While you put forth convincing arguement for abolition of estate taxes, I believe you are distorting several points through omission:

1- there has always been a significant "per recipiant deductable" of some $600,000+. So, a $10 million estate divided five ways is taxed at much lower rate than the same estate inherited by a single heir. $600,000 invested conservatively will create more gains than Joe six-pack (mister median income) can earn working 40 hours a week.

2- creation of a new form of taxation, such as a Federal consumption tax (and I'd like to see how that can be made progressive without creating work for an army of tax evasion accountants) - will not really erase the old forms of taxation. Politically, the Congress will not do something so radical as to dismantle the income tax system before implementing consumption tax - and thus we will have all the old taxes, plus this new one. More complication in an already Byzantine system.

3- The largest estates need to be broken up over generations - not paltry little $5M and $10M mom and pop businesses, but the $1B and up fortunes need to be dispersed. Otherwise, the Colliers would still own 10% of South Florida, the Rockefellers would be bigger power brokers than they were in their heyday, and the heirs of Bill and Melinda Gates would own the entire moon.

I am in favor of increasing the "deductable" to keep pace with inflation, something where a single inheritance, invested at prevailing conservative rates for the previous 10 years, would yield a median income.

I would also be in favor of tax free gifts in an annual amount perhaps up to 10% of the inheritance tax free limit.

In the case of an inherited small family business worth some $10 or 20M, a long term low interest tax payment plan would seem to be both compassionate and just.

However, when the extremely wealthy pass away from this world, if they have not fulfilled their moral philanthropic duty to disperse of the bulk of their material estate to persons and causes of their choosing, I have no problem with giving the bulk of it to the federal and state government.

Odds are, these same deceased billionaires have also failed to pass on significant human capital (wisdom) to their heirs. The world doesn't need a large number of Paris Hiltons.

I think the most important argument against the Death Tax is that it is immoral. The idea that when my race is run, our government is going to decide how much of my hard earned (and heavily taxed) earnings they will "allow" me to distribute as I see fit infuriates me.

JM,
Large estates disperse themselves over generations without any help from the government. Do you know who the richest American families were in the 18th century? Neither do I. Their wealth was dispersed over many generations.

And we need as many Paris Hilton's as we can get!

My impression is that there is little or no empirical support for the claim that estate taxes often force the sale of farms or small businesses. Even if a small business is valuable enough to generate an estate tax liability (and remember, many small businesses, especially those whose value is in the millions, have multiple owners) there are very generous provisions in the tax code for paying the estate tax over a long period.

As for the accountants, lawyers, etc., again I would like a touch more than a simple assertion to accept this. Somebody is paying $24 billion after all, and it's not poor people.

Nor do I think it is reasonable to argue for the abolition of the estate tax on the grounds it produces "only" 1% of federal revenues. If we could take the tax code and break it down into one hundred items, each of which produced one percent of total revenue, would we simply abolish taxes?

As for the inequality issue let me just note that we are moving towards a tax system that has a strong tendency to create a hereditary aristocracy. Taxes on capital income have been reduced dramatically, and now the estate tax is up for removal. Allthe talk about human capital notwithstanding, we are in the process of creating a class of wealthy individuals who pay little or no tax. This is not a good idea.

Why we should cut taxes on the super-rich and stick it further into the poor people in the form of a consumption tax in 5 pages or less. Yay.

Consumption taxes ARE regressive. It is irresponsible and disingenuous to describe them as potentially progressive. Since you are a prize winning economist, I assume you know about the diminishing marginal utility of wealth. I feel silly reminding us of it.

Consumption taxes burden those who consume 100% of their earnings, namely the middle and lower class. The estate tax burdens un-charitable billionaires who want to exercise control over their empire from beyond the grave.

Despite the 4 billions worth of lawyer and accountant families that get fed by the estate tax system, the government still manages to collect $24 Billion to spend on social services and Bombs for Democracy. Sounds like a success for me, your plan would presumably eliminate 30,000 professional jobs and force every taxpayer to shell out $240 each to make up the difference. Thanks! Great idea, I really didn't need that money for food and rent, and God knows Paul Allen needs another helicopter so both helipads on his newest yacht will be full.

"The idea that when my race is run, our government is going to decide how much of my hard earned (and heavily taxed) earnings they will "allow" me to distribute as I see fit infuriates me."

Minimum wage is hard-earned, if you made enough surplus money in your life to be eligible for the estate tax then you were either lucky, or employed dishonest means. The estate tax only applies to millionaires. People do not become multi-millionaires or billionaires by working hard. Our GNP averages out to $33,000 per year per person, if you make more than that, someone else is making less, very likely someone who works FOR YOU without which your enterprise would not function. (Sometimes I just want to smack Americans upside the head for being so obtuse. Bunch of computer engineers getting paid $100K a year to check stocks and surf the web at work and whine about their jobs being outsourced... then you bring up taxes and all of a sudden they are noble hard-working salt of the earth. What did you say to the last homeless guy that asked you for a quarter? Yeah, I thought so.)

All the estate tax says to people is, be charitible before you die or the rest of us will tax you.

Regarding social mobility and education, you might want to read an article in the April 22, 2004 New York Times. Written by David Leonhardt, the article is titled "As Wealthy Fill Top Colleges, Concerns Grow Over Fairness."

"I think the most important argument against the Death Tax is that it is immoral. The idea that when my race is run, our government is going to decide how much of my hard earned (and heavily taxed) earnings they will "allow" me to distribute as I see fit infuriates me."

One doesn't need to be Corey to find fault with this analysis. I don't mean to backhand Corey here (not entirely), just saying that the argument against taxation from morality is a particularly loathesome one, and should appear so to both conservatives and liberals.

Conceding that, for the wealthy and poor alike, some hard work goes into earnings, some luck is also involved. The very thing that makes markets work pragmatically -- the information gathering effects -- requires that markets also be unpredictable. With unpredictability comes luck. Yet there is no moral argument for lucky findings -- you don't deserve your luck. Hence: no moral argument for absolute private ownership. There are good pragmatic arguments, of course.

Then there's this one: property rights do not exist without some sort of public enforcement of those rights. You cannot pass on your wealth to your deserving heirs without the government enabling you to do so. Otherwise it goes to the angry hordes. I don't understand how you can ignore the amount of public infrastructure that is required to sustain highly complex private markets.

And no, we do not need more Paris Hiltons.

I tend to enter the fray only when there are particularly bad arguments. This one was exceptionally poor. You are presumably a Republican -- go read Oliver Wendell Holmes. He has something to say on the matter.

But this elite circulates over generations, and there is no convincing evidence that the degree of circulation, the degree of social mobility across generations, has been falling during the last couple of decades.

The income of the bottom 5th of American families has been flat for over a quarter century ($11,000/year in 2002 dollars). Is there any evidence that a significant percentage of people rise above the status of their parents if they start life in the lowest quintile of American families?

