Death by a Thousand Cuts: The Fight Over Taxing Inherited Wealth

by Ian Shapiro and Michael J. Graetz

Book Overview

This fast-paced book by Yale professors Michael Graetz and Ian Shapiro unravels the following mystery: How is it that the estate tax, which has been on the books continuously since 1916 and is paid by only the wealthiest two percent of Americans, was repealed in 2001 with broad bipartisan support? The mystery is all the more striking because the repeal was not done in the dead of night, like a congressional pay raise. It came at the end of a multiyear...

• Format: Hardcover
• Language: English
• ISBN: 0691122938
• ISBN13: 9780691122939
• Release Date: March 2005
• Publisher: Princeton University Press
• Length: 372 Pages
• Weight: 2.00 lbs.
• Dimensions: 1.3" x 6.0" x 9.3"

Customer Reviews

Explains what happened & why

As its subtitle indicates, the book is about the nitty-gritty details of how the near-repeal of the estate tax got enacted into law. The authors discuss tax policy only tangentially: their focus is on who did what and why. Some actors on both sides acted out of idealistic (or, if you prefer, ideological) motives, many out of self-interested motives. According to the book, the pro-repeal forces were shrewd and far-sighted, whereas the anti-repeal forces were slow and weak. For example, charities have a strong interest in preservation of the estate tax, but were not effective in opposition to repeal, because they did not want to offend their donors and boards of directors. Having finished the book, I now believe I understand what happened. I even understand why the estate tax dies in 2010 and then springs back to life in 2011, a situation that seems insane, but which is a perfectly logical consequence of arcane Senate procedural rules interacting with the fact that the pro-repeal forces had no hope of mustering 60 votes in the Senate.

Post Mortem on the Death of the Estate Tax

The authors, Professors at Yale University, wrote this book to explain how the century-old estate tax was repealed in a seemingly democratic society. This tax exempted 98% of the people, and was designed to work against an inherited money aristocracy. The estate tax was one of the most progressive part of the tax laws (p.3). The authors claim that support for repeal first came from various groups outside of Washington, and later used lobbyists and others in Washington. This was one battle in the war against progressive taxation on wealth and income. [The authors don't relate this to the monopolization of the press and broadcast stations, and the propaganda programs that include some "talk radio" shows.] The authors say these groups want to kill progressive taxation not by one big battle, but by a thousand small battles (p.5). George W. Bush's 2001 tax policies turned a large budget surplus into a great deficit. Manufacturing and jobs were destroyed as if hit by a neutron bomb. The authors wonder why a tax that affects so few could be so successfully attacked. They must not listen to the paid propaganda from radio and elsewhere. It could also result from an exemption figure that was too low, given the relentless devaluation of the currency since 1964 (when coins were silver and the dollar was backed by gold). A million dollars is not what it was in 1963. Renaming the inheritance tax as the "death tax" make sit more threatening to people with fuzzy knowledge. The founding of America saw the law of primogeniture replace by the law of distribution so assets would be evenly distributed after death. There are no "property rights" per se, only living people can own property. The belongings of a dead person are distributed according to law and a will. Large inherited fortunes create an aristocracy, and this is inimical to a democratic society. Refer to American History before 1877. Inheritance in a legal privilege, not a natural right, when it comes to large fortunes. The republican ideal was to split up large fortunes so each could benefit from their work. In 1889 Andrew Carnegie argued for a death tax because giving great fortunes to children was a danger to them (p.233). Page 234 provides some examples. The authors claim that the increasing number of people who own stocks made them believe they would be affected by the inheritance tax. Maybe it is more true that the $675,000 exemption was decades out of date. [Isn't that middle-class housing in many parts of the country?] That proposed raise in the exemption was too little, too late, and confirmed the idea of its wrongness (p.9). The organized coalition for repeal was not halted by assumption about the status quo. [This recalls Machiavelli's comments on the difficulty of changing laws when a well-organized group works actively while the opposition is disorganized.] The purpose of the estate tax was to break up large holdings, like those middle-class businesses (e.g. "20 gas stations") so the many co

One of the best books on how Washington D.C. works today

Right off, let me say that this is one of the best books written about how politicians in Washington D.C. respond to certain constituents when promoting or opposing changes in the tax law. Before your eyes glaze over and you think that this book is for tax experts, I assure that it is not. The authors are wonderful writers and focus on the people behind the drive to repeal the inheritance tax. Thus, it is more about personalities, personal stories, and ideology and how these are used to enact changes in the tax code, than about taxes on inherited wealth per se. Graetz and Shapiro attempt to solve several "mysteries" in this book. First, how did a tax on inherited wealth, which existed for over 60 years and was seen as appropriate, come to be viewed by many Americans as unjust and immoral? Second, how did the diverse coalition attempting to abolish the inheritance tax maintain their cohesiveness when compromise counteroffers should have weakened it? Third, why were groups who favored maintaining the inheritance tax so ineffectual when responding to the abolitionists? Finally, what does the fight over the estate tax tell us about the future of progressive taxation, the idea that those with greater resources should pay higher tax rates? The story Graetz and Shapiro tell should give great comfort to those who want government at all levels to be as small and powerless as possible, and cause great concern to progressives, like myself, who wish to see government programs in service to the majority of working people, rather than in service to the wealthy and powerful. No matter which side of the ideological debate you are on, this book is a wonderful read and I highly recommend it.

Required Reading for all Registered Voters

A friend gave me a copy of this book; and, therefore, I felt duty-bound to give it a try despite the fact that I never read books pertaining to politics. After struggling through the first few pages, I becaame facinated. It is not a book about estate taxes. Rather, it is a book about how our government works (or does not work). Every registered voter should be required to read it.

Excellent of the Conservative Playbook

This is an immensely readable, highly educational book. It details how conservatives went after one of the most progressive taxes in our system and successfully got it eliminated. It also details the power of the conservative ideas machinery and how it works in Washington to get what it wants. For those who care about how badly the system is broken -- how the concerns of the few trump the concerns of the many on daily basis in Washington -- this is an excellent book. And most importantly, it exposes how the conservatives are moving the tax system away from wealth to work -- away from the rich to the middle class. That should be a concern to most Americans. I highly recommend the book; most people will be surprised how enjoyable it is as a read.