Fox Personalities Demonize Estate Tax As Illegitimate

Napolitano: “What Right Does The Government Have To Take Money From The Dead?” For Business host Andrew Napolitano, after explaining the terms of the estate tax agreed to in the President's proposed tax plan, asked, “But why should the government be entitled to confiscate a single penny of anyone's possessions simply because he died?” He went on to ask, “What right does the government have to take money from the dead rather than let the dead give it to his or her children?” and to comment, in referring to guests who supported an estate tax, “you're all in favor of taking money the dead.” [Fox Business, Freedom Watch, 12/7/10]

Napolitano: “The Government Has No Moral Right To Take From Us That On Which We Have Already Paid Taxes.” Discussing the estate tax on Fox & Friends, Napolitano said:

NAPOLITANO: But the big picture is, the government has no moral right to take from us that on which we have already paid taxes. We should decide where our estates go: to our children, to our loved ones. Not to bureaucrats in Washington.

When confronted with the 16th Amendment to the Constitution as legal justification for the tax, Napolitano replied, “Repeal the 16th amendment! Get rid of the IRS! We'd all be a lot happier.” [Fox & Friends, 12/10/10]

Kelly: “If I Work All My Life And I Pay My Taxes On My Income And Then I Die And I Want To Pass ... An Estate To My Kids, Why Should I Pay The Government Again?” From an interview of Rep. Anthony Weiner by Fox News host Megyn Kelly:

KELLY: If I work all my life and I pay my taxes on my income and then I die and I want to pass on what would be great if it were a $5 million dollar estate to my kids, why should I pay the government again? Why should there be a 35 or 45 or 55 percent tax on that again?

WEINER: You aren't paying anything in that case because you'll be dead.

KELLY: Yes, well, the estate is, and that's less for my children.

WEINER: But you -- the only question is, look, I believe -

KELLY: No, no, you're not -- answer my question. How is that fair?

WEINER: Megyn, Megyn, you're going to have to let me answer the question if we're going to have a conversation that gets us anywhere.

KELLY: Go ahead.

WEINER: The only question here is not whether or not there should be a tax on that, the question is where the limit should be and how much should be withheld -

KELLY: No, I'll ask the question and you're not answering. Just tell me: How is it fair? [Fox News' America Live, 12/08/10]

O'Reilly: “This Is A Seizure Of Private Property. Where In The Constitution Does It Say The Government Can Seize Private Property?” From Bill O'Reilly's December 9 interview with Kelly:

O'REILLY: Look, this is interesting. Weiner did what [Rep. Charles] Rangel did, you know, at the top of the program. He's basically not going to answer the question, your question. He's going to answer whatever question he wants to answer.

KELLY: He didn't want to answer why it's fair.

O'REILLY: Right. And what I would have brought into Weiner and you wouldn't have gotten an answer anyways -- look, this is a seizure of private property. Where in the Constitution does it say the government can seize private property? That's what it is. Because as you rightly pointed out, it's already been taxed.

KELLY: Right.

O'REILLY: This is a double tax.

KELLY: And his answer was no it isn't, because you pay taxes on it, but your children haven't paid taxes on it.

O'REILLY: Right. You're dead and the children don't earn --

KELLY: They'd never paid taxes so they're going to get hit. But they're getting hit for the first time. So, in his world, one and one doesn't equal two.

O'REILLY: But all you wanted to know, all Megyn Kelly want to know was how is this fair?

KELLY: Justify it.

O'REILLY: Right.

KELLY: Yes, go ahead and justify it.

O'REILLY: And he didn't want to do that.

KELLY: No, because, you know, the basic philosophy is and I've read a lot about this lately is it's basically a wealth redistribution policy where they say --

O'REILLY: Of course.

KELLY: -- you know, we take from the super rich and it's not unfair because we don't take that much from the super rich and we feel like --

O'REILLY: Do you understand the philosophical justification behind it? Because he could have gone to that. The philosophical justification for the liberal community is: you owe it to your country because your country provided you the opportunity of becoming a zillionaire. [Fox News, The O'Reilly Factor, 12/09/10]

Estate Tax Compromise Would Hit A Small Number Of Extremely Wealthy Estates

AP: "[T]he [Estate] Tax Would Affect Just 0.14 Percent Of All Estate In 2011, Or About 3,500 Estates, Generating About $11.2 Billion In Revenue" The Associated Press reports that the recently agreed-to tax deal between Obama and Congressional Republicans exempts the first $5 million of an individual's estate, with a top rate of 35 percent. AP reports that the tax would hit 3,500 estates in 2011 and generate roughly $11.2 billion in revenue. the AP article:

More than 40,000 estates worth $1 million to $10 million would be expected to escape inheritance taxes next year under the deal struck by Republicans and President Barack Obama.

