The Estate Tax: Posturing

How Congress is trying to mislead the public about the estate tax and its effects.

Yesterday, on Thursday, April 16, the House passed a bill repealing the estate tax. Unsurprisingly, the vote broke down along partisan lines, with only seven Democrats voting to repeal it, and three Republicans voting against it. It still has to get through the Senate, which will probably be where it dies. Even it gets through, however, the White House has already threatened to veto it.

So why the push?

Estate Taxes: Driving The Right Mad for a Century

Estate Taxes: Driving the Right Mad for a Century

Historically, the estate tax has served as a way to prevent wealth oligarchies. Adam Smith himself believed that the transfer of full estates to one’s heirs impeded the efforts of everyone else to succeed. It was, in effect, robbing the living to support the unearned exuberence of the sons and daughters of wealthy dead men. Thomas Jefferson and Tom Paine whole-heartily concurred with Smith.

Policy-wise, however, the estate tax ebbed and flowed with need, typically corresponding with war. Brief estate taxes existed in the late 18th century to raise funds for the navy in response to hostility from the French in 1794, to help pay for the costs of Civil War and Reconstruction, and as a result of the widespread economic downturn in the United States in the late 19th century. Rates and revenues from these early estate taxes were typically low–the Federal Government, after all, was much smaller, requiring fewer funds to operate. But perhaps most importantly, the concentrations of wealth were not, until the late 19th and early 20th centuries, enough to warrant more drastic efforts to break up economic oligarchies.

Cue the Gilded Age, where America witnessed the largest accumulations of wealth in the smallest number of hands that it had yet seen. Economic oligarchies gave rise to concentrations power that in the Progressive Era, sparked fears of an American plutocracy. Teddy Roosevelt, the trust buster himself, advocated for an estate tax and an income tax. His efforts eventually led to the 16th Amendment, which allowed a Federal income tax, but also fertilized the American political landscape for more progressive estate taxes.

The Revenue Act of 1916 created the first modern estate tax. Over almost a century since then, the elite most affected by this tax have fought tooth and nail to cripple it or outright abolish it. In its first iteration, the estate tax exempted $50,000, applying to net estates, with the max rate set at 10 percent.

Over the Depression years, the most significant changes were to the exempted amount and the top rate. Between 1916 and 1941, the top rate jumped from 10 percent to 77 percent, while the exemption actually fell to $40,000. In 1942, Congress altered the rates to exempt $60,000 with an initial tax rate of 3 percent and a top rate of 77 percent. These rates helped pay for both the New Deal, which drove the American public out of the grinding poverty of the Great Depression, and to fund the war effort in Europe. The rates, however, remained in place, relatively unaffected until the 1970s.

What was new then? Historians have long argued that the 1970s witnessed the culmination of a new brand of neo-liberal, business-minded conservatism that rejuvenated the stagnant American Right. Taxation was one of their primary targets. Between 1977 and 2007, the exemped amount skyrocketed from $60,000 to $2 million. That meant that an American’s estate was not deemed worthy of heavy estate taxes until it was worth over $2 million. To be fair, the initial tax rate also skyrocketed from 3 percent to 18, but over those same years, the top rate, which only affected the most wealthy of American elites, dropped from 77 percent to 45 percent.

The Bush Tax Cuts were perhaps the most startling preservation of old-money the United States had seen at one time. Not only did it temporarily abolish the estate tax for the year 2010 in hopes of some sort of economic boon (and making it a great year to die rich), it began the true rise of exemptions. In 2000 and 2001, before the tax cuts took effect, the exemption was $675,000. In 2002, it was $1 million. By 2014, Congress had pushed that up to $5.34 million. During that same period, the top rate dropped from 55 percent to 40 percent.

Keep in mind that this means that estates could only be taxed for the amount above the exemption. So if you, an only child and only remaining heir, lose your father who, as of 2014, bequeaths you $6 million, you only owe 40 percent on $660,000, since $5.34 million of that is exempt from taxes. You thus owe $264,000 on your total estate now worth over $5.73 million. Not a bad deal, right?

Not if you’re a Republican. In their latest assault on the estate tax–affectionately termed the “death tax”–they argue that it only really affects small businesses and the middle class. Apparently, there is large coterie of middle class people whose estates are worth over $5.34 million who are ruined by this tax. According to the bill’s sponsor, Republican congressman Kevin Brady,

Can you imagine working your whole life to build up a family-owned business or a farm, and then upon your death, Uncle Sam swoops in and takes nearly half of what you spent a lifetime building up for your children and grandchildren?

In the real world, the Joint Committee on Taxation, which includes Kevin Brady himself, as well as Paul Ryan and Orrin Hatch, estimated in a report issued last month that only 5,400 estates total were projected to be affected by the estate tax this year, comprising 0.2 percent of deaths in 2015. Republicans are pleading for the small farmer and the small business, but their policy outcomes only ensure a larger slice of wealth for the children of the 0.2 percent.

A quaint, middle-class farmhouse threatened by the estate tax.

A quaint, middle-class farmhouse threatened by the estate tax.

