Why Dean will lose

[Wakie]

Personally I'm in favor of the estate tax (w/ the Feingold Amendment making the first $100 million tax exempt).  Large inheritances lead to the creation of a permanent aristocracy and capitalism begins to break down.  Instead of the smartest and hardest working people rising to the top you get people being slotted based on what group they are born into.

[Wakie]

I would listen to proposals on a limit to the death tax.  I am interested inprotecting farms though.  I have seen a lot of people be land rich but cash poor and then when the death tax comes along they have to sell part of the family farm to pay the taxes that has been inthe family for generations.  That is very sad.

That's what I'm talking about.  When the estate tax came up in Congress Russ Feingold proposed an amendment making the first $100 million tax exempt.  It was shot down by the GOP Congress using the "family farm" argument.  I'm sorry, but if you own a farm that is worth more than $100 million that is no longer a "family farm" it is an agri-corp.

[Wakie]

Well, my understanding is that Congress set into motion the repeal of the estate tax.  The current exemption is $1.5 million.  This will go up to $2 million in 2006 and $3.5 million in 2009 and will then be repealed completely in 2010.

It is a bizarre piece of legislation, but then most tax law comes down like that.  It was estimated that the estate tax changes will cost the govt $128 billion before 2010.

All of this said, Congress may find it impossible to support repeal of the estate tax.  The Joint Committee on Taxation scored immediate repeal (vs the current phased approach) of the estate tax as costing $662 billion over 10 years.  Thus, Congress will need to find an offset equal to the cost of estate tax repeal such as increasing income tax marginal tax rates (which were just reduced).

[Wakie]

The trick to controlling over taxation is to control spending.  Unfortunately every Congressman wants his/her special projects taken care of and the next thing you know we have a huge budget deficit.

[Wakie]

So you want to argue about the constitutionality of any/all non-flat taxes?

It is, I believe, the 16th amendment which states, "The Congress shall have power to lay and collect taxes on incomes,
from whatever source derived, without apportionment among the several
States, and without regard to any census or enumeration."

Although the 16th didn't come into being until later, the first income tax was levied in 1861.  At first, Congress placed a flat 3-percent tax on all incomes over $800 and later modified this principal to include a graduated tax.  Congress repealed the income tax in 1872, but the concept did not disappear.

In 1894, as part of a high tariff bill, Congress enacted a 2-percent tax on income over $4,000.  The tax was almost immediately struck down by a five-to-four decision of the Supreme Court, even though the Court has upheld the constitutionality of the Civil War Tax as recently as 1881.

In 1909 progressives in Congress again attached a provision for an income tax to a tariff bill.  Conservative, hoping to kill the idea for good, proposed a constitutional amendment enacting such a tax; they believed an amendment would never receive ratification by three-fourths of the states.  Much to their surprise, the amendment was ratified by one state legislature after another, and on February 25, 1913, with the certification by Secretary of State Philander C. Knox, the 16th amendment took effect.  Yet in 1913, due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at a rate of only 1% of net income.

If you want to read all about the 16th amendment and related court cases I would refer you to http://www.access.gpo.gov/congress/senate/constitution/amdt16.html