Estate taxes must be equal to be fair

Although estate taxes could be a good idea, today’s tax exemplifies the dangers of an unprincipled democracy that ignores the principle of equality before the law.

Defenders of the recent legislation proclaim that the estate tax exempts 99.8% of Americans. The non-partisan Tax Policy Center estimates that with the new $5 million exemption, only 3,600 estates (in a country of over 300 million people) will pay any tax in 2011.

Everybody wants government spending on purposes they approve of and wants “someone else” to pay for it. But historically we avoided pushing “tax someone else” to extremes because that would have contradicted another important thing that we value: equality before the law.

According to Jean Jacques Rousseau, legitimate government must express the “general will” in two different dimensions. Laws must be general rules (equality before the law) generally arrived at (democracy).

A rule equally applicable to everyone could be highly obnoxious to most people. Imagine a 90% flat rate income tax. But it is impossible to imagine such a tax getting majority support. Democracy protects us from this kind of thing.

But democracy by itself does not protect us enough. Remember the intolerable segregation “laws” in large parts of the U.S. just 50 years ago. These perfectly democratic “laws” did not apply equally to the entire population (and if they had so applied they would never have been enacted).

Rousseau was right: To be legitimate, government must both be democratic and guarantee equality before all laws.

Recent estate tax discussions reflect our increased willingness to ignore equality before the law when enacting taxes. Oregon voters recently approved a state income tax increase that supporters bragged would only affect the top 2% of the population. Arguments in Washington, D.C. in favor of raising taxes only on incomes greater than $250,000 a year showed this same willingness.

We have never decided whether the estate tax’s principal purpose is to help fund government or to prevent vast concentrations of private wealth from being transferred from one generation to another. Estates have never been a major source of revenue for the government, and we could avoid unequal transmission of unearned wealth without the unseemliness of the current tax.

We could enact a 100% estate tax applicable to all estates. Since the purpose is not to raise money for the government, all of the resulting money would go into a trust fund disbursed annually in equal amounts to every man, woman, and child subject to the jurisdiction of our government-----a “social dividend.” We would all be each other’s heirs, and inheritances would increase economic equality instead of reducing it.

To reduce administrative costs, a small deductible could be sheltered from the tax. To discourage evasion of this tax, gifts (above a small exemption) should be considered taxable income, as would dividends people receive from the trust fund.

Ideally all taxes would resemble property taxes, where the same rate applies to all property and the only issue is whether to raise the rate or to lower it. If estate and income taxes worked like this, a lot of the current wheeling and dealing in Salem and Washington, D.C. would be eliminated and government could concentrate on more important business.

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This article ran in the Corvallis, Oregon Gazette-Times on December 28, 2010.

Protest letter to president of Qwest

I do not often send off a letter by snail-mail, but day before yesterday I sent one off the the president of the mega-corporation from which we get our telephone service and DSL internet. The points made may be of general interest, as I am sure I am not the only person who has had trouble communicating with a corporation. (It is ironic that Qwest's very business is communications.) The letter follows:

Mr. Ed Mueller, President

Qwest

1801 California Street

Denver, Colorado 80202

Dear Mr. Mueller:

We do our phone service and DSL internet through Qwest. Last week, for a whole week our DSL service was not right. For three or four days it was on again, off again, and then for four days it was totally off. Refusing to consider the days of spotty service, your business office this morning gave me a $3.74 rebate for the four days of no service despite my suggestion that it should be for the whole month since we suffered the inconvenience and cost of driving to check our email on other people’s wifi.

My main complaint, however, is with the difficulty I had communicating with Qwest and finding out what was going on. At first, your reps (in the Philippines!) insisted everything was ok at Qwest and said we should take it up with proaxis.com, our ISP. Then they grudgingly admitted it was Qwest and said it was being taken care of. Later they said a new piece of equipment needed to be ordered (and apparently hadn’t heard of air freight). They finally told us it would be fixed within 24 hours, but it was actually more than 72 hours. A lot of other people were affected, apparently, and apparently it was local to Corvallis, Oregon, but nobody would or could tell us how to talk with some responsible person in Corvallis to find out what was really happening. There are no local phone numbers or addresses for Qwest in our local phone book.

We hear much talk about banks that are too big to fail. I wonder if Qwest has gotten too big to succeed.

Sincerely,

Paul deLespinasse

Thinking About Bomb Plots

Like other Corvallis residents, I was startled to read the headline in Saturday’s GT: “OSU student arrested in bomb plot.” Also like other Corvallis residents, I hope that people here and elsewhere will not jump to conclusions about Muslims in general from the fact that Mohamed Osman Mohamud styles himself a Muslim.

My personal experiences with Muslims have been positive. I remember with particular fondness one of my students at Adrian College who, although an American by birth, had grown up in Lebanon during the civil war there, and then returned to the U.S. with her parents. And over the years several Muslims were fine faculty colleagues in our college, which was founded by Methodists and is still affiliated with that church.

This said, I find it disturbing that even a few individuals of any faith can become so obsessed with political or religious abstractions that they take actions which are intentionally devastating to fellow human beings.

