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Genuinely curious about the estate tax

Lots of discussion of the estate tax repeal in the last couple of days: Kevin Drum posts a graph showing the numbers of taxed estates in the U.S., and this morning Tom Bozzo refers readers to a post at Angry Bear on the imminent elimination of the estate tax. As I understand it, the Anti Death Taxers argue that the tax destroys small businesses and family farms—the bedrock of American entrepreneurialism, symbol of our hardscrabble gumption, and so forth—despite the fact that there is zero evidence that this actually happens.

For the sake of argument, let’s imagine that it’s true: The estate tax wipes out the small businessperson and takes away incentive to be industrious. Yet I imagine that if I had a successful business or farm I wouldn’t simply will it to my heirs; I’d incorporate it, make it an LLC. Besides, why should I ever hold my small business personally? That would expose me to all kinds of personal liability to every yahoo who spills coffee on his lap. It seems that you’d have to be a pretty unique sort of businessperson to build a multimillion dollar fortune, on one hand, while failing to plan your estate, on the other.

Some variety of incorporation would essentially protect the assets of the farm and/or business, right? This would seem to make all the rhetoric about the Death Tax particularly dishonest, but I haven’t seen that element in particular pointed out elsewhere. This returns us to the fact that what the estate tax by definition really does tax is not hardworking family businesses but actual estates: Those massive private holdings of what Kevin Drum calls the super-billionaire class:

The only thing being taxed is estates of robber baron size; the only people being taxed are the pampered children of the robber barons; and the cost of repeal is on the order of $1 trillion per decade. Apply that to Social Security and the system would still be solvent when Captain Kirk retired.

And, somehow, the Democratic party gets painted as a haven for elitists and idealogues. From Josh Marshall:

If someone tells you that at least the Republicans have a plan and the Democrats don’t, laugh in their faces. The Republican agenda (the actual bills they are passing right now) is to keep weakening Social Security at every opportunity, just like they’re doing today. The most constructive thing anyone can do under present circumstances to protect Social Security, the only ‘plan’ that isn’t a joke, is to oppose the Republican agenda in Congress, to stand up and say “do no more harm.”