The Super Rich Love Estate Taxes? Jude Wanniski February 22, 2001

Memo To: David Rockefeller
From: Jude Wanniski
Re: Is Bruce Bartlett Right?

Bruce Bartlett, an economist who worked in the tax division of the Reagan and Bush Treasury departments, has written his syndicated column for Wednesday’s publication in the Washington Times and Townhall.com. He seems to think that the really, really rich families, like yours, have a vested interest in keeping the estate tax firmly in place. Not that you realize it, but it just so happens that there are so many ways for a really rich family to preserve its wealth and pay little in the way of estate taxes that chew up medium-size rich folks that it is part of your paradigm. A few years back, I wrote an essay entitled “Karl Marx Revisited: A Fluid Economy,” where I invited Marx back to life at the end of the Cold War and the experiment in communism and asked him look around and tell me how things looked to him now. I had to read a dozen books by him and about him to complete the exercise. You can actually read it if you like. But I did find that he makes the point clearly that when the really rich folks of Europe acquired great wealth, they found it in their interest to levy high taxes on the middle class and working class to keep them from rising up the opportunity ladder and challenging their sons and daughters. This was a revelation coming from a leftist like Marx, but I then discovered that Ludwig von Mises had made the same argument from the right. That is, even though the Super Rich have to pay high income taxes, they get to hold on to their wealth through legal institutions like foundations and trusts or tax havens. They have an interest in limiting the wealth of others to preserve their elite social status.

It is exactly the opposite of what George Soros and Warren Buffett and Bill Gates’s father are saying in their campaign to preserve the estate tax. They are filthy rich, as the populists like to put it, and now lecture those of us below that it would be bad for us and for our families if we got to be filthy rich too. The way Bruce Bartlett sees it, the estate tax absolutely blocks out almost any family from expanding its monetary base into successive generations in a way that would enable them to found a dynasty. So the Rockefeller and the Ford and the DuPont dynasties, founded before the estate tax and the confiscatory income tax, might go sailing on into the next century, alongside Gates and Soros and Buffett and their trusts and foundations.

Do you see what I mean, David? Now the founder of the Rockefeller Dynasty, John D., your grandpa, got to be so rich that he practically had more assets than the United States government. I’m sure you’ll agree that before he died, the things he did with that great wealth -- and his genius for seeing piles of gold where others saw only piles of dirt -- helped make this a great and powerful nation. In other words, it was Grandpa Rockefeller who developed the Mesabi Range, with private capital. The story of his life and contributions to his countrymen is a phenomenal one. Imagine if he had to face the income tax and the capital gains tax and the estate tax all along the way. The government would have gotten the money and invested it in who knows what? A national missile defense shield, maybe. Or a new Cabinet level department of Global Warming. As long as your grandfather had a genius for investment that multiplied many times over, it was the people of the United States who benefitted most. He could only eat three squares a day and wear one suit of clothes at a time. The rest was capital, as in “capitalism.” You once made fun of Michael Milken, I remember, for getting a paycheck for $550 million in one year. I had to laugh because if you converted the dollar into gold weights that were applicable to the late 19th century and early 20th, John D. Rockefeller made more than $550 million a year for a generation. Anyway, since we’ve met casually a few times and you seem to be a nice fellow even though you are filthy rich, I thought you might read Bruce Bartlett’s column and find it food for thought.