Estate tax promotes giving

By John Morris

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Despite being a lifelong Republican and the richest man in the world in his day, Andrew Carnegie (1835-1919) was an advocate for the steepest possible estate (inheritance) taxes on the wealthy. He assailed those who left “great fortunes to their children. If this is done from affection, is it not misguided affection? Observation teaches that, generally speaking, it is not well for the children that they should be so burdened.”

Carnegie felt is was “family pride” that motivated wealthy men and women to confer large fortunes to their children at death. “In many cases the bequests are so used as to become only monuments of ... folly.” He much preferred that wealth be transferred to the community so as to be beneficial to the citizens who often made the wealth possible.

“By taxing estates heavily at death, the State marks its condemnation of the selfish millionaire's unworthy life,” Carnegie said. He went on, “The day is not far distant when the man who dies leaving behind him millions of available wealth ... will pass away ‘unwept, unhonored and unsung.'?”

Of course, Andrew Carnegie followed his own advice and distributed billions of dollars in today's value to numerous charitable causes and communities across the United States and around the world. Cedar Rapids received one of thousands of Carnegie Public Libraries that he gave away. He changed the face of philanthropy and set the trend for other wealthy men and women to do the same.

Today, the debate about the federal estate tax (some prefer to label it the “death tax”) continues. It has been a political football for years.

The truth is that this tax is an incentive for those with wealth to plan how to avoid the tax. With the right planning, individuals can decide how to divide their estates and give donations to non-profit charitable organizations, community foundations, endowments, museums, hospitals, colleges, conservation groups, churches and other organizations that benefit and enhance the broader community.

Reasonable sums can be left to heirs also. With the applications of credits and deductions, the Tax Man will see little or none of it.

Today, many wealthy people support the estate tax, just as Carnegie did. Even more, their generous giving encourages people of lesser means to do the same. A broad spirit of “giving back” to the community most certainly will be lost is the estate tax is scrapped.

It is very possible that Carnegie had it right all along about the value of this tax.

John D. Morris of Cedar Rapids is the retired executive director of Discovery Living Inc. Comments: (319) 366-5908