President Obama walks on the South Lawn of the White House in Washington.
As part of the fiscal cliff deal passed in the first days of 2013, the nation’s federal estate tax rose from 35 percent to 40 percent on estates over an inflation-adjusted $5 million.
Without Congressional action, these rates would have automatically reverted to 55 percent on estates over $1 million, but Democrats ultimately caved to only a marginal increase.
The distribution of wealth in our country plays an enormous role in diversity of class on our campuses.
With current levels of inequality, attending a top four-year university is far more difficult for low-income students than their high-income counterparts — not solely because of cost, but also because of the lower quality of the high schools they are more likely to attend, and the lack of investment their parents can afford in extracurricular activities.
A Georgetown University study of the class of 2010 at nearly 200 of the nation’s most prestigious universities found that while 67 percent of students came from the highest-earning quarter of American families, only 15 percent came from the nation’s bottom half.
Despite the fact that the estate tax doesn’t address the advantages students of students from an affluent background, it can serve as an equalizer between generations, preventing large amounts of untaxed wealth from transferring to those who did nothing to earn it — but win the lottery of birth.
Wealthy students already have a much higher chance of entering into prestigious universities and with the subsequent degrees, of earning a high income later in life.
Critics of the estate tax, like Professor Edward McCaffery at the University of Southern California’s Gould School of Law, claim the estate tax creates an incentive to waste one’s money on luxuries in old age rather than see it taxed heavily before it makes its way to one’s children.
Manhattan Institute Fellow Avik Roy also suggests that the estate tax breaks up family businesses or farms, while others claim that it leads to money wasted in unproductive tax avoidance.
But regardless of the tax’s marginal inefficiencies, from an ethical standpoint there’s just no reason that this money should be given a privilege that income from labor doesn’t have.
Students born to wealthy families are more likely to live in better school districts or attend private schools, receive better opportunities to pursue extracurricular interest and more coaching for standardized tests. And these students are for some reason entitled to receive up to $5 million from their parents without paying any back to fund the social contract.
If we truly wish to make diversity a priority on college campuses we must encourage a variety of policies to level the playing field.
But the estate tax represents an effort to curb the most egregious perpetuating inequality in our society. President Obama should push to increase it beyond this slight increase he already supported.
Powered by Facebook Comments