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Thank You For Being Successful! Please Hand It Over When You Leave The Planet
This article originally appeared in The Daily Capitalist.
Most people are in favor of taxing dead rich people. Otherwise, they say, wealth will be concentrated in the hands of just a few idle rich folks which is bad. These pampered rich heirs, who will never amount to anything because they don’t have to work, will end up as a controlling plutocracy. Woe is America.
Excuse me, but this is crap. It is social engineering at best and property confiscation at worst.
Where does the government get off telling you that you can’t leave all your money to your kids? Or to Rover, your beloved dog. Like it or not, that’s exactly what they doing in the name of the “public good.” It’s your property, your kids, and your dog, and you should be able to do whatever you want with your wealth, dead or alive.
The real issues here are class warfare and bad economics.
Class Warfare
So many rich people are cowed into feeling guilty about their wealth that they even agree that the government has the right, if not duty, to confiscate their property when they die.
A few years ago Bill Gates, Sr., George Soros, Warren Buffet, and other prominent guilty rich people were making a cause of this, declaring so in an ad they bought in the NY Times. Buffet whined about us becoming a nation of pampered, fat idle heirs. He complained about the growing disparity of wealth in the U.S. yet he is leaving his wealth tax free to charity instead of letting the government redistribute it. Hypocrite.
I may think it is a waste of your life to see you idling away your time playing bridge, listening to Soros and Buffet, or reading the New Yorker. I may think you are spoiling your kids by sending them to yoga classes instead of making them work the back 40. I may think a lot of things about what is “right” for you and you would rightly tell me to mind my own damned business. Yet when the government does it, it’s OK?
The estate tax, inheritance tax, death tax, whatever you wish to call it, has been around for a long time. It was first adopted here during the “Progressive Era” in 1916 by President Wilson. They got it from the Brits. The Brits did it because they hated the aristocracy and used it to break up the large, inherited landed estates. When the Labour Party socialists came to power, because of their ignorance of economics, they confused capitalism with feudalism, stole the riches of dead industrialists, and thus modern class warfare was born. Today the Democrats are the main standard bearers of this idea, but there are many Republicans who buy into it as well.
Today, instead of saying “We resent your wealth and we are going to take away when you’re dead to punish you for your obviously ill-gotten gains,” they push the idea of “fairness” and the “public good.”
There are deeper implications to all this involving human rights and natural law, ideas created by men like John Locke, and which ended up in our constitution, thanks to Thomas Jefferson. I don’t need to turn this into a philosophical treatise because if you believe in our Constitution and Bill of Rights as originally written by our nation’s founders, you believe in natural law and property rights. Basically it says you are your own sovereign, you own the fruits of your labor, and no one can confiscate them without “due course.”
Bad Economics
Let’s assume for a moment that the government has the right of taxation in order to fund the roles given to it in the Constitution. I may disagree with the entirety of that statement, but I’ll accept it for this argument. How far can the government go when they wield this power? The answer to that is also beyond this article, but there are theories about taxation which basically say the best tax is the most efficient tax that does the least harm to society.
The main idea behind taxation is that it should be based on the result of some economic activity: income is earned from labor, profits are made on a sale of goods, gains are made on the sale of investments, and the like. The point is that some economic activity has created wealth which, if the government doesn’t take too much, can be taxed without much harm to economic actors.
Which gets me to death. Since when is that an economic activity? Obviously it isn’t. Yet the government taxes it.
Understand that if you are rich it’s not that you haven’t paid your fair share of income taxes. In fact you’ve paid far more than your fair share. Look at the data: The top 10% of taxpayers pay 70% of all income taxes; the top 5% pay 59%, and the top 1% pay 38%.
In 2009, a low year, the government collected about $13 billion (normally it’s double this) in death taxes from about 5,500 taxpayers. Considering the budget that year was $3.1 trillion, that’s only about 0.4%. So why do they do it? Class warfare.
Has this tax done anything to solve the class wealth disparities in this country? Not in the very least. The bottom line is that Robin Hood can’t create wealth or wealth equality. There is only one way to do that: capitalism. That is, allowing entrepreneurs to risk everything to start a business and employ others. Entrepreneurs may get rich, and I hope they do, but the now pejorative “a rising tide lifts all boats” is true. Income disparity is meaningless. If you measure the true wealth of the rest of America in goods and well-being, we have one of the world’s highest standards of living.