Stephen Darwall from The University of Michigan has called into question the accuracy of your reasearch done on this topic in the past:

In 1987, Gary Becker "summed up the research by saying that mobility in the United States was so high that very little advantage was passed down from one generation to the next." Many researchers believed that the effects of socioeconomic birthplace tended to wash out over two generations.

The problem is that the past research turns out to have been deeply flawed, and more recent research has shown significantly less, and significantly decreasing, mobility.

Can you offer up a ballpark figure as to what percentage of Americans rise above their lower-class start in life these days?

So the wealth-haters, hardly better than racists in their mindlessness, come out. It's not enough that this group, the well-off (if hardly all "rich"), even before paying taxes, contributes more than any other to society economically by creating businesses and jobs. It's not enough that the group that works the most, and the most efficiently, and is taxed at the highest rate thoughout their lifetimes. It's not enough that they pay the vast majority of all income taxes. It's not enough, after a lifetime of hard work, that they must spend their dotage worrying about unloading their wealth one way or another to avoid the death tax. No, after all, their just the evil rich, who deserve that the government take away half their money yet again on their deathbed, defying their last wishes.

Interestingly death is already one of the best tax breaks you can get. The stepped up basis in assets once passed on by bequest not only allows for nonrecognition of gain on inheritance, but gives the recipient a fair market value basis. This basically forgives all the tax inherent in the assets at death. This makes a kind of conceptual sense if we have decided that only amount above a certain point e.g. 1 million in estate tax, should be taxed at death. Without an estate tax I can't think of much reason for it. Any discussion of the elimination of the estate tax should include the possibility of elmininating the stepped up basis at death.

Becker's main argument against an estate tax seems to be that he favors a consumption tax. Since Becker thinks the consumption tax is best, he would likely write similar essays for all non-consumption taxes (i.e, abolish and replace with consumption tax). To the extent that it is unlikely that we will have a consumption tax as the main source of government revenue, I think Becker should answer the estate tax question 'ceterus paribus'.

Fred, assuming you write in jest, bravo.

He's not joking. He drank the Horatio Alger kool-aid. The rich are hard-working and benevolent, the poor are lazy and squander the opportunity presented to everyone in this great and magical land called America!

Remember that one from grade school? We've got the right reminding us of the myth each day so it is an easy trick to fall for. How do you think they got all those immigrants to pound spikes into the railroads until their hands bled?

People's abilities and motivations do not differ by as much as people's wealth does. I worked as many hours in the last 7 years as Bill Gates ever did in a similar period. There are only so many hours in a week. He earned nearly $1M per hour and I earned $35 per hour. Is someone trying to tell me that Gates is 28751 times smarter, more efficient, or more worthy than me or you?

Corey = Brain Dead.

"Is someone trying to tell me that Gates is 28751 times smarter, more efficient, or more worthy than me or you?"

Judging by your posts, I would say that "28751 times smarter" is a lower bound on the difference between you and Gates.

Brain Dead.

As is usual,a very interesting subject.I remember reading an old book of my mother's by James Gould Couzzens where an elderly judge admonishes an attorney who is rabid about high taxes destroying fortunes by reminding him that society is unstable when so much wealth is concentrated in a few hands.The other side of the coin is that the abilty to inherit rather than have the crown take the estate was considered an advance in English justice.I wasn't aware of the yearly revenue,which is a factor,but not that much after I know the details.I was, as I often am ,bemused by Corey's statements.Evidently ,he doesn't feel wealth can be created,just redistributed.This is a canard of the under educated left.I have a feeling the people who come away fom college with no math,no foreign languages,no econ,no sciences(but a lot of PC studies classes )haven't ben trained to critically think.This could explain the rants,which they probably even believe.

Here's an interesting dissertation topic: Create a model to simulate intergenerational wealth accumulation. One could have a lot of fun with this. I'll bet with no estate taxes, you would see the creation of family dynasties that would last for hundreds of years.

"Corey = Brain Dead."

"I have a feeling the people who come away fom college with no math,no foreign languages,no econ,no sciences(but a lot of PC studies classes )haven't ben trained to critically think."

Nothing gets me ridiculed faster than attacking the Horatio Alger myth.

Interestingly enough lincoln, I nearly had a minor in math on my way to my electrical engineering degree. I never once took a "PC studies" class, unless you count law courses taught by Law & Economics devotees.

I understand that "wealth" can be created, at least in the sense of exploiting a previously dormant resource. I am arguing that concentrations of wealth do not correlate to hard work nor moral merit. Wealth would not be created without workers who labor and invent. Industrialists, who "commission" such labor, take a larger share of the profits than all of the workers combined.

Then you have the problem of "investors", who do no actual work and merely risk surplus wealth on the ventures of others. Again, the investor gets an exponentially larger share of any gain vs. the employees of the enterprise whose ideas and labor caused the gain. (Even in relatively progressive "employee stock option" companies, the workers collectively will always own significantly less than senior management. I've seen it across the board.)

Where we differ is that I place moral authority on the worker, and you place moral authority on the capitalist. I see profit as a taking, you see it as the divine right of kings.

You are perhaps mistaking my having read Das Kapital before I read Adam Smith for economic ignorance. To the extent that you believe there is only one orthodoxy in the world of economics, I think it is you who need to study some more.

What you say about the under-educated left may be true, but I do not know or talk with those people. If it is your intention to demean people who attempt to place morals and ethics above logic and numbers, then perhaps you were born in the wrong time. Been there done that.

I would have thought that the 20th century taught us the problem with turning over all policy to the technocrats. It seems that memories are short and the history of facism really is cyclical.

Inheritance was considered an advance at a time when the crown was corrupt and tyrannical. Looking back to that time ignores the centuries of development in the realm of democratic checks on tyranny. If you are looking to check the government then you have a choice between the wealthy elites, or the polis. Problem is the wealthy elites are also capable of even greater tyrannies.

Corey: as I'm sure you're aware, every realistic consumption tax proposal includes either exemptions on "necessities" or a universal rebate, thereby making it progressive.

"if you made enough surplus money in your life to be eligible for the estate tax then you were either lucky, or employed dishonest means. The estate tax only applies to millionaires. People do not become multi-millionaires or billionaires by working hard."

Not solely by working hard. It also takes financial discipline, and to some extent avoiding bad luck, which is quite different from requiring good luck. Investing $3300 a year at 7% for 45 years gets you to over $1 million. That might be difficult for those earning $30k or so, but it's not impossible. After all, people who only make $25k aren't starving. (And of course it would be far easier if the regressive payroll tax were abolished).

A rebate doesn't make a tax progressive, it simply exempts those people at the bottom that would be otherwise put out on the street (or stop voting republican) because of the tax. The tax is still flat for everyone else.

As one gets richer, one approaches the limit of one's ability to purchase consumer goods, and the effect of the consumer tax diminishes. The result
is that the burden is felt within a particular band, namely the middle class.

