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Sepulchral talesThere is no more entrancing part of Martha's Vineyard than Nashaquitsa. West of Hariph's Creek Bridge, there's high land south of the road, low land to the north. The dry margins give way to golden green marshes, then to Chawkus Creek, then Menemsha Pond, and beyond, spangled Vineyard Sound in the distance. It's a land of hills and creeks and ponds, and it is nearly an island itself, barely connected to the bulk of Chilmark to the east or to Aquinnah beyond.
The other day at the Stop & Shop, I ran into a tough old Chilmarker who lives in the midst of all this beauty. He has run a business there all his life, starting his days at 3 am, trucking his products off-Island himself, wholesaling, retailing, trying to save a penny, trying to make a penny, and keeping his eye on the ball, giving some time to town affairs. For a lifetime, really. And, he's done okay, better than okay, though now he is devoted to looking after his lovely, ailing wife.
From time to time, he likes to needle me about things I write in this space. He has regularly volunteered sharply critical, but not unfriendly, commentary for more than 30 years.
For instance, he'll say, "You had to work pretty hard to pull that one together, it seemed to me."
I give it back when I can, but of course, everybody's a literary critic, and efforts at self-defense can be self-defeating. Plus, during the past 30 years, my critic hasn't been observed to change his mind about anything.
Often, what he wants to talk about are taxes, specifically the death tax. That's the federal estate tax to its supporters, the death tax to its critics. Congress has modified the tax, sharply reducing its confiscatory terms, but the changes are due to sunset in a couple of years. The ghoulish death tax will rise from the ashes.
As hard as my critic has worked, the bulk of his wealth is in his Chilmark land, some of which he inherited and some he bought for small dollars years ago. He is not alone on this Island. Prices have, you know, inflated. He wants to give the land to his kids, but he can't give them the money to pay the taxes, so, as he told me, he will actually be giving them a huge tax bill, which they will have to pay by selling off the generations-old family patrimony. It's a sadly common Vineyard story with perplexing implications for the Island's future.
He inspired a little research. First, consider that the chief argument in favor of the death tax is that there is a wealth gap. Apparently it's between the rich and the rest. The death tax will help redress that wrong, according to its adherents, by separating the rich from what they have accumulated (as much as 55 percent of it after 2010), thus making them more like the rest of us.
Ah, but it turns out that, in fact, little of what rich people have was inherited. Mostly it was earned by running a business, or saving, or making a lucky move, or, happily, owning an asset of some sort, say some family land, that has appreciated enormously in value. And on lots of that wealth, taxes have already been paid.
For example, most of the rich celebrities whose private lives we stalk did not inherit millions. Their kids will be rich, but they will be members of a small cohort. Same for Bill Gates and Warren Buffet. The trust fund rich are few in number, and if they don't do something to get richer, they'll be part of the just comfortable crowd before long. Besides, as draconian as it is, the death tax amounts to a mere one-point-something percent of the treasury Leviathan's annual inhalation.
Besides, my friend, the estimable but irritated Chilmarker, won't have to pay the tax. He'll be dead. His kids will pay. Or live elsewhere.
He might have avoided the taxman's sepulchral clutches if he had given away all his wealth in $11,000 installments to his kids over the years, but he didn't have pots full of the ready cash year in and year out with which to do so. He had the land, which will almost certainly need to be dismembered in order to pay the inheritance tax. Why, he asks, should he be prevented from passing on the business he built or the land he assembled to his children? The correct answer is, he shouldn't.
Well, the pro-death tax folks argue, there's been a tremendous untaxed gain in the value of that land over the years. Why should that have escaped taxation? Perhaps it should not have escaped, though why the government should assume the right to demand the realization of that gain when my friend croaks is beyond me.
And more important, why then should the gain represented in the estate be taxed at more than double the 20 percent rate at which all other capital gains are taxed? Perhaps it's because the estate tax champions who hate wealth so bitterly find it uncomfortable to do their worst, except in the long shadows of the sepulcher?