Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes

Rating:
Summary: A Topic We All Should Care About
Review: "Wealth and Our Commonwealth", is co-authored by the father of Bill Gates of Microsoft fame, and the man who is repeatedly identified as the wealthiest man in the world. The idea that this author, his son, and hundreds of others that comprise some of the wealthiest people on the planet support estate taxes, and are appalled that estate taxes were repealed recently may initially surprise some. However, in this concise, lucid, and insightful essay, the co-authors demonstrate how foolish the repeal of the estate tax was, and why it is already causing fiscal harm at the state level, and why everyone who lives in this country should pay attention to the topic.

William H. Gates, Sr. is at amongst those leading the charge at the reckless conduct of the congress that passed this legislation and the man practices what he preaches, just as those who signed a national publicity campaign to stop the estate tax from being repealed. Mr. Gates Sr. also must practice at home what he speaks of in his book for at the end of 2001 The Bill & Melinda Gates Foundation, the largest in the world had just over $24 Billion dollars in funds, and all that in the form of cash. Other well-known and very wealthy individuals that believe estate taxes are appropriate include a man rarely criticized for his judgment, Warren Buffet.

Before change can take place, firstly, the truth must be made readily available and secondly, the population of this country must care enough to listen. How to get people to pay attention to a tax that 98% of us are immune from? That question has not been answered yet, but it will in the coming years, for the other 98% that never pays the tax is going to have to either be taxed in new ways to make up for the gap or suffer the results of budget cuts. It may not sound like a great deal of money, but this tax brings in about 1% of all revenue to the Federal Government, this book suggests that number could rise to 2-5%. The Federal Government can not spend less, so it will have to replace these funds, and they will do so with regressive taxes on everyone else. The burden of their insane behavior is already being shifted to the states as you will read in the book.

The reality is, the concept of, "self made", is a myth. One third of the Fortune 400 inherited their super-wealth. A generation got their start with the GI-Bill that allowed college educations without the crushing debt a collegiate experience demands today. Few have not benefited from the public domain. The Hilton family readily explains that their Hilton Hotel empire could not exist outside an essentially peaceful nation, could not exist with the most basic infrastructures that their facilities need like highways, water, and on and on, state and federal programs funded by everyone, so why should not the same, "everyone", get something back, why should wealth become dynastic? Warren Buffet believes society over values what he does, and readily admits that in most countries, after 30 years his skills would yield him little.

The estate tax does not destroy wealth; no children of the wealthy are on bread lines the day after mom and dad pass away. The book does a brilliant job of debunking the myth that family farms are destroyed by estate taxes or that mom and pop businesses close because of the tax.

When the people that are the wealthiest, when those that control more money per person than the vast majority of the nation are telling you a tax should be kept or even increased, it's probably a good time to listen. After all, that $24 Billion that Bill and Melinda Gates have already set aside came from their own funds, but those funds were created by the circumstances and the activities and the wealth of an entire nation.

Rating:
Summary: Must Reading for Every Member of Congress
Review: Most controversial issues have two sides. The authors of this book present the arguments in favor of abolishing the estate tax in "the best light" by quoting at length and in context the abolition proponents' rationale. They then destroy these arguments by showing how and why they are based on false and often misleading "facts." They also make the case as to why an estate tax on those few accumulated fortunes which are, even under the pre-2001 law, subject to the tax is an important foundation stone of the American Experiment. I am not naive enough to believe that those who have made a career of opposing the estate tax will be swayed by the authors' book, but anyone with an open mind should be.

Rating:
Summary: Outstanding, comprehensive and brief!
Review: Not written for numbers people, but for those interested in public policy and the future shape of our society. Shows how the unseen -- or perhaps frequently unexamined -- hand of a major part of tax law has profound effects. Treats all aspects of the debate. Gives a fair history of a number of main points around the last century's debate about appropriate national taxation. Lucid, readable; reasoned but passionate. Great suggestions for further reading. And all this in fewer than 140 pages plus appendices. Deserves a Pulitzer.
I have been a tax accountant for over 25 years, with a professional interest in this subject, and I learned a great deal!

Rating:
Summary: Brilliant. A must read for those who care about the USA.
Review: This brief book strongly explains how society will benefit from keeping an estate tax on the wealthy. It explains how the estate tax allows America to be a meritocratic place where the best and brightest rise to the top and can make the most positive social change. It explains how charity giving will increase during wealthy individual's lifetimes if they know they face a big tax at the end. It gives a brief history of the estate tax and why it was introduced in the first place. It exposes the hypocrisy of Bush's estate tax repeal that expires in 2010. All in all, it provides a very concise argument why we must give back to the society which enabled us to have the potential to become wealthy in the first place. I never thought I'd be able to read through a book on tax law without putting it down. This book is brilliant.