Further, exemptions for "necessities" are paternalistic and intrusive. People here often profess to libertarianism, why then don't they get outraged by the government presuming to tell poor people that they can't buy a stereo but they can buy milk. I personally am nowhere near being a libertarian, but it seems to me that should bother them. (Maybe it does)

"After all, people who only make $25k aren't starving."

Depending on where they reside they aren't really living either. Have you ever gotten by on less than $35K a year since leaving school? Did you save 10%? It does not make sense to talk about things we all know will not happen in reality as if they possibly might.

I agree on the abolishment of the employee paid portion of the payroll tax, but a flat consumption tax would just do the same thing.
I think it is telling of the priorities of this administration that lowering the top tax rate and abolishing the estate tax were the first things chosen in their plan for "reform". It would be no less regulatory and intrusive to abolish the employee paid payroll taxes and raise the property tax.

When it comes to taxes, the states will often step in when there is an opportunity given to them on a silver platter. If the federal estate tax is abolished, would at least some of the states that do not currently have estate taxes seize the opportunity and impose them? Would states that currently have an estate tax raise theirs? Differences in state taxation rates and schemes produce economic distortions too. Would these distortions worsen? These questions constitute the difference between dynamic scoring and static scoring. Dr. Becker is taking the static scoring approach.

There is no compelling political or economic reason to abolish the federal "death tax." It has been repealed already--for 99 percent of estates. Although its existence is largely symbolic, symbols are important sometimes. So long as the estate tax rate is not so unduly high as to discourage the incentive to work and accumulate wealth, this is one tax that should be left alone.

All a progressive tax means is that higher rates of the activity being taxed are taxed more heavily. Thus a consumption tax that taxes the first $13,000 at a 1% rate and anything over $13,000 at a 50% rate is a progressive tax, b/c the total tax rate increases with each additional unit of the taxed activity. For each dollar of consuption over 13,000 the tax rate on their total consumption tax approaches 50%. Thus those who consume more are taxed at a higher level porportionately than those who consume at a lesser level.

e.g. total tax rate on someone who consumes 13,000 is 1% of consumption
someone who consumes at $20,000 tax is taxed at 18.15% of consumption
someone who consumes at $100,000 is taxed at 41.63% of consumption

The current income tax system works the same way, just with more layers and in regard to income (but all income is is taxing the present value of furture consumption), any sort of rebate/exemption/differing rate will produce a progressive tax, the only way to have a nonprogressive tax is to have it tax everyone proportionately (e.g. everyone is taxed at 1% of consumption)

The reason everyone says consumption taxes are regressive is that they are regressive as to income/wealth, not b/c they are regressive to consumption. Indeed a consumption tax that is progressive to income is possible; but it would require incredible complexity and reporting problems. Maybe a consumption tax that was progressive as to consumption (like the example I just gave with different numbers of course) would be a better solution. There is nothing inherently regressive or progressive about either the consumption tax or income tax.

I recommend David Bradford, formerly of Princeton, and David Weisbach's (of U of Chicago Law)work on the X tax as a fascinating discussion of this issue.

Venturing a bit off topic to the skewness of compensation in corporate America:

I work for a not so hypothetical company of about 500 employees. The average compensation breaks down roughly so:

CEO & VPs
~10 people average $500k/yr + ~100,000 options

Upper management
~20 people average $250k/yr + ~20,000 options

Middle management & upper tier technical + ~1,000 options
~70 people average $125K/yr

Lower tier technical, infrastructure, etc. + ~100 options
~250 people average $45K/yr (spread $8/hr to $60K/yr)

Sales / commission based
~150 people average irrelevant, highly varied, distribution actually very close to the above, capping around $250K/yr

-----------------------

Only the top two tiers, or upper 6% of my company will ever have to consider hiring an estate attorney. The rest of us would have to make a extremely lucky investments, or pursue DINK lifestyles to get to any significant net worth, because we are still consuming most of our income.

Needless to say, mobility between the layers is extremely rare, more likely to hire a new VP or upper manager from outside than to promote from within. Entry into the top 3 tiers requires a good education and extensive prior experience, typically at a similar level in another company. I tie this back to the estate tax theme by noting that noone in the top three tiers appears to have been raised in a ghetto.

The lower tier is accessible to all, but note the salary discrepancy. These people not only consume all of their income, they require dual incomes to support a home and family, and still they will have a difficult time saving any money for retirement. They might educate their children, and their children might have a shot at a third tier job someday, but they are essentially going nowhere themselves.

Arguably, the lower tier does not do "wealth creation" type work, but some of my layer - upper tier technical - certainly does. You may point to how well we are compensated compared to the line workers, but we are not offered anything approaching a participation stake in the future value of the company. We could go elsewhere, but elsewhere, the story is the same.

The wealth creators in my tier are typically malcontent over this state of affairs, but since we lack the resources to start our own ventures, we stick with the salaried jobs.

Our CEO came from money, and risked a significant minority of his fortune in funding our company as a startup. He occasionally puts in long hours, but across a year, I doubt he totals over 1500 true "company" hours. You could argue that he's efficient, but from my perspective, he started from an advantaged position, took a small risk, and got lucky. He hired a highly professional compensation department to ensure retention of people like me, and justification of his salary, benefits, options, bonuses, etc. Every year, compensation tests the lower limits of efficiency for the employees, and the upper limits of credibility for the top tier.

Whine whine whine - the unfairness of it all.

Would a stronger estate/inheritance tax correct this situation? Not immediately.

Would abolition of estate/inheritance taxes excacerbate this situation? I'd say, definitely.

The upper tier already acts like a nobility class, and there is more than one ivy league degree up there. With the material wealth playing fields skewed 100:1 (in the case of stock options, which can be worth 10x salary for the upper tiers, some years), I, in the third tier, won't be able to afford ivy league schools for my children, waterfront property for my retirement, or any of the other highly exclusive comodities in life.

Oh, sorry, whining again.

It's a pattern that's repeated again and again. Those who have, act to protect what they have, so that the have-nots never will get a chance at it.

The drastic curve of compensation in corporate life mirrors life in general, and if those at the top are able to establish and maintain dynasties, they will. The United States is already being run by groups that do not protect the interests of the majority, they managed to secure ~50% of the popular vote in the last two dynastic presidential elections through some interesting plays on values. Abolition of estate taxes plays on some of the same values that got the Republicans elected by people who they are going to trod on economically. Joe six-pack may not himself have to worry about estate taxes, but if he did, he sure wouldn't like them. And he sure wishes he's win that lottery so he'd have the problem. And, ya know, even if he doesn't win the lottery, it's just not right, all them hard workin' CEOs having to pay another tax.

If the electorate isn't careful, the system may become so biased to the powerful that it falls out of popular control entirely.