The package would leave only about 3,500 of the largest estates subject to federal taxes next year, a boon for the wealthy that many House Democrats say they can't accept.

[...]

The federal estate tax reaches fewer than 1 percent of inheritances, but it has long been a political lightening rod among lawmakers from both parties. Many Republicans want to eliminate the estate tax altogether, derisively calling it a “death tax” that makes it hard for parents to transfer small businesses to their children.

Estate tax opponents got their wish this year, when the tax was temporarily repealed. But the tax holiday will be short-lived because, under current law, the estate tax is scheduled to return next year with a top rate of 55 percent for estates larger than $1 million for individuals and $2 million for married couples.

The package Obama negotiated would set the top rate at 35 percent and exempt the first $5 million of an individual's estate. Couples could exempt $10 million.

At those levels, the tax would affect just 0.14 percent of all estates in 2011, or about 3,500 estates, generating about $11.2 billion in revenue, according to an analysis by the Tax Policy Center, a Washington research group.

Under the current law, more than 44,000 estates are projected to be taxed next year based on the number of estate-holders in that value bracket who are likely to die. That would generate $34.4 billion in taxes. [AP, 12/9/10]

Tax Policy Center: Preliminary Estimates Show Tax Deal Would Hit Only 50 “Small Farms And Businesses” in 2011. Furthermore, TPC preliminary estimate indicate that the proposed estate tax would hit only 50 “Small Farms And Businesses,” defined as "[e]states for which farms and business assets comprise at least half of gross estate and total $5 million or less." For these estates, the average tax rate is estimated to be 7.4 percent. For all estates affected by the tax, the average tax rate is estimated to be 14.4 percent. [Tax Policy Center, accessed 12/10/2010]

U.S. Has Taxed Estates Since The 18th Century; Modern Estate Tax Implemented Nearly A Century Ago

IRS: “Modern Estate Tax” dates to 1916." In “The Estate Tax: Ninety Years and Counting,” prepared by the Internal Revenue Service, authors Darien B Jacobson, Brian G. Raub, and Barry W. Johnson write of “The Modern Estate Tax”:

The years immediately following the repeal of the inheritance tax were witness to an unprecedented number of mergers in the manufacturing sector of the economy, fueled by the development of a new form of corporate ownership, the holding company. This resulted in the concentration of wealth in a relatively small number of powerful companies and in the hands of the businessmen who headed them. Along with such wealth came great political power, fueling fears over the rise of an American plutocracy and sparking the growth of the progressive movement. Progressives, including President Theodore Roosevelt, advocated both an inheritance tax and a graduated income tax as tools to address inequalities in wealth.This thinking eventually led to the passage of the 16th Amendment to the Constitution and the enactment of the Federal income tax. It was not until the advent of another war, World War I, that Congress would enact the Federal estate tax.

The Revenue Act of 1916 (39 Stat. 756) created a tax on the transfer of wealth from an estate to its beneficiaries, and thus was levied on the estate, as opposed to an inheritance tax that is levied directly on beneficiaries. It applied to net estates, defined as the total property owned by a decedent, the gross estate, less deductions. An exemption of $50,000 was allowed for residents; however nonresidents who owned property in the United States received no exemption. Tax rates were graduated from 1 percent on the first $50,000 to 10 percent on the portion exceeding $5 million. According to the act, taxes were due1 year after the decedent's death, and a discount of 5 percent of the amount due was allowed for payments made within 1 year of death. A late payment penalty of 6 percent was assessed unless the delay was deemed “unavoidable.” [IRS.gov, accessed 12/10/2010]

IRS: “Taxation Of Property Transfers At Death Can Be Traced Back To Ancient Egypt As Early As 700 B.C.” The IRS report details the history of inheritance taxes, from Egypt, 2,700 years ago, through ancient Rome, the European middle ages, into the modern era. From “The Estate Tax: Ninety Years and Counting”:

