In Monday's Washington Post, U.S. Treasury Secretary Lawrence Summers penned a rather incoherent op-ed attacking the effort to eliminate death taxes.  Summers is caught up in the frenzy of class warfare, and therefore chooses to ignore common-sense economics.

The Treasury Secretary reiterated the Clinton Administration's call for targeted death tax relief.  Why does the Administration oppose elimination?  Summers explained: "In contrast, repeal of the estate tax would undermine our fiscal discipline, compromise our national priorities, damage our philanthropic institutions and reduce the progressiveness of the tax system." 

Allow me to decode this Clintonian spin.  When Summers writes that killing death taxes would "undermine our fiscal discipline" and "compromise our national priorities," this simply means that the government might have less money to spend.  President Clinton, Vice President Al Gore and Secretary Summers would prefer that resources be gobbled up by government, and not left with the individuals who earned, built and own such assets. 

After all, as President Clinton has noted before, when you cut taxes, the people might not do the right thing with their own money.  Instead, in Clinton's perverse worldview, resources are better utilized when taken away from hard-working individuals and business owners, and placed in the hands of government bureaucrats and politicians.

By mentioning possible damage to "our philanthropic institutions," Summers delves into some good old political scare mongering.  He would like to make the public believe that private charities would receive less because the death tax would no longer force individuals to give away their assets in order to avoid punishing taxes.  Putting aside the abhorrent notion that government should impose such draconian taxes that people are forced to give away their property, the key to the financial success to private charities and foundations has always been general economic prosperity.  Eliminating the death tax would boost incentives for saving and investments, and thereby boost economic growth.  That's good news for charitable giving.

Finally, Summers holds out "the progressiveness of the tax system" as some kind of intrinsic good.  In reality, progressive taxation simply works against positive incentives for working, investing and risk taking.  In addition, the death tax is not only progressive, but also an egregious case of multiple taxation.  After paying countless taxes over a lifetime, the government shows up again at death.  This is not only economically destructive, but grossly unfair.

But Summers does not stop here.  Later, he wrote that the result of eliminating the death tax "would be reduced pay-down of the debt, increased interest rates and reduced investment."   Here Summers has lost all contact with economic reality.  He has stretched economic credibility to the breaking point by asserting that eliminating the death tax-with rates reaching 55% or higher and applied to total assets-would somehow hurt investment.

While one might expect politicians to ignore economics for the sake of politics, when the U.S. Treasury Secretary does so, it is quite disturbing.

Raymond J. Keating
Chief Economist
Small Business Survival Committee and co-author of U.S. by the Numbers:
Figuring What's Left, Right, and Wrong with America State by State