"If the electorate isn't careful, the system may become so biased to the powerful that it falls out of popular control entirely."

I don't know, do you feel like there is any real popular control NOW? We may already be there. Certainly there is no popular control in the working world. Engineers still laugh at the idea of forming unions to protect their rights.

In tech companies I worked for, there was some upward mobility, from the "suitably trained" upper-middle tier into management. Even hereditary dynasties occasionally need new blood to renew the gene pool. (Witness the sordid genetic history of the English royals)

The problem I saw was that the individuals choosen to rise up the ladder were most often not the individuals who had created wealth. In fact, they were most often the individuals who were the best at stealing credit for the successes of others and sucking up to the whims of management.

On one level, anyone being chosen for promotion encourages the rest of the troops. It really only takes one or two internal promotions a year to keep the engineers working 70 hour weeks. By picking the syncophants, management sends a direct message that devotion to the hierarchy is preferred over devotion to truth.

This wouldn't be a problem except that it leads to discontent in the minds of innovators, who by nature are often "outside the box" anti-authoritarian personalities. Many of them get driven out or leave voluntarily after making significant contributions in the more free-wheeling startup phase. This is one of the reasons you often don't see lightning striking twice after tech-companies IPO or otherwise "go legit." You get a horizontal migration of talent that only really benefits in times when there is a high demand (that is, not now).

The bottom line is that the qualities necessary to be upwardly socially mobile in disfunctional American corporations are opposed to the qualities necessary to create wealth in the same. The whole system is based upon appropriation, whereby management is credited for the gain (and disproportionately rewarded) to which it only indirectly contributed. This is why I have no qualms about asserting that few to none of the rich EARNED their position on their own merit.

Investment may grow the economy if it is effectively directed to concentrations of innovators, but the growth falls in proportion to the initial distribution of shares in the economy. No one is benefited who was not already in line, except via inefficient and paternalistic methods like trickle-down.

"Hence: no moral argument for absolute private ownership."

I think John Locke had one: "I grabbeth the fruit, therefore the fruit of mine labor is not thine! Get thy hands off my apple, scoundrel! Thou didst not pluck it!" The alternative is theivery. Are you seriously making the case that theivery is not immoral?

"And no, we do not need more Paris Hiltons."

Spoken like a man who hasn't visited Paris and been inside the Hilton.

COREY:"The whole system is based upon appropriation, whereby management is credited for the gain (and disproportionately rewarded) to which it only indirectly contributed."

Sounds like a bitter worker. But note this: it is the management that is accountable for failures and criminally liable if wrongdoing occurs. It may be true that Bernie Ebbers is rich, but it is also true that Bernie Ebbers is going to prison. Credit is the flipside of blame.

COREY: "Inheritance was considered an advance at a time when the crown was corrupt and tyrannical. Looking back to that time ignores the centuries of development in the realm of democratic checks on tyranny. If you are looking to check the government then you have a choice between the wealthy elites, or the polis. Problem is the wealthy elites are also capable of even greater tyrannies."

Like any majority, the poor are capable of tyranny.

"do you feel like there is any real popular control NOW"

You can fool 33% of the people all of the time.

You can fool 51% of the people some of the time.

Following the above, elected leadership can pull off heinous acts aggregious to the entire populace some of the time, and still get re-elected.

But, if the elected leadership starts grinding down more than 83% of the populace on a continuous basis, they should be thrown out under the current system.

Scary what a few fools will allow to go on.

Sadly, I think that whatever is done about the estate tax will be such a small matter in the minds of the voters that it will be a non-issue in upcoming elections.

[[["After all, people who only make $25k aren't starving."

Depending on where they reside they aren't really living either. Have you ever gotten by on less than $35K a year since leaving school?]]]

Some people in some countries sell their kidneys to provide for their families and they have never been to school. They cannot read. They die from measles and polio. No one making $35k per year in the United States of America is "not really living".

""And no, we do not need more Paris Hiltons."

Spoken like a man who hasn't visited Paris and been inside the Hilton."

I did not notice the building being particularly crowded when I stayed there. Good food, mediocre service, dreary architecture.

And, the benefits to society of a recognizable brand medium luxury hotel conveniently located in high traffic locations do not, I think, outweigh the degredation of values perpetrated on society by the hotel mogul's offspring.

If you haven't seen the South Park "Paris Hilton" episode, you should. I believe it is readily available via bitTorrent....

THE ESTATE TAX

The estate tax is favored by cynical politicians who know that heirs of multimillion dollar estates are outnumbered by non-heirs. Thus, more voters benefit from the estate tax than lose out.

These cynical politicians are usually populists, and so are on the Left. Their campaign and fundraising rhetoric slurs heirs as greedy and undeserving. After all, heirs didn't earn their inheritance. The little guy loses out if the greedy rich are able to spend their dollars how they choose.

CYNICISM: BRINGING DEMOCRATS TOGETHER

The Left benefits politically by restricting the use of capital by rich private persons, natural or state-created. First, corporations and rich individuals have less money to spend on elections and lobbying for free market policies. Second, the extremist rhetoric keeps Leftist politicians well-financed and in office, because extremist rhetoric energizes the far Left, which maximizes the number of small "hard money" donations incoming to tax-exempt liberal groups and the coffers of liberal loudmouths like Chuck Schumer.

HOW TO HELP THE POOR, WITHOUT HYPOCRISY

The way to improve the lot of poor people is to grow the economy. Don't take my word for it, take the word of Professor Bhagwati of Columbia University, who used that very strategy while an economist on the Indian Planning Commission to raise the minimum income of India's poor (defined as the bottom 30% of India's wage-earners). He is quite explicit in "In Defense of Globalization" that:

"[G]rowth was not a passive, trickle-down strategy for helping the poor. It was an active, pull-up strategy instead." p.54
...
"[G]rowth had to the principal (but, as I argue below, not the only) strategy for raising the incomes, and hence consumption and living standards of, the poor." p.54
...
"A suitable growth policy can always nip the immiserating growth paradox in the bud, ensuring that growth does amount to an increase in the size of the pie." p.55
...
"We must also improve the poor's access to investment by making sure that bureaucrats are replaced by markets wherever possible. As I remarked earlier, the anti-market protesters do not adequately appreciate that, as has been documented by numerous development economists who have studied both the working of controls and the rise of corruption in developing countries, far too many bureaucrats impose senseless restrictions just to collect bribes or exercise power. Letting markets function is therefore often an egalitarian allocation mechanism." p.58

I ask you this, my friends. Does the estate tax "let the market function"? If not, why is Corey opposed to an egalitarian allocation mechanism? Isn't he supposed to be an egalitarian? Or is he just an elitist in populist clothing?

R,

I disagree. The particular method that I used to obtain my wealth might have involved luck, but the fact that I obtained it had more to do with hard work and determination. I guess you could argue that inheriting intelligence is lucky, but there are plenty of smart people who are not wealthy.