Rating:
Summary: 6 Stars Out of 5
Review: This extraordinary little book packs a gigantic punch. I'd love to summarize it here, but as soon as you buy the book, get straight to Chapter One. It's enough to make you sick in the stomach.

Is America a "democracy"? After Ch.1 you really wonder. A sample from p. 15: Around the turn of the century, shortly before WWI, the top 1 (one) per cent of the population owned 56.4% of the country's private wealth - at the same time, the authors tell us, "the wealthiest 10 [ten] per cent of households owned 90% of all wealth." Now, think about it: 90% of Americans together owned a mere 10% of the country! (And most of the country's wealth was in private hands, because the government at all levels owned very little of value. There wasn't even a national park in existence!) That's neither justice nor democracy.

American society started to improve since then, especially after the introduction of income tax. But things have again gone in the opposite direction in the last two decades, so that "the United States is now the most unequal society in the industrialized world." (p. 14)

This fact is borne out in the UN Human Development Report 2002. (I was surprised that this authoritative publication is NOT cited anywhere in this book.) This report gives the "Gini Index" for each country, among numerous other data. The Gini Index is not something out of Aladdin: It "measures inequality over the entire distribution of income or consumption. A value of 0 represents perfect equality, and a value of 100 perfect inequality." (p. 197) Ranked are these selected countries in the industrialized world: Denmark (24.7 - the least unequal society), Japan (24.8), other Scandinavian countries (including Finland) at around 26, then Germany (30.0), then English-speaking countries like my own Canada (31.5 - the lowest in this group), Australia (35.2 !!), the UK (36.8 - hardly news, what with their queen and lords), and finally the United States at 40.8. (France, the host of the French Revolution, is a surprising 32.7.) For comparison, developing China is 40.3 (beats the US by a hair - but not for long), India only 37.8 (I guess only a couple of people can be called rich there), and Russia is the most unequal of all at 48.7.....but then Russia is now run by a mafia of ruthless moneylords, much like America a century ago, when men like Rockefeller and Al Capone ran all the shows. (Still it is better than the gulag and secret police. And anything is better than communism.)

Getting rid of the estate tax won't help one bit. On the other hand, not repealing it in and of itself is just a small step in the right direction, hardly enough to stop the country from sliding down the slippery slope to a second Gilded Age. This book makes a very convincing argument why getting rid of the estate tax is truly a form of insanity the name of which is still not in the psychiatric textbooks. Bill Gates Sr.'s position is supported by his son (the world's richest man - mostly self-made). Warren Buffett, the world's second richest man (also self-made), disagrees with them only because he thinks the estate tax as it is does not go far enough. (He'd prefer to tax 100% of the super-rich's inheritance not given to charity.) This estate tax is absolutely, undoubtedly no "death tax" - as though everyone has to pay it, even the poor. Rather, it is really just "rich kids' tax"! Let's start calling the thing by its right name.

Andrew Carnegie is frequently quoted in this book, for good reasons. This mega-hero of the Gilded Age, who rose from abject poverty in a foreign country to become the richest man on earth, literally built America - with the steel from his furnaces, used in railroads and highrise buildings. He went even further than Buffett: "Any rich man [or woman, I assume] who doesn't give away his money to charity BEFORE he dies is a shame and a disgrace to society," as he said over and over. Carnegie certainly practised what he preached. (Before he died he gave away at least 95% of his worth, mostly to create free libraries for people too poor to have books.) Carnegie also believed in the estate tax: "Of all taxes this seems the wisest," in a memorable quote in this fine book.

At a time when many Americans worry about losing their jobs, when every citizen pays for the defense of the country, this is no time for the estate tax repeal - just so that the Forbes zillionaires own and control even more of the country while the rest have nothing or next to nothing. The supremely selfish, extremely greedy, totally irresponsible, unbelievably small-minded and short-sighted people who oppose the estate tax - and therefore dislike this book - hate and despise their fellow Americans more, and do more long term damage to America, than any Middle East terrorists because this kind of injustice (in Buffett's choice word) was what caused the downfall of Rome and is still yet another reason which encourages neo-Marxists everywhere.

This book is densely argued and extremely clearly presented. The 24 pages of sources in this slim little volume show the authors have done their homework, despite the omission I mentioned. Bill Gates Sr.'s authority is undeniable not only because he was already wealthy himself BEFORE his son became the world's richest human being (for at least the past ten years as far as I know), but also because he is himself a highly successful tax lawyer and in charge of one of the world's largest charitable foundations, the Gates Foundation. (One day it will be the world's largest.) If he doesn't know what he is talking about, I don't know who does. This book's Foreword is aptly written by the formidable Paul Volcker, former Fed Chairman.

I can't praise this book enough. It can go further though, as the public and private statements by Warren Buffett - a good friend of both Gates' - explain clearly why. Despite its admirable conciseness, this book can use a good general index at the end. (I want to be sure who said what when and why.)