When I was a student at Willamette University in the 1950s, a political science professor told us that the only way Republicans could win Multnomah Country would be to shut down the Portland telephone system on election day. He thought that Republicans would probably vote anyhow, but Democrats needed to phone people who hadn’t voted and offer to drive them to the polling places.

Since I was a Republican back then I figured out two different ways to shut down the telephone system. I am afraid that one of them, however, was not very practical. It involved hijacking an atomic submarine from the U.S. Navy, running it up the Columbia to Portland, plugging the output from its reactor into the local phone network, and then revving the reactor up to full power and burning out all the telephone circuits.

The other approach, which I won’t disclose for fear someone might actually try it, would have been easy to do. But once I considered the side effects of shutting down the Portland phone network, the idea lost its charm for me, as I think it would for most people. It would have been nice to have the Republicans take Multnomah County. But what about people who couldn’t call the fire department about a house fire? Or those who couldn’t call an ambulance for a heart attack?

Defensible ethical generalizations are hard to come by, but I think there are two such generalizations that apply both to my own case and to Mohamed Osman Mohamud:

First, in a fully civilized world children must be brought up to think concretely about all of the consequences their actions will produce and to evaluate their actions in terms of the Golden Rule (which has analogies in many religions).

Second, no religion can be all good that tolerates any of its members bringing up children to hate people of other races, nationalities, or religions. Islam is not alone in suffering from this imperfection; it has Christian brethren.

Members of an Islamic peace group were handing out leaflets protesting terrorism to the crowd awaiting the Christmas tree lighting in Portland Friday. Ironically, if the bomb had worked, a number of Muslims would have been among the dead and injured, just as a number of Muslim workers were killed when the World Trade Center towers fell.

Clearly, the world is not yet fully civilized. We should avoid reacting to situations like that in Portland in ways that make it even less civilized.

HOW OBAMA, AND ONLY OBAMA, CAN PREVENT NATIONAL BANKRUPTCY

Discussion of what to do about our government’s looming financial catastrophe has become really interesting. It is increasingly obvious that disaster cannot be avoided if we continue political business as usual.

As Rand Paul has warned, our national debt is growing so fast that the interest paid on that debt will be bigger than our annual defense budget within a handful of years. This would obviously be intolerable. But when presidential commission co-chairs Alan Simpson and Erskine Bowles pointed out the tax increases and expenditure reductions necessary to reduce the annual deficit to a manageable 2% of the GDP, politicians all over the spectrum angrily declared the proposals dead on arrival.

David Brooks probably is right: without dramatic public opinion changes, Congress won’t dare to enact the changes proposed by Simpson and Bowles. Some congressmen might be willing to save the country even though it is political suicide for them personally. But a majority would not be willing, so these individuals won’t speak up since their suicides would serve no purpose.

The only person whose political suicide could save us is, therefore, President Obama. A proposal put forward recently by David Stockman suggests how the President could save the country without any cooperation from Congress. Stockman, Ronald Reagan’s director of the Office of Management and Budget, says that all of the Bush era tax reductions should be allowed to expire, not just the reductions for upper income people.

This would put taxes back where they were during the prosperous Clinton years and bring in huge amounts of extra revenue. Any short run harm to the economy, which various interests always exaggerate, would be outweighed by renewed confidence in the dollar and in the stability of our system.

Since the Bush tax cuts expire automatically on December 31, this fix would require no action by Congress. If Congress couldn’t resist extending some of the tax cuts, Obama could implement Stockman’s proposal by vetoing this legislation. He would then go on TV with a candid analysis of the disaster facing us if he didn’t veto the bill. He could point out that he is not increasing taxes in violation of his pledge, since the increase resulted from the expiration written into the law by an earlier, Republican congress. The key paragraph in his speech would be something along these lines:

“I am aware that by vetoing this bill I am probably signing my own political death warrant for 2012. But it is absolutely necessary for the general welfare. My sacrifice will be a small one compared to those made by our brave men and women serving in Afghanistan and Iraq.”

Of course Congress might override the veto. But the President could head this off by promising that if this veto is overridden (which would require bipartisan support) he and Vice President Biden will resign. They would not be willing to assume responsibility for the financial disasters that would then be inevitable. Since this would propel House Speaker John Boehner, Republican, into the White House, this should have a calming effect on Obama’s fellow Democrats.

Stockman’s proposal does not reduce government expenditures. But it increases revenues so much that smaller reductions in expenditures than those contemplated by Simpson and Bowles could put government finances on a solid footing. Given the new Republican majority in the House such modest reductions might be politically feasible.

Supreme Court Should Overturn State Establishment Clause Cases

The establishment clause again has come up for discussion. Delaware Republican Christine O’Donnell brought it up in a debate with her Democratic opponent Chris Coons.

O’Donnell asked Coons (who is a lawyer) exactly where the Constitution requires “separation of church and state.” The law school audience laughed, evidently finding it a stupid question. But in fact “separation of church and state” is not mentioned in the Constitution. Coons’ reply was that “The First Amendment establishes a separation.” And so it does, if we believe the Supreme Court.