There is very little difference between taxation and theft. Either way, someone takes your stuff by force. At least you can argue that income tax pays for the police protection they receive. But a dead person does not get anything from the government. Seventy percent to transfer value? I would rather take my chances with your angry hordes.

And I am not fond of either major party, but I am closer to a Democrat than a Republican.

Winfield, you are really going to rely on the old "eat your peas because there are starving children in _____" argument? OK, then is it relevant that many of those desperate people in other countries that you refer to have jobs making shoes and cutting down bananas that end up being consumed in America? (yet they still can't manage to get by) Because I think its the same debate, on a global scale. Plus then we get to talk about why the US is willing to offshore business but won't export the rule of law. Seems like we've covered that ground though.

Is it relevant that Americans have attempted to sell their kidneys on EBay?

You can call me a bitter worker if you want, there are more of me out there. I have a right to be bitter, I was shafted and left with nothing in exchange for years of hard work. For a while I was paid more than I was worth, fortunes rise and fall. I am unique only in the sense that I have stopped trying to win that way, and am pursuing other options in the higher education system.

I think I have presented a critique that is worth more than a "you are bitter" dismissal, but its your perogative.

"No one making $35k per year in the United States of America is "not really living".

It depends upon how it is done. In graduate school (in the US), I made $14K per year and toured Europe two summers in a row, paying all my own bills, including rent on the (small) apartment I wasn't using stateside during the summers.

No, I did not stay at any Hiltons during those trips.

Upon graduation, I made $36K per year, and I was a wage slave. I bought a home in the ghetto (best investment of my life, as the ghetto retreated and values tripled in 10 years), and didn't have enough free time to do anything substantial in my life.

My quality of life was better earning $14K per year, working about 800 hours.

At $36K per year working 2000 hours, I was able to buy a new car and a invest in a small house, contributing more to society, I suppose, but net enjoyment of life was seriously diminished.

In today's America, there are precious few choices of employment that will pay a reliable $50 per hour, while allowing more than a few weeks per year of vacation. Unless you happen to inherit a moderately sized fortune which you can effectively invest and manage for about 100 hours a year.

BECKER: "Suffice it to say that consumption taxes, unlike income taxes, do not distort savings decisions, a particularly important issue for the United States."

In other words, you're only taxed when you spend. If you don't spend, you get to accrue compounding interest and keep it or pass it on. It means instead of borrowing, poor people can simply spend less. This will get rid of a lot of junk economic behavior, as poor people opt not to spend money on frivolities. The only problem is that there is a limit to how much poor people can cut their costs (a reason for progressivity), and the progressive consumption tax would need to be administered a cost which would fall on the seller of the goods being consumed, which means an across-the-board increase in sticker prices, which affects buyers with lower savings disproportionately. (Unless Becker is in favor of socialist price controls, which we all know would lead to rationing....)

Plus then we get to talk about why the US is willing to offshore business but won't export the rule of law.

I don't think "the US is willing to offshore" any business. Multinationals that are thought of as American corporations are offshoring. But that is not a government action. I think the inability of you to make that distinction is telling. George W. Bush has not implemented a executive order commanding multinationals headquartered here to offshore. But I am sure you will make up some conspiracy theory to the contrary, probably involving your stolen patents.

"No, I did not stay at any Hiltons during those trips."

I was clearly making a vulgar sexual Paris Hilton joke. Perhaps your lack of humor is proof that you are "not really living." I'd advise you to abscond to Bangladesh immediately, where workers have it much better, according to Corey. But don't go to Hong Kong or Singapore, former British colonies with an Anglo-style legal system and governance, including property rights, because they, apparently, don't have rule of law. Evil empires never export rule of law. Especially not in Iraq, which is writing its Constitution, or Afghanistan, which already wrote its. And never mind that Kuwait, which we freed from Iraqi occupation in 1991, just gave women full political rights. No, no, America is evil because it "offshores patents".

"Is it relevant that Americans have attempted to sell their kidneys on EBay?"

No, because Americans don't sell their kidneys to put food on the table. I'm sure that person was a get-rich-quick libertarian who'd just read a book by Richard Epstein.

"OK, then is it relevant that many of those desperate people in other countries that you refer to have jobs making shoes and cutting down bananas that end up being consumed in America?"

It means cheaper goods for poor American workers, which means increased purchasing power for poor American consumers (who are also workers), which means more money potentially going into savings for poor people. You want poor Americans to have an increased chance of accumulating wealth, don't you, Corey? Or would you prefer that poor Americans not be able to buy cheap goods they like at Wal-Mart and Target? You like higher sticker prices for poor Americans, is that it? Because higher sticker prices in American stores are in essence a tax on poor Americans. You think poor hard-working Americans should pay more taxes because of your liberal sympathies for distant foreigners? It didn't realize that "egalitarian" was spelled E-L-I-T-I-S-T.

I don't think of them as foreigners Winfield, I think of them as people like me. Aparently, they made my shirt and I am looking for a way to say thanks.

If you want to put words into my mouth, invent things I never said or implied (re: Bangladesh), and turn me into a talisman for your latest crackpot redefinition of terms... then have at it. I believe in the things I say with all of my heart. That may not be enough for you but it is enough for me.

"I don't think of them as foreigners Winfield, I think of them as people like me. Aparently, they made my shirt and I am looking for a way to say thanks."

Then why don't you adopt a Bangladeshi. Your personal and private belief in cosmopolitanism is no reason to support raising taxes on the working poor in this country, which is a public act that affects millions of households. If you don't think an increase in sticker prices is a tax on the poor, maybe you consult some recent Democratic speeches opposing the idea of switching to a consumption tax. (or an economics or tax law textbook.)

Corey writes: "I think I have presented a critique that is worth more than a 'you are bitter' dismissal, but its your perogative."

Nope.

Do you have hammer and sickle sheets on your bed?

Brain dead.

Joe Merchant,

Responses to your comments enumerated above;

1. The historic $600,000 exemption was per donor, not per donee.

2. A progressive federal consumtion tax can be easily achieved by expanding IRAs through removing the $3600 annual cap and allowing taxable distributions at any time. In essence, this would exempt net current savings from the tax base leaving consumption to be taxed on a graduated basis. William Andrews of Harvard suggested a variant of this thirty years ago and Sam Nunn offered it as legislation last decade. In my opinion inter vivos as well as testamentary gifts (as distinguished from charitable contributions) should not be deducted from the base. Alternatively, a sales tax style tax could be made progressive by exempting basic needs such as food, medicine and shelter. You are correct that such exemptions would introduce the potential for gamesmanship and complexity, but it is not clear that it would be any worse than our present system. However, this alternative would be especially susceptable to the "additional tax" risk that you mention.

3. Huge estates diminish over time without the help of the government. Just look at how little is left of the original Rockefeller and Kennedy estates, and through good planning they have paid little in estate tax. Of course, some of that planning has been accomplished by the use of private foundations. The mischief those foundations have caused is staggering.

