Why and How All Large Estates Should Be Taxed to Death

Eric Zuesse, originally posted at strategic-culture.org

All non-taxation of estates at death is feudal; it’s systematic continuation of feudalism, into our own era.

Here’s a good example to show this: U.S. National Public Radio’s (NPR’s) reporter Lourdes Garcia-Navarro, headlined on August 25th, “For Brazil’s 1 Percenters, The Land Stays In The Family Forever,” and she reported that, in that country, the aristocracy own half of the land, and that whenever a building on their land is sold, 2.5% of the sale price must go to the land’s owner, the heir-aristocrat, in a perpetual tithing-system to the hereditary Portuguese aristocracy (including the Roman Catholic Church), who have descended from the Portuguese colonizers to whom Portugal’s king had granted the land 515 years ago, in payment for their having conquered the native Indians and stolen their land for the king. The king didn’t give them all of what these conquistadors had stolen for him, but only what he felt they deserved for their services, of theft from the people who had previously owned the land, or lived on it. (Among the receiving aristocracy was the Roman Catholic Church, for its services assisting these thefts, by approving them – declaring them to reflect God’s will.)

Back in that time and territory, there was little in the way of paper deeds, etc.; there wasn’t even much in the way of writing-implements and paper, with which to record ownership; so, these “thefts” (which NPR’s reporter carefully declines to call by that clear term, saying instead – paraphrasing what she was told by one of the aristocrats – “back then, it made sense: It was a way of supporting the whole colonial enterprise,” which was an enterprise of stealing the natives’ land, which fact, again, she doesn’t explicitly assert to be the case, because she doesn’t want her audience to understand what she is actually talking about – what “the whole colonial enterprise” actually consisted of, which is something that all aristocracies, including America’s aristocracy and the big donors to NPR want to hide – and so a Brazilian aristocrat instead explains the rationale for it, as best he can, in this “journalism”) – these thefts were therefore unrecorded, just as was everything; and this is the reason why “supporting the whole colonial enterprise” can even be presented as having been good, instead of criminal, which it actually was. The victims were conveniently ignored by historians, with few exceptions, such as David E. Stannard’s magisterial 1992 American Holocaust: The Conquest of the New World, which book reconstructs some of this disgusting history, throughout the Western Hemisphere, and not only in Brazil. As Stannard said in his Prologue, “We must do what we can to recapture and to try to understand, in human terms, what it was that was crushed, what it was that was butchered. It is not enough merely to acknowledge that much was lost. So close to total was the human incineration and carnage in the post-Columbian Americas, however, that of the tens of millions who were killed, few individual lives left sufficient traces for subsequent biographical representation.”

In Europe, the recording of deeds went back as far as ancient Rome, but in “the New World,” invading Europeans created everything anew, with no regard for rights of people who had long been living there before them: natives were instead treated more like slaves, when they were not ignored altogether, or simply slaughtered to clear land.

So: Portugal’s king established Brazil’s entire feudal system, which still drains the country. Burdened by such ongoing siphoning-off of the nation’s productivity, Brazil competes at a disadvantage in international markets, but this is a disadvantage that’s shared by many other nations, too. It’s shared in every nation that allows children to inherit their parents’ estate tax-free or else at a lower taxation-rate than applies to earned income, so that heirs are tax-advantaged there, over people who earn their living instead of having had it given to them. Earned income should always be taxed at a lower rate than unearned income. But, in a feudal system, unearned income is taxed less than earned income is.

The basic principle of feudalism is hereditary rights and obligations. Aristocrats, unless they are first-generation, have inherited rights from their parents, and serfs and slaves have inherited obligations to aristocrats. That’s what feudalism is. Adolf Hitler passionately supported the principle of hereditary rights and obligations, to such an extent that he even believed every descendent from Jews has inherited an obligation to be exterminated by “Aryans,” “God’s people.” He also believed that Russians and other Slavs have an obligation to relinquish their land to Aryans, and to become Aryans’ slaves. Fascism is to the industrial age what feudalism was to the agricultural age, and Hitler was a fascist – a neo-feudalist. As Hitler-biographer David A. Meier wrote: “His favorite game to play outside was cowboys and Indians. Tales of the American West were very popular among boys in Austria and Germany. Books by James Fenimore Cooper and especially German writer Karl May were eagerly read and re-enacted. May, who had never been to America, invented a hero named Old Shatterhand, a white man who always won his battles with Native Americans, defeating his enemies through sheer will power and bravery. Young Hitler read and reread every one of May’s books about Old Shatterhand, totaling more than 70 novels. He continued to read them even as Führer. During the German attack on the Soviet Union he sometimes referred to the Russians as Redskins and ordered his officers to carry May’s books about fighting Indians.”

Hitler’s ideology of feudalism/fascism was based on heredity. (He knew nothing about genetics; he attributed “race” to “good blood” and “bad blood”; the gene-concept never even made its way into his comments. For example, he thought that Jews had “poisoned blood,” or else some microbial contamination in their blood.) One end of feudalism/fascism is racism; the other end of it is aristocracy, hereditary superiority. Feudalism/fascism is the ideology of exploitation. Aristocrats are the people whom the fascist legal system treats as having the right to exploit all “Untermenschen.” (As Shakespeare wrote: “The fault, dear Brutus, is not in our stars, but in ourselves, that we are underlings. … Rome, thou has lost the breed of noble bloods!” The author of the Shakespeare plays was himself a feudalist.)

