On his blog Robert Reich writes, “repeal [of the estate tax] would cost the U.S. Treasury $1 trillion in its first ten years. That's about equivalent to what's needed to save Social Security over the next 75 years.”
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But Harvard Economics Professor Gregory Mankiw (pictured above) takes issue with those numbers. Professor Mankiw states, “How much does repeal of the estate tax cost over its first 10 years? According to the Tax Policy Center, immediate repeal would cost about $300 billion from 2006 to 2015. That, however, appears to be an undiscounted number. The present value is probably around $250 billion.
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But Harvard Economics Professor Gregory Mankiw (pictured above) takes issue with those numbers. Professor Mankiw states, “How much does repeal of the estate tax cost over its first 10 years? According to the Tax Policy Center, immediate repeal would cost about $300 billion from 2006 to 2015. That, however, appears to be an undiscounted number. The present value is probably around $250 billion.
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“What does it cost to fill the Social Security shortfall over 75 years? This report from the Social Security Administration shows the present value of the 75-year shortfall for OASDI of about $5 trillion.”“Hmmm....Those two numbers don't seem "about equivalent" to me. In fact, the second one seems 20 times as big as the first.”
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WoW! That sure seems like a huge gap!
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While Robert Reich claims a $1 TRILLION loss, the Tax Policy Center’s numbers show $250 BILLION.
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With Social Security looking at a $5 TRILLION shortfall over the next 75 years!
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So, while Robert Reich himself seemed off by a factor of 5X in claiming a $1 Trillion Social Security shortfall over the next 75 years, when you consider the Tax Policy Center’s numbers (a $250 Billion ten year revenue loss with the Estate Tax repeal) it becomes a factor of 20X that Reich’s claim is off.
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Sadly, Liberals ALWAYS tend to make their arguments this way – with blatant, often deliberate distortions! Remember homeless activist Mitch Snyder’s claim that 45 homeless people die every second (which would amount to 1.4 billion deaths every year)?! The media LOVED that! Or the unfounded claim that Snyder made that there were 3 million homeless Americans, but when questioned about the source of this figure, he admitted that he had made it up to please journalists!
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More of the same?
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As Professor Mankiw states, “Why compare a 75-year shortfall to a 10-year revenue loss? There is no reason to, other than for dramatic effect. But policy wonks are supposed to have less license in making up their drama than playwrights.”
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WoW! That sure seems like a huge gap!
.
While Robert Reich claims a $1 TRILLION loss, the Tax Policy Center’s numbers show $250 BILLION.
.
With Social Security looking at a $5 TRILLION shortfall over the next 75 years!
.
So, while Robert Reich himself seemed off by a factor of 5X in claiming a $1 Trillion Social Security shortfall over the next 75 years, when you consider the Tax Policy Center’s numbers (a $250 Billion ten year revenue loss with the Estate Tax repeal) it becomes a factor of 20X that Reich’s claim is off.
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Sadly, Liberals ALWAYS tend to make their arguments this way – with blatant, often deliberate distortions! Remember homeless activist Mitch Snyder’s claim that 45 homeless people die every second (which would amount to 1.4 billion deaths every year)?! The media LOVED that! Or the unfounded claim that Snyder made that there were 3 million homeless Americans, but when questioned about the source of this figure, he admitted that he had made it up to please journalists!
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More of the same?
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As Professor Mankiw states, “Why compare a 75-year shortfall to a 10-year revenue loss? There is no reason to, other than for dramatic effect. But policy wonks are supposed to have less license in making up their drama than playwrights.”
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Indeed they are.
Actually, Mankiw and Reich are both wrong. Unless they are asserting that people are going to burn their inheritance in a big trash barrel in the back yard. They are both forgetting the basics of supply-side economics. When people have money, they will spend it, or invest it. Both create more returns to the fed than if the initial inheritance is taxed.
ReplyDeleteBottom line: Tax cuts work wherever they are implimented.
Well, they're basing their calculations on the Center for Tax Policy and other such economic forums that calculate the revenues from the Estate Tax and other taxes.
ReplyDeleteThe conventional wisdom is that it's harder (for regular folks) to circumvent the Estate Tax because it takes it cut in probate.
Of course, it's sold as a way to keep the rich from perpetuating wealth, but the truly wealthy (those who don't rely on income for wealth) are able to transfer vast amounts of REAL wealth via Foundations and Trusts.
The reason the Estate tax is so insidious, is that it taxes ALREADY taxed monies that are private property that BELONGS to the person bequeathing that inheritance to the heirs of their own choice.
It is a basic violation of our one of our most basic Liberties.
I don't know if it's sad, funny, or just ironic that blue-collar pukes like us understand this better than most of Congress.
ReplyDelete"I don't know if it's sad, funny, or just ironic that blue-collar pukes like us understand this better than most of Congress." (Roadhouse)
ReplyDeleteIt'd be one thing if they really DIDN'T understand, but it seems more a matter of the "political class" constantly trying to convince free and independent-thinking, working people that they really NEED government to take care of them and that more tax revenues are better, because more government is better.
The big problem, at least from my perspective, is that politicians like Newt Gingrich (who actually made good on cutting government spending, to GREAT results - the late 1990s boom, not just the Tech Bubble) are very rare.
After Gingrich, Frist, Delay and Hastert all saw themselves as "members of the political class" FIRST, and everything else, second.
In a sense, that's where the tendancy for government ALWAYS to grow comes from. Even the Republicans, who supposedly stand for LESS government and LESS regulation, err far more on the side of more government than not.
That's the dilemma we face.
Franklin answered the woman who asked, "What kind of government have you given us," with, "A Republic mam, if you can keep it."
Which was completely correct, they gave us a government heavily shackled by a rigid Constitution and over the last nearly 100 years, a bunch of effete, "fancy-boys," who imagine themselves "smarter than America's Founders" have fought tirelessly to erode those constraints.
And we, the American people, have NOT done a very good job of "keeping it."