The Unfairness Doctrine – Would Killing the Step-Up Wreck the Economy?

The Unfairness Doctrine – Would Killing the Step-Up Wreck the Economy?

Prolonged years of study have led me to the conclusion: taxation isn’t fair.

If my mother were here to read these slim words, I know what she’d say and bet you do, too: “Life isn’t fair.” These oft-heard words, at my proposed bonus snack times or her arbitrarily set bedtime, no matter if I Dream of Jeannie (my first crush) was still on TV, seemed draconian, a word I hadn’t mastered but understood wholly in the depths of my Greco/Irish/African-American heart.

Yet mom was right; those words have stayed with me, as they have with nearly every kid on Earth. Don’t expect fair treatment and you’ll never be disappointed.

But taxes, oi. It’s the way they’re demanded, their opacity, wicked in their very conception, unjustly, capriciously enforced. This doesn’t mean taxes, or firm-handed mothers, are unreasonable. We want government, we pay up. As suggested by newsflow, the alternatives are worse. This might not be fair, but it’s so.

President Joe Biden’s administration has big spending plans. Supporters point to the dire state of our nation and things that need fixing: worn-out bridges and roads, rickety schoolhouses, out-of-date Wi-Fi, weak healthcare for marginal communities, on and on they run, these demands for our money.

Critics see a boondoggle, a hornswoggle, a pork barrel, and that, my friends, is how you make policy. Expecting cool reason from Washington DC falls in the category of demanding cookies for breakfast, and mom has an answer for both jejune notions: “Put that right out of your mind, buster.”

The president has proposed enough tax-raising proposals to cover the back of a cereal box. They would make ruinous breakfast reading, and one idea in particular has estate planners, retirement specialists and common Joes and Josephines grinding their mashers: Joe Biden wants to eliminate the step-up in basis from the venerable inheritance planning regime.

The step-up allows assets to be revalued to current value at the time of the owner’s death. This keeps most estates below the elevated estate tax exclusion, allowing heirs to inherit without paying excessive taxes, perhaps hardly a cent.

Biden and supporters argue the step-up allows the super-wealthy to avoid contributing a fair share to the tax kitty, and encourages an unhealthy concentration of wealth in a society founded on treating hereditary aristocrats to .70 calibers of hot musket ball. So goes the president’s argument, more or less..

Senator Chris Van Hollen (D-MD) has introduced a bill called the Sensible Taxation and Equity Promotion Act, in common parlance, the STEP Act. If it passes, the step-up in basis would pass from history.

Fox Business reported last week that a study, commissioned by a partisan think tank, but conducted by an independent pollster, showed how the Biden proposal to kill the step-up in basis could liquidate up to one million jobs and knock $1 trillion off GDP over the next ten years.

I know a little about polls; I’ve worked for major opinion/research agencies in the US and Russia, learned how accurate they can be, or otherwise. Judging from the comments below the Fox article, the people are unhappy. The government told us to use the step-up for planning, they write; now it’s pulling a switcheroo. These critics don’t seem to grasp fully the president’s proposals, for good or ill, but they clearly don’t like what they’ve heard and most sang the same note: it sounds so unfair.

I’ve argued that justifying taxation as a means to achieve social equity and a level playing field is a smoke screen: the current administration means to spend, its needs revenue, it must concoct ways to get it. We’ve never had a Caesar in America as yet, but those green portraits of George, Benjamin and Tommy stand in well in the case of rendering unto: they print the money; they want it back. Nothing to see here, Populusque Americanus.

Yet it does seem unfair; we all earned our green the hard way. I have a tale about fairness: in 1984, I snagged my first solid job, working for a renowned pollster. The owner and honcho, Peter we’ll call him, was all heart, but man, what a cheapskate. I earned $5 an hour; after taxes, I hauled in – in the tiniest red wagon – $180 a week. Jeepers, I used to say.

One summer day, I crossed from my shoebox on Otis Street in Northeast DC to the Brookland Metro station. In my pockets, four dollars and change, an empty Camel deck – that’s what we call a cigarette pack in DC – and my unlimited ride metro pass. Pacing nervily at the foot of the escalator was a homeless fellow, one of countless living rough in our national capital. Don’t get me started.

He asked for change and I had nothing to spare, and so, I said so. Oh boy, did he let me have it. It was a mega-muggy Saturday, and I was feeling the pains of my pennilessness. His words roiled my gullet; I wasn’t having it.

I dealt him the verbal shotgun, twin barrels. He heard an uncheerful little earful on skinflint tyrants, blood-draining taxes – for what? – nothing to show! Look at me, I barked: I’m in rags; why, you’re better dressed than me!

Indeed, the offender – George, I learned in a bit – was wearing smart jeans, brand new cross-trainers, a fine button-down shirt. I had on ratty Levi’s, holed tennis shoes, a faded t-shirt proclaiming The Clash, a band I don’t even favor, but it fit. My others were so shrunken they made me look like Beatrix Potter’s ‘Tom Kitten’.

I’m a peaceable fellow, usually, but imposing, stoutly built; in those days, in a red rage, I might have been taken for intimidating.

Not by George. He put his hand on my shoulder, if you please. “Take it easy, cuz. They give us these clothes at the shelter.”

Fairness; well, he was better adorned than me, but it’s fair to assume he hadn’t my choices. Opportunities eventually took me around the globe. I now understand his bruised pride, why it would make him tongue-lash some spry young kid that he envied a tad.

George had a heart in his pocket, if little else. He suffered from bad luck and a bottle, a pipe or a needle too much. We don’t always get what we deserve in life, but usually get what we ask for. Fair? I don’t know, but at least it makes sense.

I’m kind of sorry about that distant day, as George could have used a buck. He looked like he needed a smoke, too, but just for the moment, my deck was empty. It’s a shame; I could duke him pretty solid, today, but likely, he’s long gone.

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