Ten Miles Square

Blog

May 15, 2013 9:20 AM Wall Street Journal Continues Subversive Estate Tax Campaign

By Harold Pollack

I’ve taught in elite academic settings for a while now. Academic life being what it is, many of my students come from wealthy backgrounds. Children of the affluent can attend great high schools and extra tutoring. They can take unpaid internships. They can spend semesters abroad learning German. They can take an unpaid intern at Greenpeace or Slate rather than spend the summer waiting tables at Chili’s.

The above paragraph underscores the reality that American meritocracy retains a strong, perhaps inherent class overlay. This is a serious problem, most recently emphasized in Chris Hayes’ new book. In an era of rising inequality, the problem becomes correspondingly more troubling.

Still, at least these affluent parents are using their wealth to help their children become capable and accomplished, genuinely qualified for competitive jobs and educational opportunities. Despite some troubling structural implications, these human capital investments are more admirable and productive than just providing your kids with fancier stuff.

My Friday Wall Street Journal includes the following story, which concerns “High-End Luxury Suites Aimed at the Sulky Set”:

As families have gotten smaller and houses have gotten larger, the teen room has begun to evolve into a social center in its own right in recent years. Experts say that’s partly because parents today spend more time with their children than ever before….

The story includes an amazing slideshow of kids’ living areas with indoor basketball courts, Harry-Potter-inspired passageways, and more. On a more tasteful opulent note, some parents are still thinking big:

Jacquie Kim, a mother of two in San Diego, turned a pool house into a teen lounge for her son Alex’s 16th birthday, partly as a way to keep him home after he got his driver’s license. She hired designer Kristy Kropat, who turned a Mediterranean-style casita into a modern-industrial room with modular furniture, LED accent lights, metallic gray walls with pixelated Space Invader vinyl decals and bright pops of color.

OK I admit it. I don’t know what a casita is. A web search yields the following:

1. A small crude dwelling forming part of a shantytown inhabited by Mexican laborers in the southwestern U.S.

2. A luxurious bungalow serving as private guest accommodations at a resort hotel, especially in the southwestern U.S. or Mexico.

This being the “Mansion” (a.k.a. real-estate porn) section of the paper, I’m betting definition #2 is operative. That’s too bad, because Alex might learn more from the first one.

The Mansion section, like its New York Times’ counterpart “Style,” exists to chronicle the conspicuous consumption of a tiny slice of affluent America. As a cultural signifier, it’s still depressing. At least I think it’s depressing, since I’m not quite sure what a cultural signifier really is.

I do know one thing. If you’re building your tween a room-size “closet inspired by ‘The Lion, the Witch and the Wardrobe’,” you might provide her with something a little bit more lasting by giving her a little bit less. I’m not a wealthy person. So I don’t understand what’s really appropriate or wise to provide your child if you live in a multi-million dollar home. A little proportion and restraint does seem in order.

Sometimes I wonder if George Soros or the Nation magazine doesn’t secretly produce these stories. From a broader perspective, the “Mansion” section provides a weekly Veblen-ian reminder that there’s one group of Americans who truly have so much money that they can’t figure out how to spend it, beyond purchasing bigger and more impressive monuments to their own wealth. Our tax system might do more to help them address this problem.

[Originally posted at The Incidental Economist]

Back to Home page

Harold Pollack is the Helen Ross Professor at the School of Social Service Administration at the University of Chicago.

Comments

  • Richard W. Crews on May 15, 2013 1:35 PM:

    The Republicans complain that the inheritance tax is a second tax on a person's wealth, calling it the 'death tax.' The tax only affects around 2% of all estates. Furthermore, much substantial wealth hasn't been taxed. Asset appreciation, retirement and insurance accounts haven't been taxed.

    I suggest diverting the entire conversation by turning the attention to the recipients. Set a high deductible tax-free allocation to every recipient of an inheritance. Any person inheriting over this set amount pays a determined tax rate on their receivings. Set the amount high enough to preserve family operations, perhaps $5M. A Billionaire could designate 200 people and escape all governmental pillaging. (Think of the economic stimuli; 200 newly-minted multi-millionaires, the cash would resound and rebound.!)

    The estate tax is valuable beyond mere measure. The punitive 55+% has positively sponsored many a civic treasure when an euphonious symphony hall, hospital wing, or university building is donated so as to direct the benefactors fortunes. Nowadays, with a low estate tax, the civic benevolence needs to be weighed against the real creation of a blood dynasty. Hmmm, symphony hall, or.... Dynasty!

    The end of the idea that America is a meritocracy, once a core Republican “value.”.