The Wife and Kids: Not the Excuse They Used to Be
Lenten, Michael Rappeport and Howard Van
The Wife and Kids: Not the Excuse They Used to Be by Michael Rappeport and Howard Van Lenten Veteran recruiters of whistleblowers in Washington and elsewhere have learned to recognize one...
...And while 133,944 people are not enough to constitute a broadbased national trend, they do indicate a surprisingly wide distribution of inherited wealth-especially among the stratum of people who might become whistle-blowers in government or industry...
...Ownership of these securities may not be as widespread as one might like, but some of these stockmarket gains are passed on to non-o wners through inheritance...
...For all the corporate and governmental abuses it leaves unexposed, the excuse at least leaves us with our national self-respect: our toasters may self-destruct and our government may be corrupt, but at least we are a decent enough people to put our families first...
...Estate taxes are one indication of this economic change...
...This increase, like those in real estate and stocks, represents an enormous gain even when inflation has been taken into consideration...
...If they don't speak up,, we shouldn't blame the wife and kids...
...When their parents die, they will inherit enough money to allow them to overcome the “wife and kids” concerns in choosing their jobs and determining their values...
...Twenty-five years later, some of the parents are retired or deceased...
...Their economic security is not necessarily based on their current high income, but on the extra cushion provided by capital...
...cut into their purchasing power on the next trip to Europe...
...Many of those too timid to blow the whistle are as likely to end up on the breadline as Ross Perot...
...This appeal to paternal responsibility has devastated even the Naders, who can hardly compete against it with their allusions to honesty and the public interest...
...The increase has been so rapid in recent years that many of today's families in effect provided their own inheritance when they bought a house 20 years ago...
...The main elements that make up inherited wealth-real estate, stocks, and life insurance-each displays the same trend...
...In 1971, there were 357 million life insurance policies in force (an average of about 1.7 per living American), with a total Value of more than $1.5 trillion...
...In fact, they are often heads of families whose greatest worry is likely to be how deeply the devaluation wil Michael Rappeport is a contributing editor of The Washington Monthly...
...Most of the estates, of course, are worth far more than the $60,000 minimum...
...The Wife and Kids: Not the Excuse They Used to Be by Michael Rappeport and Howard Van Lenten Veteran recruiters of whistleblowers in Washington and elsewhere have learned to recognize one sentence as a tell-tale sign that their efforts are about to fail...
...Most of this increase is not included in the estate tax figures, since most insurance policies are owned by the beneficiary and therefore not counted in the taxable estate...
...In 1959, there were 55,685 individual estate tax returns filed...
...now their children are the businessmen and professionals, with families of their own to care for...
...Perhaps even more significant are the percentages: in 1954, only 2.5 per cent of those who died had estates worth enough to qualify for estate tax...
...In 1950, the average family held $4,600 worth of life insurance...
...If only it weren’t for the wife and kids,” says the accountant as he turns back to writing cost-overrun checks for a three-winged airplane, or the campaign treasurer as he neglects to mention a few cash-filled envelopes on his campaign spending report...
...The third important kind of inherited wealth, life insurance, affects a far broader group of people than do the other two...
...They stuffed extra funds into savings accounts, blue-chip stocks, and vacant lots in Arizona...
...In the last 30 years, the constant increase in real estate value has turned bungalows and deserted country acres into candidates for the estate tax...
...by 1970, the number had more than doubled to 133,944...
...Howard Van Lenten is a New Jersey writer...
...Even before they actually acquire the estate, the knowledge that it is coming gives them a degree of independence that is denied to the family still counting on Social Security benefits for their old age...
...None of these figures tells us much about general problems of poverty and inequality in America, but they have an important bearing on questions of courage and honesty in business and government...
...Real estate provides the most immediately comprehensible examples, for each of us has had the disheartening experience of watching the house we saw advertised for $35,000 sell for $42,500 a year later...
...Inflation had, of course, cut the value of the dollar somewhat (30 per cent) during that period, but even today a $60,000 estate takes some of the terror out of changing jobs or providing for the wife and kids after an act of conscience...
...Stocks and bonds, another important component of inherited wealth, have increased at an even more dramatic rate...
...During the 1940s, the market value of stocks and bonds increased by $1.3 billion each year...
...during the 1950s, the average yearly increase was $2.4 billion...
...In that era before inflation, when the only worry about “economic growth” was that we get enough of it fast enough, millions of middle-class parents started putting money away for the future...
...The evidence is accumulating to show that “wife and kids” is beginning to rank only slightly below “separate but equal” on the list of great phony excuses...
...What diverts the national outcry from such trends to ballooning meat prices is that, while few of us are farmers or butchers, many of us own our own homes...
...Such taxes must be paid only when an estate is worth more than $60,000, so they are a reasonable indicator -of the number of comfortable inheritances being passed on...
...Returns were fied for seven per cent of all estates in 1969, and the rate is climbing quickly...
...by 1971, the figure had risen to an average of $21,800 in life insurance coverage for every single family...
...Since 1939, the value of residential real estate alone has increased by an average of $8.7 billion each year...
...Those people whose futures are being made secure by inherited wealth are in general the same professional people in a position to notice when a company or agency flagrantly violates the public interest...
...We must reach back to the days of the Depression and World War I1 to find the roots of this increase in capital accumulation...
...What makes today’s adults different from their parents, whose financial incentive arose from first-hand experience during the Depression, is that an increasing number of families now have the kind of economic cushion that used to be restricted to the English gentry...
...But while the market is currently at 1968 Ievels, it should not be forgotten that during most of the 1960s, the market value of stocks and bonds rose by $15 billion every year...
Vol. 5 • June 1973 • No. 4
