguards for those who have exercised neither great effort nor discipline.
Or ability, for that matter.
Congress – are you listening?
Rodney Quinn, a former Maine secretary of state, lives in Gorham. He can be reached at email@example.com.