ME VS. THE ESTATE TAX PT. I: DECLARE THE PENNIES ON YOUR EYES
For someone with my political and financial affiliations – liberal progressive and middle-middle class, respectively – it would seem a no-brainer as to where I would stand on the Estate Tax. I vote Yes because the ET provides a substantial amount of revenue that comes from only the very richest people in the US, this revenue can be used to fund pinko social programs like, say, schools, so that more people can get rich and give us their money when they die, and finally, it does not apply to me, nor is it ever likely to.
But I must confess to certain qualms. I believe in (graduated, progressive) taxes, and I believe in Government, but I am not sure that a posthumous transfer of assets qualifies as a reasonably taxable transaction. I balk at the idea that dying somehow changes the status of your assets, and that passing them on to another party entitles the government to a cut. The ET is taking another chunk out of money and property that has already been taxed – ideally – as income, as purchases, as holdings and/or dividends, and this worries me. This is the thrust of my question about the ET. So let’s debate:
The main argument against the Estate Tax, what Conservatives label the Death Tax, is that it discourages the accumulation of wealth, which means no capital, which means no investment, which means no jobs. It makes sense according to the framework of trickle-down economics (TDE), as per my understanding, and is the economic theory to which most Americans, i.e. the “American People,” tend to subscribe.
In some kind of civilization built of charts and graphs and statistical margins, where the language is binary and the food is Energon Cubes, trickle-down appears to work…for the greater population I mean. I think TDE does work, in a classical sense, because the people that formulated it said to themselves, “How can I convince people to give me my money and their money and defend my right to keep it all?” Mission Accomplished.
To counter, one may easily argue that the ET encourages the spending that is so vital to our econo-society or socioconomy. You-can’t-take-it-with-you and all that. This, in fact, fosters profits and dividends and capital and investment and jobs, so the song and dance goes. Thus, a strong economy. I recall a similar logic from the enemies of the ET, when years ago they urged working families with debt, housing and medical expenses to buy a DVD player with their $300 “Tax Relief” checks to “grow the economy.”
Stir in the consideration that it would take various probes, clips, and strong electrical current to actually discourage the accumulation of wealth, and you have a pretty weak argument against the Estate Tax.
to be continued…
But I must confess to certain qualms. I believe in (graduated, progressive) taxes, and I believe in Government, but I am not sure that a posthumous transfer of assets qualifies as a reasonably taxable transaction. I balk at the idea that dying somehow changes the status of your assets, and that passing them on to another party entitles the government to a cut. The ET is taking another chunk out of money and property that has already been taxed – ideally – as income, as purchases, as holdings and/or dividends, and this worries me. This is the thrust of my question about the ET. So let’s debate:The main argument against the Estate Tax, what Conservatives label the Death Tax, is that it discourages the accumulation of wealth, which means no capital, which means no investment, which means no jobs. It makes sense according to the framework of trickle-down economics (TDE), as per my understanding, and is the economic theory to which most Americans, i.e. the “American People,” tend to subscribe.
In some kind of civilization built of charts and graphs and statistical margins, where the language is binary and the food is Energon Cubes, trickle-down appears to work…for the greater population I mean. I think TDE does work, in a classical sense, because the people that formulated it said to themselves, “How can I convince people to give me my money and their money and defend my right to keep it all?” Mission Accomplished.
To counter, one may easily argue that the ET encourages the spending that is so vital to our econo-society or socioconomy. You-can’t-take-it-with-you and all that. This, in fact, fosters profits and dividends and capital and investment and jobs, so the song and dance goes. Thus, a strong economy. I recall a similar logic from the enemies of the ET, when years ago they urged working families with debt, housing and medical expenses to buy a DVD player with their $300 “Tax Relief” checks to “grow the economy.”
Stir in the consideration that it would take various probes, clips, and strong electrical current to actually discourage the accumulation of wealth, and you have a pretty weak argument against the Estate Tax.
to be continued…
posted by Mike | 1:16 PM
2 Comments:
A few thoughts on the estate tax to ponder before your next post. As an upper-middle class person with some upper-class relatives, the estate tax is likely to affect me at some point in my life. Seeing some of my relatives plan for it has given me some perspective on how it really works. As far as I can tell, there are roughly 1.76 billion ways to store, shelter, and shield your money so that as little as possible is effected by the estate tax--and that is just the legal ways. Those effected by the estate tax (a tiny percent of the population) have full time accountants and lawyers working on this on a daily basis. Obviously, a solid chunk of their income is taxed, but they still have the chance to keep Uncle Sam's mitts off of quite a bit of it.
Additionally, I have never really understood what people mean when they say the estate tax stunts the accumulation of wealth. It is an unclear phrase that could mean two things. One, which you commented on, is that people near death will spend quite a bit. This does happen and you were right in saying it probably fuels the economy to an extent. One thing you didn't mention is that it is one of the main engines driving chritable giving in this country. The other possible meaning is that it actually stop people from wanting to make money. I can personally attest that I would still like to be rich, even if the government takes most of it when I die.
Honestly anyone ever thought, "You know, when I die this money will be taxed, so maybe I better not take that raise."
Just to clarify, since it seems like my position on this is uncertain, I think the logic that the ET discourages people from getting rich is bunk.
As well, I think that the importance placed on accumulated wealth as vital to our economic well-being, i.e. trickle-down (again, as per my understanding), is pretty much bunk too.
I know there are theories that prove me wrong, and I know that they carry much water with many people. To that I offer Communism as a socio-economic theory. Graphable and sound, but ass in the execution.
Good point on the charitable donations.
More soon...
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