Need I tell you where the money goes when the government confiscates it from a dead rich person? Down the federal rat hole. Here’s another way to look at it: some entrepreneur combined capital and genius and created something that benefited society (people voted with their own dollars to make it happen) and made himself rich. He paid huge taxes during his lifetime. Later in years, he cashed out of the business and, after paying taxes doing that, invested his remaining wealth in ways that were utilized by the economy for productive purposes.
Then he dies and the government comes in and says “More!” The death tax takes a sizable portion of a rich person’s wealth and destroys it. This tax also has negative effects on the economy, both short- and long-term, but that is ignored by those who foster class hatred. I say it is un-American, unfair, and punitive. We should eliminate this pernicious tax.
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In a country where 0.1% of the population controls 50% of the wealth and income, untaxed inheritance allows the competent to hand all power to the very likely incompetent. Society ceases to be a meritocracy, and stops running efficiently. Need proof? Look at America's political dynasties.
The funny part in all this is that cuddly-wuddly Warren B amassed a huge chunk of his fortune by swooping in and "saving" privately-held businesses that owed Uncle Sam huge estate tax assessments. Of course he was in favor of the estate tax -- playing that game was the easiest money the vulture bastard never earned!
The media try to alarm everyone with the "death tax" nonsense, and Joe Sixpack ends up thinking that the government takes away every nickel from everyone when they die. But let's keep this in perspective. As of December 2010, the top tax rate for estates was 35%, but only on estates worth more than $5 million ($10 million for couples). So unless you and your wife have an estate worth more than $10 million, you don't have to worry about the tax. And if you do have more than that, any good probate attorney will know lots of ways to hide the rest.
By the way, the smartest move, from an estate planning perspective, would have been to die in 2010, a year when there was no estate tax.
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Here's a concept for those who are so bent on taxing the fuck out of people:
Fuck off and die. If you want it that badly, come and get it.
"Excuse me, but this is crap."
No, it's not. Beyond a certain wealth level we're all better off in the long run if the estate tax exists. Have a $10 MM exemption if you want. OK, $20 MM. But that's enough. Tax the living shit out of the superrich and start now. Thye've been getting a free ride for too long. The only social engineering is the kind that created the Federal Reserve and makes sure TARP is around. Save the claptrap for the stupid.
Yes, Warren Buffet leaves his money to a foundation to keep it away from the governnment -- exactly. He knows that government is the biggest waste of money to come down the turnpike.
Still, he sucks up to this administration and shills for socialism for everyone else, even though he is against it for himself and one of the largest shareholders of Goldman Sachs.
Most people love their children more than they love themselves. Milton Friedman did a pretty good job explaining the economics of the interhitance tax to this very punchable 70's wanna be intellectual.
http://www.youtube.com/watch?v=MRpEV2tmYz4
Even Milton Friedman had a hard time telling a marxist anything.....
Those are some of my favorite videos. Nothing like Milton. On that same youtube page there was a skinny and young, and still vapid, Michael Moore asking a question to Friedman.
The estate tax is the codified effect of class envy. The concept is the brain child of one Karl Marx.
The problem is not great wealth, but the effect that great wealth can have on the functioning of government in a democratic republic.
The problem then is to merely contain the effect of great wealth on government by placing limits on campaign contributions (direct and indirect), term limits, and laws preventing/restricting legislators and governement officials from working for entities that lobby them when in office.
The problem is not wealth, but government.
The estate tax should be abolished. And so should the income tax by the way. (If there is any income tax it should be small and flat.
All revenue for government functios can come from indirect taxes: sales tax, a tax on all imports and exports.
Direct taxes are almost always tyranny in disguise.
Etienne de La Boetie put it best:
"What condition is more wretched than to live thus, with nothing to call one's own, receiving from someone else one's sustenance, one's power to act, one's body, one's very life?
Still men accept servility in order to acquire wealth; as if they could acquire anything of their own when they cannot even assert that they belong to themselves, or as if anyone could possess under a tyrant a single thing in his own name. Yet they act as if their wealth really belonged to them, and forget that it is they themselves who give the ruler the power to deprive everybody of everything, leaving nothing that anyone can identify as belonging to somebody."
plus. fucking. one.