I am not sure that Becker is correct in observing that the estate tax is inefficient because of the number of lawyers and accountants employed to avoid it. Although I havent' seen any research on the point (and there must be some) my personal observation is that there are many expensive lawyers and accountants employed at the upper margins of any tax system. Are more lawyers and accountants employed per dollar collected from taxpayers with large lifetime plus death transfers than from individual and corporate income tax payers paying over 30% marginal rates on ten million dollars of income? I doubt it. The difference is that the federal income tax collects much of its revenue by withholding from lower- and middle-income tax payers who cannot save much by hiring lawyers. At the upper margins of income taxation, lawyering is probably more prevalent than at the upper margins of estate taxation.

winfield -- the argument isn't that theivery is moral, but that taxation is moral. We have no absolute right to private ownership that can be abrogated by the government. Because ownership itself relies on government protection, and for other reasons that are mentioned above. It isn't my argument, though I'd like to lay claim to it.

I have been to Paris; its lovely, have been inside neither the Hilton, Paris, nor Paris Hilton, though they each service multitudes.

"The particular method that I used to obtain my wealth might have involved luck, but the fact that I obtained it had more to do with hard work and determination."

How can anyone be sure of this? Conceding that markets are unpredictable -- that luck plays some role in your wealth accumulation -- are you not a little cautious about quantifying the amount of luck responsible, versus the high estimate of merit you bestow upon yourself?

One difference between theft and taxes, that seems quite obvious, is that the government can lay a valid claim upon you wealth. Your money -- and your ability to protect it -- is a construct of government action.

"Because higher sticker prices in American stores are in essence a tax on poor Americans."

This is a ridiculous statement. If you want to call any increase in cost a "tax" -- well that's pretty tortured, in that the traditional definition of tax is a cost directed to the government, and not just anywhere -- but fine, do so. But the "tax" you describe is no more a tax on poor people than a tax on everyone. Sure, higher prices are bad, and poor people, because they are poor, might feel the pinch a bit more, but that doesn't make it solely a tax on poor people -- in as much as it can be called a tax at all, which it isn't.

Currently, the wealthies 1% of Americans have an income of about 80 times the average family in the lowest quintile.

Perhaps that number could be the estate tax rate...80%

Might give the Masters of the Universe an incentive to raise their workers pay. How hard would it be to get that number around 50?

"How can anyone be sure of this? Conceding that markets are unpredictable -- that luck plays some role in your wealth accumulation -- are you not a little cautious about quantifying the amount of luck responsible, versus the high estimate of merit you bestow upon yourself?"

There are all kinds of factors that affect someone's potential for wealth accumulation. High School grads make more than drop outs. College Grads make more than HS grads. People who do not have children as teenagers are wealthier than those who do. Those who live frugally save more than those who live beyond their means. None of these are random events.

You are right that I cannot entirely discount the role of chance, but there are things people can do to put themselves in a position to be in the right place at the right time.

"One difference between theft and taxes, that seems quite obvious, is that the government can lay a valid claim upon you wealth. Your money -- and your ability to protect it -- is a construct of government action."

If I were able to avoid paying taxes in exchange for waiving any government protection of my assets, I would gladly do it. But they do not offer that option.

monkyboy,

You are falling into the trap of zero sum thinking. Rather than worry about the top one percent versus the bottom twenty, look at the state of the bottom twenty percent. The places where "poor" people are doing the best are the places that have the largest disparity between rich and poor.

Previous attempts to reduce the ratio between rich and poor have succeeded by reducing the wealth of both classes.

Hehe, TheOC, we've had 25 years of "trickle-down" economic policy and the lowest quintile in America has the exact income they had when Reagan took office.

If you look closely at most fiscal policies, they are designed specifically to help the richest 1% of Americans. The question is, why can the Republicans fool so many poor people into thinking they actually want to help?

R - "ridiculous" is a little harsh. The idea has merit even if the word "tax" isn't a perfect fit. If congress decided to set a policy of no trade with China, there would be costs. These costs would be paid through higher prices on cheap consumer goods that aren't usually purchased by the upper class.

I think you see this, though.

OC -- I don't think you fully grasp my point. It isn't just police protection that you would have to forgo, but the entire infrastructure set in place by the government to create private markets. An important one would be the mint. Then we also have the SEC, the federal reserve, etc. It isn't just that you require a government to protect your wealth (you do) but that the existence of private wealth in non-cattle form is predicated upon a government. Without a government, you could presumably acquire a flock of sheep, and trade for goods and services. But a more liquid form of wealth requires a government. Otherwise it does not exist.

This is why arguments that begin "taxes are immoral" are so very unappealing. It seems obvious that they aren't, and it makes one question whether the speaker genuinely believes what he is saying.

Daniel --

I see your point, but it isn't only use of the word "tax" that bothered me, but the unsupported assertion that the "tax" was exclusively "on the poor."

There is actually evidence that the very rich and very poor alike buy basic consumer goods on the cheap. We need to define more readily what kinds of goods we are talking about before the statement can be proven true. For instance, evidence suggests that the rich don't buy name brand cereal. There isn't much evidence that rich people shy away from bargains.

There are other examples -- such as state lotteries -- which actually do act as taxes upon the poor. State lotteries are both (1) taxes -- in that the money goes to the government -- and (2) primarily targeted to the poor -- because poor people buy more lottery tickets. I don't think (1) or (2) necessarily applies to the example. It was so hastily thrown out there that I think it deserves whatever I called it.

If I were able to avoid paying taxes in exchange for waiving any government protection of my assets, I would gladly do it. But they do not offer that option.

And what will you do when someone at the bank or brokerage house transfers your account to his name, or when a gang of thugs moves into your house while you are at work, or someone decides to tow off your car?

Maybe you're willing to take a chance on your house burning down, but who do you think will sell you insurance if they know the fire department's not going to show up?

Fair enough, R.

monkeyboy (and others on the liberal side):
Check out "Report Exaggerates Income Equality," by Robert Rector and Rea Hederman, L.A. Times, Oct. 7, 1999, at B11. This article goes into detail as to why the lowest quintile is not nearly so bad off as many spin it, and why people tend to misread the data on inequality.

Second, check out "Still the Land of Opportunity" by Pete Du Pont, Tampa Tribute, May 4, 1996, at NATION/WORLD p. 15. This article details the extraordinary economic mobility that exists in the United States.

Both are available on Lexis or Westlaw, and probably DowJones. I would challenge anyone to refute these analyses of the data.

It sucks to be in the lower quintiles in America. The need for many social programs derives from this fact, RWS.

Whether your stay in the lower quintiles of American family income for 10 years or 50 years is beside the point.

"You shoulda gone to Harvard and held off on having kids," sounds an awful lot like, "Let them eat cake!"

