Taxing Picasso

A friend recently posted an Internet meme supposedly quoting Pablo Picasso as saying, “The meaning of life is to find your gift. The purpose of life is to give it away.” I replied saying that I didn’t think that Picasso gave away many of his paintings. Picasso was not a very nice man. Great artist but not a great man (many artists are like that).

In fact, according to an estate planning law firm, Pablo Picasso’s estate contained 1,885 paintings, 1,228 sculptures, 7,089 drawings, as well as tens of thousands of prints, thousands of ceramic works and 150 sketchbooks when he passed away in 1973. He also owned five homes and a large portfolio of stocks and bonds. It is estimated that this estate would be worth over a billion dollars today, but I think that is a low-ball estimate seeing as how just one of his paintings sold for about $180 million in 2016. No matter how you count it, that’s a pretty big estate for a man who professed to being a Communist.

And although Picasso died without a valid will many years ago, his vast estate was eventually settled between his four children (by three women). As he was a French citizen, I am unaware of the tax implications related to the inheritance of such wealth. But I do know that Joe Biden, Nancy Pelosi and especially Elizabeth Warren and Bernie Sanders would dearly have loved to get a hold of a substantial part of that estate if Picasso had been an American citizen. In addition to estate taxes, Senators Warren and Sanders, have proposed an Ultra-Millionaire Tax Act that would tax the wealth of ultra-millionaires at an annual rate of 2% for wealth between $50 million and one billion dollars and three percent for wealth above a billion dollars.

But how would Senators Warren and Sanders have taxed Picasso had they the chance to do so? The value of Picasso’s unsold works of art at the time of his death was unknown. It took an extensive audit to even make a best-guess estimate of the value of the estate. Do Senators Warren and Sanders intend to send in teams of auditors to value such an estate, and then resend them every year to revalue the estate? The court-appointed auditor of Picasso’s estate estimated the value of the estate (in 1973 dollars) at between $100 million and $250 million. Which value would the tax auditors use? (The higher one I think). And how would have Picasso paid the Ultra-Millionaire Tax while he was still alive? He would have been forced to sell some of his works of art, which he was loathe to do or he would not have so much stuff cluttering up his studio.

How could a government justify such an obscene intrusion into a person’s life and property? For that matter, what right could a government have to a person’s life work. It didn’t take a village to create that estate, just Picasso. And even Barack Obama couldn’t say that he didn’t build it or paint it or sculpt it.

Senators Warren and Sanders might say that people like Picasso would be exempted from this onerous new law, he was, after all, a good life-long communist. The Ultra-Millionaire Tax is intended for greedy hedge fund managers and corporate CEOs, not misogynist left-wing artists (which would leave most of their friends in Hollywood in the clear).

But are the corporate creations of billionaire CEOs and start-up founders that much different than Picasso? Sam Walton started with almost nothing but determination and a willingness to work hard. With $5,000 in savings and a loan from his father-in-law he was able to purchase a Ben Franklin variety store in 1945. Slowly and despite numerous setbacks he was able to build a small chain of mid-west stores before creating Wal-Mart in 1962. At the time of his death in 1992 he was one of the richest men in America. Senators Warren and Sanders would have wanted a piece of that fortune which they would have claimed that he did not build and that was due to his greed. But Wal-Mart at that time employed 380,000 people and provided inexpensive products at affordable prices to millions of Americans. In 2021 Walmart paid almost $7 billion in taxes and employed 1.6 million Americans (who also pay taxes).

Jeff Bezos may not pay much in taxes but his million or so employees do. And after being founded in 1995, his company, Amazon, lost money for years and was only marginally profitable until 2015. And Bezos accomplished this feat over a period of twenty years by offering customers low prices and free delivery. Jeff Bezos and Sam Walton made life easier for millions of people, myself included. So did Steve Jobs and Bill Gates

Of course, Sam Walton could have been content to stick with his Ben Franklin variety store and not have created a retail giant. Just as Jeff Bezos could have remained an obscure bookseller, Steve Jobs a computer tinkerer in his garage and Bill Gates a Harvard dropout. They wouldn’t have to worry about progressive politicians trying to take their creations from them or from their heirs. But the rest of us would be the worse for it.

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And why are Senators Warren and Sanders along with their far-left progressive friends so obsessed with taking money from rich people? It can’t be because they believe in sound fiscal policy. Even if they did not invent deficit spending, they took to it like Br’er Rabbit in the briar patch (is it a microaggression to reference Uncle Remus?). And the Biden Administration, the Democratic Party and their progressive militants obviously don’t care a whit of the massive and growing public debt. No, there must be some other reason.

Your friends on the left will tell you that they only want fairness. That it is not fair that some people can accumulate a vast fortune and not share it. However, over 200 billionaires such as Bill Gates have taken the Giving Pledge to give away the majority of their wealth, an amount that had swelled to $600 billion by 2016. After all, there are only three things you can do with vast amounts of money; you can invest it, you can donate it, or you can spend it on yourself. But after private jets, luxurious yachts, and multiple homes the amount you can spend on yourself is pretty limited so you might as well give it all away. But this is not good enough for the progressive left. They don’t want all those billionaires donating their money to causes they believe in; the progressives want to have that money go to the leftist causes they believe in.

If the excessive accumulation of material wealth is due to greed, then the lust of the left for the justly gained wealth of America’s billionaires is due to envy. It busts their chops to see somebody else doing well and they want to bring them down. That is why antifa goes around poor neighborhoods smashing small businesses, liquor stores and restaurants. And it is why the progressive left wants to attack big businesses and corporations along with their owners.

I am not saying that the wealthy should not pay taxes. They should pay taxes and they do. According to the Tax Foundation (using IRS data) the top 1% of taxpayers paid 40.1% of all income taxes, more than the bottom 90% (28.6%). The bottom fifty percent of taxpayers only paid 2.9% of income taxes. The left will say that income taxes are only part of the tax burden and the poor and the middle class pay more in payroll taxes for Social Security and Medicare than do the wealthy. But that is because paycheck deductions for Social Security and Medicare are considered contributions to trust funds that the beneficiaries will receive when they retire (their employers are also supposed to contribute as well but only a dope thinks those contributions come out of the employer’s pocket).

There are some reforms to the tax code that make sense. The step-up in basis at death essentially forgives the capital gains tax on inheritances and the carried interest treatment for hedge fund managers should be repealed. But punitive confiscatory taxes arising from the envy of the wealth accumulated over a lifetime of work should not be a part of the tax code. The government’s ability to collect taxes from citizens (by force if necessary) is the concession that citizens must make in order to create a viable social contract among people. But there must be a consensus on the appropriate level of taxation and on the use of those taxes. That does not sit well with the Democrats whose political platform is dependent upon giving people free stuff paid for by greedy billionaires.