Here we go again. This argument is 100 years old and passed into history long ago. The really rich don't pay this tax. They have estate planners, charitable foundations etc to dodge it. The middle class pays it and that is one reason the middle class is pretty well shot. Government is the enemy of all decent, honest, hard working people and the government is winning.
these insurance products and trusts are not free. they cost money, not just in fees but in control. no one gets away with avoiding this tax, some people just pay a lower rate.
Why shouldn't someone who works and saves and builds a business get to pass that wealth on to their family? Without the entrepreneurial spirit to risk and create where would we be?
Having said that, we have Dynasty trusts and other types of artificial corporate constructions that allow for the concentration of wealth across many generations.
Without these devices, the wealth, if normally distributed to heirs, would spread itself out throughout the economy in two, three or four generations. No problem with that.
The problem is in the ongoing concentration via the trusts. Primogenitur was the old form, modern day trusts are better.
For most, in the absence of trusts, charitable or not, wealth would work its way back into the general economy in a matter of a few generations.
Primogeniture was the old form, modern day trusts achieve much the same, but invisibly.
there, fixed it for ya.
glad somebody finally makes this point. its not hard to rattle off the names of several foundations that have been at the epicenter of the social engineering malaise, like ford, rockefeller, and now gates, etc. it looks to me like if you want to really play, you gotta agree to become a part of the globalist elite and make your fortune available to the agenda. i would agree that if the tax exempt foundations were not possible, accumulated wealth would not be misued to such a degree.
just thinking of the nominal implications of wealth, its probably useful to consider that much of what is considered wealth is just unexercised claims on property or future productivity, and in such a light, foundation wealth appears to be much like fallow land in a starving feudal state.
+!
"The top 10% of taxpayers pay 70% of all income taxes; the top 5% pay 59%, and the top 1% pay 38%." - well well well...
according to some ( http://sociology.ucsc.edu/whorulesamerica/power/wealth.html )
For example in 2007, before the multi-trillion dollar wealth redistribution "Wall Street style," top 1% had 42.7% of Financial wealth, and top 10% possessed 88% of all investable assets... so, even excluding other factors the tax rate you're quoting are not out of order.
However, this does not include Social Security taxes, which bottom 90% pay 14 cents form every dollar earned! Since the 1960s, The Federal Gov't used the Soc Sec taxes as general revenue, and by doing so created an illusion that income taxes can be cut. So if governement treats SocSec and income taxes identically, why do we separate them in 2 categories? Here's the answer: while average billionaire pays roughly 17% of their income in taxes, a minimun wage earner pays 14% from every single dollar BEFORE he even begins paying income tax. If there was one single progressive or even a flat tax, the top 10% and especially top 1% and 0.01% would pay MUCH higher percentage in taxes than they pay now, and bottom 90-% would pay less. That's why this will never happen.
When you are self employed and you pay both sides of social security and then you pay a high level of ordinary income taxes because you didn't inherit your wealth or because you don't run a hedge fund your average tax rate is substantially higher than most.
The game is rigged to support the financial classes who flip paper and who have inherited wealth not the working folks who actually employ people or who are making things.
Kudos for noticing what the MSM repeatedly fails to correct: the myth that half of Americans pay no federal taxes. That statement is only technically true if the word "income" is inserted before the word "taxes", which it almost never is. But even when it is, it is a complete ruse. Because when our SS taxes (which everybody pays) are used to fund general government expenses, there is no real difference between SS taxes and income taxes --- except that the rich don't pay SS taxes on any income over about $120k.
Bull crap. There is no purpose for inheritance in a meritocracy. Why should some unproductive prodigy get anything?
how about a family farm?
it doesnt have to always be a black and white/no gray option
some money is earned in damned non productive ways
some isnt
some is acquired in a combination of both
Here's another way to look at it: Some genius took advantage of domestic peace, educated workers, strong intellectual property rights and a variety of other benefits provided by our system of government and in that context was successful, and so, he is happy upon his death to have some portion of that wealth go to the society that allowed him to succeed so richly. At the same time, he still had plenty left over for the estate (just ask Paris Hilton) Interestingly, when some of these highly succesful people acknowledge the benefit of living in our society, certain (presumably) far less successful idealogues begin to foam at the mouth....