Whereas democracy is based upon compassion and equality of rights, aristocracy is based upon contempt and inequality of rights: it’s based on humiliation – it is the zero-sum society. But it’s even worse than that, because the people who occupy the positive territory in it, the aristocracy, are far fewer in number than the people who occupy the negative territory in it. Feudalism/fascism is run by the ‘elite’ for the ‘elite,’ not for the public. The public, in it, are instead merely tools that are used by the ‘elite’ – victims to be used, exploited; and, in order for aristocrats to do that, the public need to be humiliated – they must accept their ‘inferiority’ to aristocrats.

In most countries that are trying to get beyond feudalism/fascism, estate taxes are imposed upon large estates in order to prevent this sort of thing – feudalism/fascism. However, 18 billionaire families in the United States financed a decades-long propaganda campaign to end all estate taxes, and as a result, estate taxes are the only form of taxes that virtually all segments of the U.S. population want to eliminate entirely.

The U.S. situation is instructive: In April 2006, Public Citizen, Congress Watch, and United for a Fair Economy, placed onto the web a new, massive and scorching study, exposing who was conning America into abolishing the estate tax, and how they were doing it: “Spending Millions to Save Billions: The Campaign of the Super Wealthy to Kill the Estate Tax.” This study documented that just 18 billionaire families were the initiators and the main financial backers behind the decades-long propaganda campaign to eliminate the estate tax. The study’s chapter headings were indicative: “The Super-Wealthy Families Behind the Campaign to Repeal the Estate Tax,” “How the Super-Wealthy Families Have Fought for Repeal,” “The Anti-Estate Tax Campaign Has Relied on Stealth, Deception and Dishonesty,” “The Super-Wealthy Families Have Pumped Millions into Campaigns and Political Committees,” “Profiles of the Super-Wealthy Families,” and “Myths About the Estate Tax.” A table was included, “Estimated Estate Tax Obligations of Families Identified in this Report.” It showed, for example, that the Cox family (the owners of 100% of many newspapers) stood to save $9.7 billion, out of their estimated $24.8 billion assets. The Koch family (owners of 100% of Koch Industries) stood to save $9.4 billion, out of their $24 billion. The DeVos and Van Andel Families, co-founders of Amway Corporation, were also listed, and, “In 2005, Forbes pegged co-founder Richard M. DeVos’ net worth at $3.4 billion,” and, “Their family heirs would save an estimated $1.3 billion if the estate tax were repealed.” The Mars family (owners of 100% of Mars candy company) stood to save $11.7 billion, out of their $30 billion. And the Walton family (owners of 40% of Wal-Mart) stood to save $32.7 billion, out of their $83.7 billion. A different table was headed “Top 20 [political] Recipients from the Super-Wealthy Families,” and though it didn’t calculate the percentages going respectively to Republicans and to Democrats, 81.5% of the total went to Republicans, and 18.5% went to Democrats. The Democratic leader in the U.S. Senate, Tom Daschle, was defeated by these families, and replaced by their man, Republican Senator John Thune. The conservative Democratic Senator from Arkansas, Blanche Lincoln (the “Senator from Wal-Mart”) “ranks No. 3 among all members of Congress in contributions from members of the super-wealthy families and their companies, … trailing only Sen. Elizabeth Dole (R-N.C.) and Rep. Tom DeLay (R-Texas).” 72% of Sen. Lincoln’s cash from these families came from the Waltons. Under the heading “Aiding President Bush’s Election and Re-Election,” the report said “The families used their financial resources and their connections to assist President Bush in winning election in 2000 and re-election in 2004.” In 2001, Karl Rove organized the Tax Relief Coalition of a thousand business organizations, and the man he put at the head of it cited “repeal of the estate tax as the coalition’s top priority.”

Here are the 18 billionaire families (and their companies): Allyn-Soderberg (Welch Allyn Inc.), Blethen (Seattle Times), Cox (Cox Enterprises), DeVos & Van Andel (Amway/Alticor), Dorrance (Campbell Soup), Gallo (Winery), Harbert (Harbert Management [investments]), Johnson (Black Entertainment Television), Koch (Koch Industries [oil]), Mars [candies], Mayer (Captiva [oil]), Nordstrom [dept. stores], Sobrato [real estate], Stephens [investments], Timken [bearings], Walton (Wal-Mart), Wegman [food stores]. These 18 families have been dedicated to destroying American democracy and replacing it by an aristocracy in which only unearned income is received tax-free, and all of the burden of financing the government is laid upon the backs of workers.