I assume you do not dispute the basic factual accuracy of the above analyses.

I wouldn't say "you should have gone to Harvard," of course. Your statement is a parody of my point. Going to a community college, on the other hand, is hardly out of the question. One with only a GED can go to our local community college for a health services career and come out with a very nice salary and stable job with benefits. I do not believe this assertion is Marie Antoinette-ish.

I would say that holding off on having children would be a good thing for many, especially the unwed and those who have not yet established themselves. I would not quarrel with that.

[Aside: Enjoyed the comments of Professor Becker on the "Chicago boys" in Chile this morning on NPR.]

I wouldn't say "you should have gone to Harvard," of course. Your statement is a parody of my point. Going to a community college, on the other hand, is hardly out of the question

"Check out "Report Exaggerates Income Equality," by Robert Rector and Rea Hederman, L.A. Times"

So a couple of Heritage Foundation arch-conservatives manipulate census data at the 1999 peak of economic growth and we are supposed to forget that we passed 5 homeless people last time we walked down the street?

Who here has ever been in the lower quintile? Anyone? Who here is in it now? Anyone? Lets look for some news stories to tell us that its not so bad then. Don't we feel better knowing the poor are doing just peachy and they love their prospects.

I'm hardly a liberal, RWS. Just pointing out some numbers. Look at income distribution, not in percentages, but in actual dollars. Two sets of American families, roughly the same size.

$ 325,440,000,000 is split between one group
$4,010,520,000,000 is divided between the other

That is the difference between the top 5th of American families and the bottom 5th. But few in the top 5th are asked to pay estate tax. That falls mainly on the top 1%. Dr. Becker points out this tax brings in about $25,000,000,000/year.

The income for this group is over $1,000,000,000,000. I think they can afford it.

Almost all discussions of tax policy (I am only a semi-pro tax practitioner and an amateur economist) get bogged down on two issues both of which are close to intractable.

First, you can read a description of how the tax system is supposed to work on the IRS web site or in a newspaper, but that may or may not be the way the system really works. This is most particularly true in situations where the government is out-gunned like large estates and big corporate returns.

Lots of folks like the Estate Tax on principle and lots of folks hate it, but very few understand it. The Estate Tax is voluntary. No one is required to have estate. If you consume your wealth or give it away (there is a gift tax but that is another story) it is not subject to the Estate Tax. This thought may seem trivial, but it is the ur-insight on which all Estate Tax avoidance strategies are based.

It therefore follows that the Estate Tax is not a tax on the very wealthy. The very wealthy, who have assets far in excess of their possible consumption needs, can, and do avoid the Estate Tax by retaining only so much as they will consume and giving the rest away to heirs, trusts and foundations. This is why there are wealthy Rockefellers, duPonts and Kennedys.

A corollary to this fact is that the tax is only paid by the unsophisticated, the unlucky (died before they had worked out a plan) and by those whose estates are large enough to be taxable but not large enough to given away.

Second, the real policy issue in evaluating a tax is not the formal rules but the economic impact of the rules. Tax the rich is a popular slogan, but attempts to do so may result in lowering the living standards of the poor.

Take the great Yacht tax fiasco of the early 1990s. The theory was admirably direct a tax aimed only those wealthy enough to buy really big boats, in the form of an excise on their purchase. What happened was an illustration of the best laid plans of mice and men. The rich stopped buying boats in the United States and hundreds of laborers lost their jobs. The tax was repealed. See: "Shipwrecked In New Jersey", The Freeman: Ideas on Liberty, January 1994 by Robert A. Peterson.

If the world consist only of Rich Dudes and Towel Boys and the tax on Rich Dudes is reduced, it may very well be that the Rich Dudes will bid up the wages of Towel Boys. meaning that the beneficiaries of the tax cut were the Towel Boys not the Rich Dudes. This is just the opposite of the famous case of the yacht tax which was borne by the proletariat not the idle rich.

Unfortunately, outside of such cautionary tales and offhand model building, there is little real world data to guide us in making good tax policy.

The 2004 Economic Report of the President (which is available here) Chapter 4 states that:

“A more important point, however, is that the effect of the tax is likely to take the form of a reduction in capital accumulation. Because the estate and gift taxes are taxes on capital, part of their long-run burden is likely to be shifted to workers, who never receive a bequest or taxable gift, through a reduction in wage rates.”

But even they do not have data on which to base their position.

Furthermore, after a century of trying to create a tax system that would bring distributional justice into this cycle of reincarnations, I am ready to claim that it cannot be done in any economy that allows a modicum of freedom in setting wages and prices; and that a tax system cannot be a central plank in a system of social justice, and, further that major redistribution can only be accomplished by Mugabbifying an entire society. No tax system in any western country has had a discernable effect on the distribution of wealth or income and it is time to stop trying.

The criteria for tax systems should be simplicity, ease of enforcement, and cost of compliance. The best maxim of taxation is to pluck the most feathers from the goose with the smallest amount of hissing.

Now in ordinary circumstance when you are riding a horse and it dies, you should get off. Why proponents of the current federal tax system continue to promote it on distributional grounds must be evaluated in psychological not political terms.

Mike P -

Thanks for your responses.

Yes, my tax law is a little weak - and I do not feel particularly compelled to learn today's inheritance tax law details, as they will undoubtedly change before they affect me directly - even if that is next year.

I have, however, "Lived in a brownstone, lived in a ghetto, I've lived all over this town." (Talking Heads)

Nobody likes to pay tax.

The rich have the power to have exceptions made for themselves, whether they are massive landholders (farmers), corporate tycoons, or .com lucky kids.

Uncapping the IRA is an interesting form of consumption tax, I could almost get behind that, but it will be hard to phase in during deficit spending (gee, when was the last time we didn't have deficit spending, oh, I digress...) due to the loss of revenue for 20-30 years while worker bees horde their income. Exceptions for food, medical care, etc. are less attractive to me - due to the petty bickering that will flare up along the boundaries - are cigarettes groceries? No, well, how about the double chocolate fudge ice cream that is now being peddled by the tobacco companies, yes? Well, what about nutraceutical performance enhancing beverages at $5 a pop? Same thing happens in health care for things like breast implants, cosmetic tattoos, etc. Better to have a system that is inherently arguement free, unless you are a lawyer; and there aren't any lawyers elected to federal office drafting our laws, are there?

And, then, if anybody outside the bottom two quintiles cares, there are those folks who think that IRA is some Jewish banker who wants them to deposit their money with him - where they won't have access to it for things like food, rent, clothes for the kids, etc. And, in a sense, they're not far off the mark. Uncapping the IRA won't make a hill of beans difference to a lot of people. In fact, if these folks wanted to save in an IRA, it's practically uncapped for them today.