Taxation of property transfers at death can be traced back to ancient Egypt as early as 700 B.C. Nearly 2,000 years ago, Roman Emperor Caesar Augustus imposed the Vicestina Hereditatium, a tax on successions and legacies to all but close relatives. Taxes imposed at the death of a family member were quite common in feudal Europe, often amounting to a family's annual property rent. By the 18^th century, stamp duties and registration fees on wills, inventories, and other documents related to property transfers at death had been adopted by many nations, including that of the newly formed United State of America." [IRS.gov, accessed 12/10/2010]

IRS: “In 1797...Federal Stamps Were Required On Wills Offered For Probate, As Well As On Inventories And Letters Of Administration.” Furthermore, "[t]he tax on the receipt of legacies was levied on bequests larger than $50, from which widows (but not widowers), children, and grandchildren were exempt. From “The Estate Tax: Ninety Years and Counting”:

In 1797, the U.S. Congress chose a system of stamp duties a source of revenue in order to raise funds for a Navy to defend the nation's interest in response to an undeclared war with France....Federal stamps were required on wills offered for probate, as well as on inventories and letters of administration. Stamps also were required to receipts and discharges from legacies and interstate distributions of property....The tax on the receipt of legacies was levied on bequests larger than $50, from which widows (but not widowers), children, and grandchildren were exempt....In 1802, the crisis ended, and the tax was repealed. [IRS.gov, accessed 12/10/2010]

IRS: “The Advent Of The Civil War Again Forced The Federal Government To Seek Additional Sources of Revenue, And A Federal Death Tax Was Included In the Revenue Act of 1862.” From “The Estate Tax: Ninety Years and Counting”:

IN the years immediately preceding to American Civil War, revenue from tariffs and the sale of public lands provided the bulk of the Federal budget. The advent of the Civil War again forced the Federal Government to seek additional sources of revenue, and a Federal death tax was included in the Revenue Act of 1862...[T]he 1862 package included a legacy or inheritance tax in addition to a stamp tax on the probate of wills and letters of administration. Originally, the legacy tax only applied to personal property, and tax rates were graduated based on the legatee's relationship to the decedent, not on the value of the bequest or size of the estate.

[...]

By 1864 the mounting cost of the Civil War led to the reenactment of the 1862 Act, with some modifications....The end of the Civil War, and subsequent discharge of the debs associated with the war, gradually eliminated the need for extra revenue provided by the 1864 act. Therefore, in 1870, the legacy and succession taxes were repealed....Between 1863 and 1871, these taxes had contributed a total of about $14.8 million to the Federal Budget. [IRS.gov, accessed 12/10/2010]

IRS: “A Federal Legacy Tax Was Proposed In 1898 As A Means To Raise Revenue For The Spanish-American War...Despite Strong Opposition, The Legacy Tax Was Made Law.” From “The Estate Tax: Ninety Years and Counting”:

Throughout the last half of the 19^th century, the industrial revolution brought about profound changes in the U.S. economy. Industry replaced agriculture as the primary source of wealth and political power in the United States. Tariffs and real estate taxes had traditionally been the primary sources of Federal revenue, both of which fell disproportionately on farmers, leaving the wealth of industrialists relatively untouched...

[...]

Against this backdrop, a Federal legacy tax was proposed in 1898 as a means to raise revenue for the Spanish-American War. Unlike the two previous Federal death taxes levied in times war, the 1898 tax proposal provoked heated debate. Despite strong opposition, the legacy tax was made law. Although alled a legacy tax, it was a duty on the estate itself, not on its beneficiaries, and served as a precursor to the present Federal Estate tax...The end of the Spanish-American war came in 1902, and the tax was repealed alter that year. Although short-lived, the tax raised about $14.1 million. [IRS.gov, accessed 12/10/2010]

Tax Foundation: Modern Estate Tax Hits Far Fewer Estates Than In Recent Past. A Tax Foundation report from 1994 explains that "[p]rior to the 1976 Act [reforming the estate tax], estate taxes were paid by approximately seven percent of estates in any given year. After 1987, the estate tax was paid by no more than three-tenths of one percent in a given year." [Tax Foundation, January 1994]

Fox Calls For Repeal Of The 20th Century

Since President Obama's election, Fox personalities have expressed opposition to or called for the repeal of virtually every progressive achievement of the 20th century, including Social Security, Medicare, the Americans with Disabilities Act, portions of the Civil Rights Act of 1964, and the 16th and 17th Amendments to the Constitution.