And to be fair, his point is grounded in what could be hardship. If the estate bequeathed to you is only in land or assets, one would presumably need to quickly liquidate a portion of those assets to pay the tax. Given the speed at which they would have to do this, it’s conceivable that many might have to sell for well under the assessed value, resulting in an even greater loss of the estate.

But that’s the point. Estate taxes liquidate portions of large estates to support government services that provide children of regular folks better opportunities to succeed. Spinning it any other way is a cynical move by a Republican party designed from the ground up to starve the beast. By putting this bill through, Republicans are shrewdly eying the White House in 2016. The candidates will all support it, and if it passes the Senate they will use the President’s inevitable veto as proof that he not the champion of the middle class.

GamerGhazi and Anti-Feminism

The Death Throes of the "Gamer"

Everyone is a gamer. But does that mean gaming is dead as a subculture because people are now pushing for video games to take on serious social issues? No, and here’s why.

"The Art of Video Games," at the Smithsonian American Art Museum. It ran March - September, 2012. The exhibit is now traveling across the United States.

“The Art of Video Games,” at the Smithsonian American Art Museum.

It’s been a while since I’ve considered the idea that video games were art. It initially seemed obvious to me. Of course video games are art. They involve music, art, writing, world-building, and interactivity in ways that other media could never achieve. This makes them art on a whole new, very interesting level. The late Roger Ebert’s 2010 argument that games cannot be art made me rethink the terms by which games could be art. Despite his compelling reasoning, I think he missed just how significantly games can affect people. We can (and I have) find incredible meaning in the ways game developers insert us into an environment and allow us to achieve some sort of goal (or fail at that goal).

Over the last decade, a critical side-effect of games becoming increasingly popular art is the realization that they are interpreted through the experiences of a wider variety of people. According to the 2014 report by the Entertainment Software Association, 59% of Americans play video games, and 48% of those are women. Long gone are the days of the mid-2000’s when in multiplayer games, your comrades were a symphony of male voices of varying pitches and age ranges on the microphone.

As a result, games and gaming has had to come to terms with demographic reorientation. You can’t market a game solely to white males 18-35 anymore without at least considering how it will sell to other audiences. Advertising is changing–is being pressured to change.

The expanding audience for video games is subjecting the medium to all sorts of exciting new critiques from feminists, and queer theorists, and others. These writers and social critics are enriching the gaming environment by calling on publishers and game developers to realize that content objectifying women or perpetuating violent cultural subtypes cheapens the cultural impact of gaming and drives away important segments of gamers.

Social criticism is usually a good sign. It means your medium is being taken seriously, and that it is important enough to groups of very smart people that they want to change it in ways that they feel would benefit current and future gamers. That means they believe games have the power to change not only gamers and games themselves, but the rest of society with it. That’s powerful stuff.

Zoe Quinn in 2014 at the GDC

Zoe Quinn in 2014 at the GDC

But you wouldn’t think that was such a good idea if you have been locked in the #GamerGate echo chamber over the past few months. The Twitter hashtag got its start as most scandals involving women seem to: jilted lover posts seemingly incriminating material designed to incite an angry mob into a slut-shaming frenzy. The ex in question tried to link Zoe’s alleged infidelity with corruption in independent games journalism. Instead, it was just another virulent backlash against the changing character of video games and gamers by an increasingly tribalistic, hateful segment of conservatives that not even could find much humor in.

When famous conservative Adam Baldwin (yes, of Firefly fame) tweeted the #GamerGate hashtag to support the movement, it took off. Thus began a new campaign of hate, couched in a crusade of journalistic responsibility. At its core it remains a profoundly conservative, anti-feminist movement.

Anita Sarkeesian's Series on Women's Portrayal in Video Games

Anita Sarkeesian’s Series on Women’s Portrayal in Video Games

Gamers assert that people like Zoe Quinn making games about depression rather than shooting Nazis aren’t making “real” video games. Others argue that Anita Sarkeesion, whose video series on misogynist tropes in modern games, is trying to force games to change, or ruining video games as we know it. Both have faced death and rape threats, publication of their personal information (“doxxing”), and Sarkeesian was driven out of her home as recently as August, 2014, by escalating threats.

Recently, #GamerGate is making the rounds again. Gamasutra is a popular news website dedicated to games journalism and blogging. In August, Leigh Alexander published a piece arguing that the era of “gamers” must come to an end. The hypermasculine advertising geared toward gaming culture that this summer exploded into international news outlets, she argued, threatens to become representative of gaming and gamers throughout society. As a result, on September 10th #GamerGaters (also known as GamerGhazis, GamerGators, or just Gators) launched a campaign against the website’s advertisers. Intel was chief among them.

On Thursday, October 3rd, Intel announced that it was withdrawing ads from the site in response to the complaints. Their press release stated that they did not intend to support or denounce either party with their actions. Gamasutra may very well succumb to corporate perceptions of false balance putting feminism on a level playing field with mens rights.