But this is a case where we should not believe the Court, which actually found “wall of separation between church and state” in a letter written by President Jefferson. Jefferson’s colorful words are a grossly inadequate generalization about the establishment clause.

The clause reads: “Congress shall make no law respecting an establishment of religion . . . .”; The key word is “respecting,” which means “having to do with” an establishment of religion. This awkward expression was used because the amendment’s drafters intended it to do two things, not just one: 1) prevent Congress from establishing a religion, and 2) prevent Congress from interfering if state governments establish a religion. (Several states had established churches when the First Amendment was written; others had religious tests for public officials.)

Most establishment clause cases challenge actions by state governments (including school districts) rather than by the federal government. If the clause were interpreted as written all these cases would be thrown out of court. Most of them involve actions (monuments in parks, prayer in public schools, Bible reading in schools, etc) which it is a stretch to consider “establishments” of religion. But, assuming that they are indeed establishments, the right of the states and school districts to engage in them would be protected by the establishment clause, not prohibited!

But the Supreme Court has been striking down state government actions under the establishment clause for more than half a century. It has held that although the original Bill of Rights (amendments 1-10) placed limits only on the federal government, the Fourteenth Amendment, added after the Civil War, was intended to place many of these same limits on the state governments.

There is convincing evidence that this was indeed intended when Congress wrote the Fourteenth Amendment. And for the most part this “incorporation” of the Bill of Rights made sense. It did not undermine our protection against federal censorship, for example, to hold that the First Amendment also protects us from state government censorship.

But when the Court “incorporated” the first purpose of the establishment clause to prevent state establishments as well as federal establishments, this totally contradicted the clause’s second purpose, protecting the right of states to establish a religion. The Fourteenth Amendment’s drafters intended no such result. Their report to Congress conspicuously omitted the establishment clause as one of the long list of provisions that would be “incorporated” against the states.

No doubt it would be a bad idea for a state to establish a religion today. But letting nine unelected justices twist a key clause of the Constitution so that it means the opposite of what it originally meant is an even worse idea.

There can be no doubt that the Supreme Court has pulled a fast one here, quite possibly without realizing what they were doing. The proper thing for them to do now would be to recognize their error, overturn all of the cases based on that error, and leave issues of church-state relations to the political and legal process at the state level as our Founders intended.

Reminder: See my website

My companion website includes free access to four of my books, music that I have written, the rules of Perplexichess---a 7-board variation on chess for use by groups---and other materials. To go there click here.

How To Exercise and Still Get Your Work Done

During my recent visit to Adrian College, where I taught for 36 years, my friend Beth Myers asked if I was still riding my indoors bicycle, a Schwinn Airdyne. When I mentioned the things I have done over the last 25 years while wearing out two of these contraptions and starting on a third, she suggested I should write it up as a possible inspiration to others.

So here I sit on Amtrak heading for my next stop in Boston, taking Beth up on this proposal on my netbook.

I bought my first Airdyne because I had made a serious mistake. Feeling cooped up, I rode my bicycle during a cold Michigan January, wearing two pairs of socks for added warmth. Instead of protecting me, the extra pressure inside my shoes reduced blood circulation to my feet and I froze my toes. This put an abrupt end to cold weather bicycling.

Still restless, I bought an indoors bicycle. I got the optional reading rack because without something interesting to do I would be horribly bored within two miles. (The boredom factor may be why, when we moved to Oregon, the movers were astonished by my Airdyne’s odometer. The average mileage they were seeing was about 75---total.) Boredom is not a problem for outdoor bicyclists who have scenery to admire and the danger of being hit by cars to keep their interest up.

I found I could do all my class reading while riding. Many of the assigned books were things I had already read, but I still re-read them all so they would be fresh in mind when we discussed them in class.

I taught a course on the Soviet Union until it disappeared in 1991. I then renamed it: “Autopsy, USSR.” ( We dissected the Soviet corpse--its birth, life, and death.) For background I had subscribed to Pravda, the Communist Party newspaper, in 1962 and continued reading it until 1991. Despite Pravda’s small type I was able to read it on the bicycle, and since I read Russian more slowly than English that added more weekly miles to the odometer.

Later I found I could also do some writing. I printed out a triple spaced draft of a book I was writing. Then I rewrote it by propping the pages up on the reading rack, making changes by hand. Later I quickly typed the changes into my computer (not while riding!).

Recently, having had to clean out my late parents’ house, I have taken pity on our own kids and begun cleaning out my extensive files while riding. In the process I am sorting out and keeping quotations and other material that might be useful for another book I might write.

There are thus many things one can do while getting some exercise. (Some people even watch TV. I have only done this once, in order to observe President Clinton’s impeachment trial while also getting my usual miles. In general, for me TV does not work.)

The bottom line is that I have worn out two Airdynes, the first after riding 55,000 miles, the second considerably more than that, and am working on the third. I rode about 200 miles per week and 10,000 miles per year for many years before I retired and continue to do so since retiring ten years ago. About four fifths of this was indoors, the rest on my real bicycle.

In a nation that has become sedentary, where obesity is increasing, and where time is scarce, I hope my experience can inspire other people to give this approach a try. I will enjoy hearing from those who do.