Saturday, March 12, 2011

You can't take it with you

A modest proposal: tax estates at 100%

It always strikes me as funny how Republicans cry on about freedom, the opportunity society, and everyone pulling themselves up by their own bootstraps and getting only what they work for & deserve. But when it comes to their own children, no expense or trust fund is spared. The principle of individualism takes a back seat to a distinctly socialistic distribution of wealth without regard to merit or virtue, the criterion of blood trumping all others.

While this is without question instinctive and in accordance with the most hallowed aristocratic traditions, it hardly accords with the professed ideology of the right, which celebrates the self made, the entrepreneurs, the innovators, the up-from-poverty Horatio Alger stories. Leaving aside the typically dubious methods of acquiring such nouveaux riches, the vieux riche are rather the opposite- unemployed, coddled, Paris Hilton ... need we say more? The best that can be said by way of justification is that they share some of the genes of the originating generation, if one sets store by that kind of inheritance. Or that they faintly echo the dreams of their progenitors, who, despite being dead and gone, deserve our continuing gratitude.

So in order to supply all the character-building and innovation-encouraging opportunities heretofore denied to children of the rich, I'd propose that all children start life out of the same gate, provided with all the opportunities we can collectively and fairly give them, along with the healthy need to take advantage of them. Each would make his and her own way in the world. In short, each would have to work.

We could begin to provide this opportunity by making the estate tax 100%, eliminating the corrupting influence of inherited wealth. Such a tax should net upwards of $200 billion per year. Perhaps not quite the vast sums we need to fund the whole government, but a definite boost to programs needed to provide all children the opportunities and education needed to have a proper start in life. Gifts and other forms of intergenerational transfer would likewise be prohibited over nominal levels, to make the playing field of life as fair as possible. While I am at it, elementary and secondary schooling would become similarly egalitarian, with private schools either eliminated or opened to all students without financial restriction.

The last century has seen a truly remarkable sea change in the opportunity structure of higher education in the US and Europe. Academic and personal merit has gained substantial ascendance over breeding and money. Trust fund students still get inordinate attention, but financial aid has enabled high achievers from all backgrounds to get excellent educations in the finest schools, with meritocratic standards like standardized test scores opening many doors to the unpropertied and un-networked.

A no-inheritance revolution would extend this opportunity-generating process, making our society fairer, more focused on the many public goods involved in providing opportunity to the young, and better able to nurture and benefit from everyone's talents. It would also make us less susceptible to the kind of entrenched power that flows from old money- from the creeping re-establishment of aristocracy, if you will. The New World should lead the way in repudiating this inherited vestige of Europe- one of its very worst traditions.

Indeed, a thousand years hence, this may be one of those things that people look back at in sage disappointment, as we do at slavery in ancient Rome. That we prideful "moderns" still adhered to the old rules of blood inheritance, ate the carcases of dead animals, and burned fossilized carbon till we choked on it.

Would inequality remain? Huge amounts would indeed remain, from social and professional networks to more or less enriching home environments and genetic endowments. The advantages of the advantaged would still be incalculable. But perhaps without unearned and undeserved wealth to look forward to, all children would on average have a brighter future, and children of wealth could embody those values their class so prizes, of self-reliance, ambition, and hard work.

"Over the past several years, the Taliban have savagely attacked tribal leaders who oppose Taliban rule in the tribal areas and the greater northwest [of Pakistan]. Tribal opposition has been violently attacked and defeated in Peshawar, Dir, Arakzai, Khyber, and Swat. Suicide bombers have struck at tribal meetings held at mosques, schools, hotels, and homes."
  • Pakistan is on fire ... and Islam as the fuel.
"The religious fanaticism behind our assassinations is a tinder-box poised to explode across Pakistan," -Zardari 
  • Skidelsky on Ricardo, Osborne, and austerity.
  • GOP knows no bounds in meanness towards the poor and unfortunate. The rich are the only ones you can trust with money, after all!
  • Bill Mitchell quotes of the week:
"In relation to today’s blog we should understand that government deficits are the norm and they generally never pay back their debt (overall).
These economists essentially lead sad professional lives. They bunker down in their offices and doodle away with mathematical models that are largely banal representations of some obscure untested assumptions about human behaviour and motivation which the other social science disciplines and relevant research show to be inapplicable."
"The only “pressing policy question” relating to “fiscal space” is that there are millions of people unemployment who could be engaged productively generating income and feeling better about themselves.
Unfortunately, that is not the “hotly debated topic” and that is because economists like this lot have a completely warped sense of priorities and a mistaken understanding of how the monetary system actually operates."


  1. I love it. I assume you've also been successful at the "balance the budget yourself" game?

  2. Thanks, Kelly!

    I have not, but for California we have a similar game for a far more dire situation, and of course it was no problem at all! If only everyone agreed with me!

    That said, the federal budget should not be balanced. Nothing could be more damaging to our system. It is a theme I harp on quite a bit.. that the federal government prints all our money, great gobs of that money leak out to piles of savings foreign and domestic, and thus more needs to be created all the time, until we reach an overall saving/spending equilibrium. The Chinese don't seem to be near their equilibrium (of dollar demand) yet, to take one example. The recession has dramatically increased saving and decreased consumption, also requiring more spending from the government. It is very simple, for those without ideological blinders.

    So the whole budget "debate" (aka deficit hysteria) is fundamentally misguided and damaging, both to the actual economy and to the political position of progressives, if they accept those terms. It is class warfare of the most naked sort. We should put it on a different, (and more accurate), Keynesian, foundation. Public debt = private savings. The government has no financial constraint and can spend at any time, bounded only by inflation. I guess I should make it rhyme somehow.

    Best wishes!