Until my company put up matching funds for their 401(k), I never had a tax exempt retirement account - instead, I got lucky and leveraged myself heavily into real-estate around the turn of the millenium. Any IRA that I could have accumulated with my real-estate investment principle would look pretty sad compared to what I have now, especially considering the negative return many mutual funds had during the same timeframe.

At least we have enough transparency in our system that we can see the rich padding their own pockets, hopefully that will remain in place and serve as some deterrent to falling down the rabbit hole of >99% in the hands of

Oh, wait, didn't I just hear the same arguement against equalizing rich and poor? Yeah, but Communisim was a lie - examples of extreme aristocracy abound in history, and around the globe today.

Oh, and everyone loves to bash the yacht tax... anyone who didn't see that result coming wasn't thinking more than 1/2 step ahead.

Of course there are other countries in the world where you can buy a yacht - in fact, many of the big brokers in the US specialize in bringing in these massive luxury craft from overseas.

If you pass a tax on cigarettes sold from stores on the north side of the street, you might expect more cigs to be sold on the south side (there is a grocery store in my neighborhood that faces 90 degrees to the main street to circumvent a liquor restriction law.)

I think the yacht tax might have been pushed through by a few schemeing plutocrats just so they have an arguement to throw at the towel boys for the next 50 years.

Nah, plutocrats aren't really that clever.

I would like to treat some of the non-economic arguments on the Estate Tax.

Morality

We might ask if there is there any argument of morality against the principle of the Estate Tax that does not apply as well to other taxes? In my view all arguments concerning taxes, once the legitimacy and necessity of taxation are established, are prudential. They concern the direct and indirect costs of administration, the amount of revenue raised in relation to those costs and the incentive side effects of the tax. Therefor, I believe the correct formal answer to this question is yes as the argument must depend on social, political and economic context.

Paris Hilton

The wastrel (idle rich) and the miser are stock figures of political/economic discourse. The miser was criticized for withdrawing his capital from the economy and the wastrel was criticized for dissipating capital and withholding labor.

The true miser (Scrooge McDuck) who keeps his capital in unproductive forms is not a feature of the modern economy. Such a person would left in the dust of a dynamic economy. Just ask anybody who has been a long term investor in gold.

The wastrel has always been the target of opprobrium, particularly in the context of a protestant society such as that of the United States. However, without some sociology to back up the anecdotes, I would be hard pressed to think of this as a real problem.

To some people the model wastrel is Paris Hilton. However none of them have seen her financial statements and other than her name and the vaporizings of her public relationists, they have no reason to believe that she really has substantial inherited wealth. For all that I know, Paris Hilton is actually working very hard to produce a return on her human capital, and has done very well. How many skinny girls without real beauty or acting talent have been in as many television shows and movies as she has? If she were truly among the idle rich, we would not have heard of her. The fact that we have is a testimony to ardor of her efforts. If you think she is tacky, that is your privlege, but she clearly understands the importance of Mencken's maxim that nobody ever went broke underestimating the taste of the American people.

The real wastrels, the ones who do not have television shows, but have Ferraris and drug habits, may be very effective agents of social leveling. But, this is conjecture not data. It may very well be that the rates of self-destructive behavior are no higher among the wealthy than they are among the poor or the middle class.

In both cases, I do not know that anybody has demonstrated that there is a problem with misers or wastrels that needs to be solved, or that can be solved by tax policy.

Liberal Political Theory

On a more theoretical point, inheritance is a fact with which liberal political theories have had a hard time. (By liberal political theories, I mean the class of theories that begin with Locke and Kant and have been developed through thinkers as various as Friedman and Rawls.) These theories all begin by positing individual human beings who live an abstract existence outside of history.

They break down when they enter the realm of real men embedded in history. Ethnic strife is a phenomenon about which liberal theories have not been able to say anything useful (See Nelson Ascher's and Victor Davis Hanson's eviscerations of Tony Judt’s article about Zionism).

Likewise, the problem of inheritance is difficult for liberal theorists to deal with. On one hand they justify private property as an incentive for hard work and risk taking. The liberal judgment of property distribution is based on the fairness of the distributional process. The logical consequence of the liberal commitment to private property and personal autonomy is that property owners can give their property to whom they wish and they can raise their children as they wish. This means that some children will join the fray with more capital or better educations than their fellows. In other words they will violate the initial condition of equality on which liberal theories are grounded.

Liberals are then left in the uncomfortable position of saying that the only way to create a liberal system is to limit the fundamental rights of property and autonomy, which undermines the moral basis of liberalism in the first place.

I do not see anyway out of this box. My own disposition is to say that all theories have their limitations and are only so good. In this case the proponents of limiting inheritance underestimate the rate at which capital depreciates and overestimate the efficacy of formal educational systems.

Personally, I think that private property and family are institutions that have proven their value over time and should not be denigrated in the pursuit of a justice that mortal men will never be able achieve. The less the state attempts to monkey with these institutions, the better off its citizens will be. Mugabe, is only the most recent example of that truth. For more information on this point, see, "Property and Freedom" by Richard Pipes.

Joe, I think we'll have to wait a few years to see who was clever.

Even if the poorest 60% of Americans were taxed at 100%, the revenue wouldn't equal the federal budget. The budget keeps getting bigger, the plutocrats keep getting their taxes cut, and the debt keeps growing.

I can't tell what's going to happen, but I suspect the poor will just eat the rich in the end.

From Europa, regarding our histories and the news i can grab your are already a fascist state (not like nazi but like napoleonian days).



And:

"You can fool 33% of the people all of the time.



You can fool 51% of the people some of the time."



is true ... except if you use war or terror . We hadgreat examples in Franceof those with Robespierre and Napoleon.



And a fair consomption tax is a myth. When we already have a hard time getting fair data about what is owned ...

How would a state find out one bought his yoat in korea ? I bought this book on ebay from a russian student ... or that my dad paid a relaionship to help him build this wall. And so on .



Economics is the science of HUMAN economy. Not some sort of robots who do everything in a predictive ways.



And you are paid to find out how to best rules a world that does not exists . That s tell a lot about your axiom about the relationship binding wealth to effectivness.



Though you are right you are really smart. Finding out how to earn your living while doing useless research is really clever. I bet you have to work really hard to keep everyone from finding out.



Thankfuylly a lot of dumbass prefer keeping working really hard to keep the social consistency to our nations and avoid civil wars as in the nineteenth century than fighting such social abuses.

I hope it will last as i prefer a mad world for my family than civil war ... it helps for them not dying.



But at least have the decency to avoid telling bullshits and tell that they are lazy. It is the least you can do to reward them behing dumb (or smart enough) to understand why they do not turn violent.

I don't understand how you go from "the estate tax" is inefficient as in our information age most of the wealth is given through education to "we should tax consumption".

The obvious conclusion is to tax education for wealthy families and education credits for the poor ...
Isn't that obvious ?

in developed countries how much percentage of inheretance tax is paying please give details about inheritance tax in developed counties