Nature Noted

Notes on a changing Nature

Location: Bellville, Texas, United States

I never would have predicted this one

Monday, May 02, 2005

Death to the Estate Tax!

Here's an novel argument out of right field. This commentary in the Christian Science Monitor argues that environmentalists should be against the estate, excuse me, death tax. (Isn't semantics wonderful? or is that Aren't Semantics wonderful?) Here's the nut of the argument One of the most sinister effects of this tax is the needless loss of millions of acres of farmland, forest, and wildlife habitat. When a landowner dies, his or her heirs are often shocked to find out that they must pay huge sums to the government within nine months of the death, based on the value of the land. To pay the money, they are typically forced to sell the land - often to developers.A particular problem is the breakup of contiguous tracts of land, which are necessary for larger animals to forage and roam. A 2000 study by the US Forest Service's Southern Research Station found that about 1.3 million acres per year of forested land had to be sold to pay the estate tax, and of the land sold, 29 percent was developed or converted to other uses. And 2.6 million acres of trees are chopped down each year to pay the estate tax. (The study makes clear that people sold the assets to pay the estate tax, rather than simply to pocket some cash.)
The counter-argument? Also supplied by the same commentary.The Friends of the Earth spokesperson also noted that the estate tax actually encourages conservation thanks to conservation easements - where landowners get tax relief in exchange for preserving their land. It is certainly plausible that an easement could induce some heirs to preserve their land, who otherwise would have sold it if there were no estate tax. But conservation easements are complex undertakings; most landowners and heirs are not willing to go through the time and expense of setting them up. In 1998, the Office of Management and Budget estimated that deductions for conservation easements over the ensuing five years (1999-2003) would reduce estate tax revenue by less than two-tenths of one percentage point (0.18 percent). Two New York Democratic members of Congress certainly seem to believe the estate tax is taking a toll on the environment. Concerned about dwindling open space on Long Island, Sen. Charles Schumer and Rep. Tim Bishop put forward a bill last year that would defer the estate tax for those who agree to not sell their land to developers.
Not content to just make the argument, the commentary then devolves into name-calling.
No doubt there are some within the environmental movement who genuinely believe that the estate tax actually helps, or has a neutral effect on, the environment. But I suspect that a big reason for environmental groups' support for, or silence on, the issue has to do with other factors. Most employees of and donors to major environmental groups hail from the left side of the political spectrum, where anything that reeks of tax cuts for the rich is anathema. Even for those organizations sympathetic to repealing the estate tax, publicly supporting that could alienate much of their donor base
So there you have it. Kill the death tax, support the environment. Support the estate tax, and become a long haired hippie apologist. What could be more clear?


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Anonymous Anonymous said...

Whether stock brokers whose sole focus is on portfolio managment, making of fees, and growth of portfolios can even be adequate fiduciaries is a question that has not been debated.

Legitimacy may well depend upon the result regardless of their disclaimers.

As for the period of postmortem settlement before taxes and closure of estates, preservation of capital would seem to be the overriding prudent investment - which is not likely in the possession of stock brokers with disclaimers. Hence, the conversion from stocks to treasuries or bonds makes perfect sense if preservation of capital is the objective for such estates.

If that isn't done, it would seem logical to conclude that the objective is anything other than fulfilling the obligations of a prudent trustee/executor, etc. as a per se violation of duties.

If there was not such a large industry that depended upon the estate tax for theft opportunities under the guise of estate taxes, there would be no need for an estate tax.

The cure is to keep the estate intact, preventing theft, and thereby using the funds for general working capital by governments until settlement is completed, foreclosing theft opportunities - in essence, maintaining the wealth as productive wealth from a government viewpoint, without having to tax or allow the estate to be stolen by interlopers.

8:44 AM  

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