The Roots Of The Estate Tax
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William H. Gates Sr. is the co-chairman of the Bill and Melinda Gates Foundation in Seattle. Chuck Collins is the co-founder and program director of Boston-based United for a Fair Economy. -The following text is an excerpt from chapter two of Wealth And Our Commonwealth by William H. Gates and Chuck Collins, published by Beacon press. More information about the book is available on the Beacon Press Web site.
The essence of the American experiment is our collective of rejection of European hereditary aristocracy and grotesque inequalities of wealth. When Alexis de Tocqueville visited the United States in the mid-nineteenth century, he noted that equality of condition permeated the American spirit: "The American experiment presupposes a rejection of inherited privilege."
The nation's founders and populace viewed excessive concentrations of wealth as incompatible with the ideals of the new nation. Revolutionary era visitors to Europe, including Thomas Jefferson, John Adams, and Ben Franklin, were aghast at the wide disparities of wealth and poverty they observed. They surmised that these great European inequalities were the result of an aristocratic system of land transfers, hereditary political power, and monopoly
In two other articles, "Rights of Man" and "Agrarian justice," Paine extended his contempt of inherited political power to a critique of inherited economic power.
The distrust of concentrated wealth was so great that, in an extreme sentiment, Ben Franklin argued "that no man ought to own more property than needed for his livelihood; the rest, by right, belonged to the state."
In 1776, artisans from Philadelphia put forward a provision for inclusion in the original state constitution of Pennsylvania. They advocated for a limit on the concentration of wealth. "An enormous Proportion of Property vested in a few Individuals is dangerous to the Rights, and destructive of the Common Happiness of Mankind; and therefore any free State hath a Right by its Laws to discourage the Possession of such Property."
Indeed, central to American republicanism was the principle of a broad and fair distribution of wealth and property. Noah Webster, writing in favor of adopting the U.S. Constitution in 1787, expressed that "a general and tolerably equal distribution of landed property is the whole basis of national freedom" and wide spread distribution of property was "the very soul of a republic." Too much inequality was a threat to a self-governing society. Without an equitable land distribution, the founders believed, the republic would not survive.
John Adams also viewed broad land ownership as a key ingredient in maintaining a balance of political power. He was greatly influenced by seventeenth-century philosopher James Harrington, who argued that the widespread distribution of property dispersed power. Adams believed that when "economic power be came concentrated in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." In a 1776 letter to James Sullivan, Adams articulated his perspective that a balance in property owner ship was essential to liberty.
The balance of power in a society, accompanies the balance of property in land. The only possible way, then, of preserving the balance of power on the side of equal liberty and public virtue, is to make the acquisition of land easy to every member of society; to make a division of land into small quantities, so that the multitude may he possessed of landed estates. If the multitude is possessed of the balance of real estate, the multitude will take care of the liberty, virtue, and interest of the multitude, in all acts of government.
Jefferson wrote:
The descent of property of every kind therefore to all children, or to all the brothers and sisters, or other relations in equal degree, is a politic measure and a practicable one. Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.
Noah Webster exuded confidence in the justness of the American system: "Here the equalizing genius of the laws distributes property to every citizen."
John Adams and Thomas Jefferson wrote confidently that America's land tenure system encouraged subdivision and a broader distribution of land ownership, preventing aristocratic concentrations of ownership.
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