Gamers are dead. Almost 2/3rds of Americans are gamers, and we’re not all white men 18-35 looking to fulfill our masculinist fantasies. This is the byproduct of games becoming art, and it is a good thing. In fifty years, today’s video games will be talked about, both in a positive and a negative light. Games like Mass Effect and Depression Quest will be mentioned for how they sought to broaden the sexual and psychological dimensions of typical games. Meanwhile, games like Hitman: Absolution will be discussed in passing as a product of the last generation of the 1990s/2000s “gamer.”

There will, of course, be a place for games like Duke Nukem and Hitman: Absolution as a genre in the future. But hopefully young developers realize that the atmosphere of sexism and sexual violence that pervade these titles are not central elements to what makes those games fun and/or artistic.

Gaming has become embroiled in the culture wars, and deservedly so. They are important, and millions of people derive meaning, friendships, and entertainment from them. Those who think that we can go back to “just games, not politics” are mistaken. If you want video games taken seriously, you have to contend with the political. Insisting on “neutrality” leads to the silencing of the social critique that drives the immense popularity and social power of video games. In this conflict, what seems like neutrality is not so at all–it is conceding defeat to conservatives.

I, for one, think video games are too important, too much damned fun to concede that they are no place for serious social critique.

Further Reading

Trillion-Dollar Coins and the Uses of Law

How to Get the Law to Work for You

It seems like a joke that emerged from fear mongering about government spending and taxes, but the trillion-dollar coin idea has legs because it’s based in sound legal argumentation. Above its legal validity, it dismantles debates over the debt ceiling. Do you know how it does it?

The idea of the trillion-dollar coin came from a blog comment from a Georgia lawyer going by the name of Beowulf during the 2011 debt ceiling crisis. (American politics are becoming more and more surreal by the day.) If you forget what happened, let me refresh: Republicans refused to raise the debt ceiling and thereby refused to approve the budget of the United States without dramatic spending cuts and lower taxes. Apparently, they still believe trickle-down economics is a thing. In the ensuing Cold War between Democrats and Republicans, many people began to seriously float the idea of the trillion-dollar coin as a way around Republican crisis mongering.

So What does this Do?

The Secretary of the Treasury is allowed to mint platinum coins (intended for commemorative purposes) without authorization from Congress. Paper money and other coins are subject to this and other accounting measures to help curb inflation and track spending, so it has to be platinum coins. The U.S. mint, by law, is obligated to print the coins and give them out, and they are worth what the Secretary stipulates.

In this plan, if Tea Party Republicans are blocking the passage of a budget and are threatening to dismantle the U.S. economy, the Secretary issues a single trillion-dollar coin (or whatever the U.S. budget needs to be that year) and hands it to the Federal Reserve. Crisis averted.

The legal argumentation for this is sound because the acts allowing the Treasury to do this have no stipulations on the maximum amount or intent of the coinage. The text of the act allowing the Secretary to set an amount reads,

There shall be established in the Treasury of the United States, a United States Mint Public Enterprise Fund (the “Fund”) for fiscal year 1996 and hereafter: Provided, That all receipts from Mint operations and programs, including the production and sale of numismatic items, the production and sale of circulating coinage, the protection of Government assets, and gifts and bequests of property, real or personal shall be deposited into the Fund and shall be available without fiscal year limitations.

31 USC § 5136 – United States Mint Public Enterprise Fund

And the law giving the Secretary the power to do so reads,

The Secretary may mint and issue bullion and proof platinum coins in accordance with such specifications, designs, varieties, quantities, denominations, and inscriptions as the Secretary, in the Secretary’s discretion, may prescribe from time to time.

31 USC § 5112 – Denominations, specifications, and design of coins

The Uses of the Law

Although an unlikely scenario, the threat may have played a role in the end of this year’s debt ceiling crisis. On January 12th, the Federal Reserve and the Treasury Department reported that it reviewed the case for the trillion-dollar coin, but ultimately rejected the idea. Less than a week later, several tea-party Republicans in the House began backing down from their blockade on raising the debt ceiling.

The scenario demonstrates a lesson that is learned, forgotten, and relearned by every generation. Laws (and any rule system) can either work for you or against you. If you know the rules, you can act in such as a way as to have them work for you. If you fail to do this, those rules can easily work against you when your opposition knows the letter of the law better than you. When Republicans began blocking simple procedural votes to take the U.S. government hostage on the behalf of their wealthy constituents, they were using a silly law–that everyday government procedures like passing budgets require majority votes from the House–to push their agenda. Democrats found their own way to use the law to defuse that embargo.

It’s a magical cycle of bickering and legal nitpicking that will witness, I think, something fantastic and underhanded happening that just barely skirts the letter of the law and shocks the public. It probably won’t be a trillion-dollar coin. I only hope it’s not something ultimately destructive.

What is the Fiscal Cliff?

If you’re like me, you’ve been hearing whispers of some new buzzword with an ambiguous meaning. The so-called “fiscal cliff” is the latest calamity that is the Tea Party Congress. The Washington Post explains it all in a great blog entry, updated with the latest facts, figures, and congressional debates. I’ve summarized the key points here. Continue reading