The Richest Inheritance

The Senate plans to act soon on a bill that would permanently eliminate the federal estate tax. The bill would benefit about one percent of taxpayers.

My friend Ed belongs to the other 99 percent. The Midwestern farm where Ed (not his real name) grew up, and which his parents still run, is not large enough to fall under the estate tax.

But farm-raised Americans like Ed -- whom the American Farm Bureau and other lobbying groups have portrayed, falsely, as estate tax victims -- exemplify some of the best reasons for keeping the tax. 

Even with his parents alive and well, Ed has already collected his most important inheritance. During those years of living and working on the family farm he acquired the essential means for making his way in life.

What he inherited goes far beyond the know-how to adjust a combine or milk a cow. It includes his thrift, his knowledge of both technology and nature, and his ability to fix just about anything. But that's still only part of it.

Ed carried from the farm the wisdom that takes nothing for granted, that knows hard work and cleverness aren't enough. He was bequeathed the knowledge that we're fundamentally dependent on soil, water and vast, unseen biological networks. He's schooled in the tricky business of taking from a farm's ecosystem what's needed, without crippling it.

Most of us, whether we grew up rich, poor or in between, on a farm or in a town, big city or suburb, have inherited tax-free, inflation-proof estates, differing in content but of comparable value to Ed's.

By bringing that heritage rather than material wealth to the forefront, defenders of the estate tax can retake the philosophical terrain they have lost to its foes.

In their 2005 book Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth, Michael Graetz and Ian Shapiro argue convincingly that lobbyists for permanent elimination of the estate tax are prevailing because they have appealed to "fairness and virtue."

Those who would preserve the tax are faltering, write Graetz and Shapiro, because they have appealed only to narrow self-interest -- by saying, in effect, "This tax will not affect you. It burdens only the wealthy few, so you should support it."

Government statistics show that only a tiny fraction of families pay the tax, and that it does not destroy farms and other small businesses. This has carried little weight in Washington. The anti-tax movement is perceived as having a moral message with stronger appeal, Graetz and Shapiro say.

But only in a society where virtue is measured in hard currency, stocks and bonds can it be considered a moral imperative to eliminate taxes on all estates -- not just those under $2 million or $10 million, but ones that reach into the dozens of billions. 

For almost 90 years, taxation of the nation's wealthiest estates has helped hold down taxes on middle- and low-income people, and check ascendance of a wealth-based aristocracy.

Meanwhile, it has never hampered the ability of parents to hand down to their children the means -- financial and otherwise -- that they need to make it in the world. In the current, possibly decisive battle to save the estate tax, it's time to trump the repeal forces' phony "moral" arguments by emphasizing skills and values like those Ed's parents have passed on to him -- items you don't find cataloged in a last will and testament.

The hour is late, but there is still time to convince senators that the estate tax is a crucial part of an economy that protects every family's legacy, including those treasures that have nothing to do with material wealth.