On 19 January 2006, faireconomy.org headlined “2006 Estate Tax To Affect Fraction of One Percent of All Estates, a New Low,” and reported: “New information released today by United for a Fair Economy (UFE) indicates that the rise in the estate tax exemption level from $1.5 million per person to $2 million ($4 million per couple) means that less than one third of one percent of all estates – or 0.27% – will be affected by the federal estate tax in 2006. All other estates, or 99.73%, will be able to pass on 100% of their assets to heirs tax-free.” Moreover, “The share of estates taxed will fall to 0.16% in 2009, when the exemption rises to $3.5 million.”

What had been 2%, and then shrank to 1.27%, quickly became only .27% of American estates being subject to the estate tax, during George W. Bush’s Presidency.

But polls still showed that Americans wanted estate taxes eliminated entirely; they wanted all earned income to be taxed, and all unearned income to be tax-free.

Consequently, as barbaric as Brazil might seem to be, the wealthier countries are basically no different: they all pretend to be not feudal, not fascist, but their basic mentality still remains feudalist/fascist.


How, then, can we end feudalism, end fascism? Here is my general proposal:

All unearned income must be taxed at the very highest percentage; all earned income must be taxed at a lower percentage than any unearned income. However, this must be integrated into an income-taxation system that has progressive taxation-rates, especially because the higher one’s income is, the easier it becomes for that person to add any specified additional amount to the wealth he already owns – money begets money. That’s not equality of opportunity; it’s the exact opposite.

The recipient of a gift or inheritance (i.e., unearned income) from some other entity (typically from a parent) should thus pay tax on it not at his/her earned-income taxation-rate, but instead at a taxation-rate which is 10% higher, with the maximum rate being 90%. During America’s most productive, and world-leading, period, 1951-1964, the top marginal taxation-rate on income was 91%; so, a 90% top rate is reasonable in every respect, for any type of income. However, unlike in the U.S., where capital gains were taxed at only 25% during that period (and which difference, 91% to 25%, greatly advantaged one way of earning income – which mainly is rich people’s way of earning income – over other ways of earning income, and thus was very regressive), capital gains should be granted no advantage over other earned income. All legitimate earned income should be taxed at the same rate. Furthermore, in order to facilitate the transfer of businesses, at an owner’s death, to present employees of those businesses, so that no undue incentive will be provided to replace these people who are already trained for their jobs, the government should, when a business-owner dies, offer to lend recipients of a business whatever is needed in order to pay estate taxes on it, and the interest-rates on those loans should be the ordinary rates applicable for such collateralized loans. This offer will avoid providing favoritism to the former owner’s children or favorites, while, at the same time, removing any need to fire or lay off existing employees in the firm (including the owner’s heirs). It would be like an Employee Stock Ownership (ESOP) plan.

If any person uses what are categorized as being “tax-avoidance techniques,” then the individual would be committing a felony if the person additionally applies “tax-avoidance techniques” to reduce taxation of gifts/inheritances. For example, moving assets abroad to avoid or reduce gift/inheritance tax, would then constitute a serious criminal act for such a person. A recipient or donor of unearned income would safely be able to move abroad, but not avoid taxes by means of moving assets abroad. Furthermore, any person who would commit such a crime would thereby automatically empower the country where he’s trying to avoid taxes, to take ownership of all of his/her assets and businesses, and sell them off to the public via online auctions.

This is not at all about increasing the amount of taxes; it’s about who pays what proportion of the costs to provide the services that the government provides. Many of the government services that provide the legal system and the roads and infrastructure that enable and increase the wealth of the wealthy are paid by the public. Replacing feudalism/fascism by democracy will reduce the public’s taxes, because the wealthy will be paying the share that they always ought to have been paying but did not. To the general public, this will be a tax-reduction.

If politicians (such as Bernie Sanders in America) are serious about wanting to establish equal economic opportunity and to end the existing rigged system, then they will have to endorse this proposal or one similar to it, and fight to achieve it, because the aristocracy will not allow feudalism/fascism to end without a fight – a fight which has not yet been waged. If there is no fight, which realistically would be a very intense one, then feudalism/fascism will simply continue on.

Feudalism/fascism must end. The basic principles to replace feudalism/fascism with democracy and an authentic equal-opportunity society must be established, and all aristocratic rights must end in order for that to be able to happen. Therefore: who will lead this war by the public, against the aristocracy – the war to end feudalism/fascism, and to establish democracy and equal opportunity? Who? And when?

The country that wins this fight will have a booming economy. Patriotism will become the norm, because equality of opportunity will seriously be the objective – and the policy. Furthermore, since the existing wealth-distribution is so heavily skewed, even nations that now are cursed by their sovereign debt, and so are bad investments and thus unlikely to improve under the existing system, will now become enabled to eliminate their debt (via this estate/gift tax system), without destroying themselves by being forced to sell their governments to aristocrats (privatizing, such as in today’s now-hopeless Greece, which has become totally in the grip of aristocrats). Such countries, freed from aristocracy, will thus increasingly be the most attractive ones for foreigners to move to, with free public education, highways, infrastructure, health care, and everything else that productive enterprises need. Firms won’t need to pay for those things, because the government does. Such countries will increasingly dominate the future, not only because of the public’s patriotism, but because investments will be maximally productive, minimally wasteful.


Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.