The tax is simple. Spend your money, or waste it on the tax. Americans in total are not broke, just a majority are, especially the government. So if we are (once again) willing to give up more to float a system that allows for this sort of "re-distribution" that is already expertly being carried out then we are a majority of fools. Where is the money you ask? Well where did it go? "Stop hoarding the money!" is the message we need to send, there's nothing wrong with that.
Look at this from a money supply perspective. "Hoarding" money removes it from circulation. The total money competing for goods goes down, and the value of *your* dollars goes up as a consequence. Dis-hoarding, by contrast, increase money in circulation, and devalues the buying power of *your* cash. Read Rothbard, and think.
Stop thinking of someone who saves as a problem. The root problem is your government that spends way to much on things they have no business being involved in, and then they deal with their citizens as if their binging/bribing/splurging were proper and needed and justified, even vital.
"Stop hoarding the money" is just lipstick on "You have, we want, we outnumber you, so give!". In other words, Theft sanctioned by that oh-so-lovely degenerate form of democracy known as Mob Rule, where a majority can impose its will on a minority.
I read up on Rothbard, and before i go all out anarchist and austrian, i'd feel safer in funding deficits with surpluses levered from the benefits of a secure state.
We're trolling in the submissions now? Is the author for or against? He argues one side of this so vehemently and so badly that I can't tell.
Dude,
If I'm reading you right, and I think I am, your real message is that there should be no taxes at all, and thus no actual goverment.
Then, what is going to protect me from Hank Paulson as chairman of Goldman Sachs hiring a bung of thugs (paid in gold of course) to come beat the sh*t out of me and steal everything I have? Gonna tell me he wouldn't do it? ROFL.
because even the most baddest ass Delta SEAL Spetsnaz operator on this planet cannot catch a .338 Lapua. especially from behind.
Ever watch the movie "Liberty Valence"?
in the end, the police and army are there to protect the TPTB, not we the people.
Right to bear arms. If no one in a society is packing, then everyone is easy prey. If *everyone* is packing, then you need to think twice before you do something stupid like mug granny. It may be the last stupid thing you ever do. Anarchy is only bad at the start; after a bit the bad seeds go bye-bye.
Guns <-- Humanity's lost connection to Darwinian Evolution.
Put more to your point: you seem to be a member of the subset that believes Government has the RIGHT to do things that individuals don't. Most of us Anarchists believe that is plain wrong, and that Government rights should at most be a small subset of those of individuals, and only where it makes sense to scale up.
Modern humans have been raised to believe that we *should* be governed. As if every problem in our lives required LAWS and COURTS and POLICE and RULES backing us up and telling us how to behave. We've forgotten that we have the ability to live morally and with respect for ourselves and our neighbors by simply relying upon common sense and social conscience. Living in a society where there are consequences for bad behavior keeps thing tidy over time; in contrast being a slave to rules often reserves consequences for those who aren't on the right team, and over time shifts more and more power to those at the top.
Hiding behind the letter of the law, and abrogating our independence, seems very immature; a sure path to death by a thousands cuts.
What and recycle it into a $223 billion deficit in ONE FREAKING MONTH. FUCK THE POWERS THAT BE!
The death tax takes a sizable portion of a rich person’s wealth and destroys it.
That happens only when the owner of the wealth allows it to happen. Don't like the tax? Lobby to have it repealed (good luck with that). But until it is repealed, the smart thing to do is estate planning. A smart estate plan will leave nothing for the government to tax. Which is just what the government is intending by levying this tax.
An import duty on Bentley Continentals?
That piece of fucking shit Buffet is a Rothschild with a name change.
The FUCKING ..."Red Shields...Fuck off and Die.
What nonsense! Who better to tax than dead rich people? What are you going to do, discourage them from becoming rich, or discourage them from becoming dead? I'm going to ignore how stupid our current government is for the moment, but that people should have to pay tax on income, unless that income comes in the form of a gift from a dying person makes no sense at all. Our tax code is stupid and annoying, and needs to be overhauled, but a tax on inheritances is not intrinsically more immoral than a tax on working, or investing, or owning a nice house. It's less immoral IMHO. Keeping overall tax revenue the same, where should that 26 billion dollars come from? Higher tolls? A federal tax on jelly beans?
It's dumb to have an estate tax because the money and assets have already been taxed --- it's all after-tax money and assets. The business has been taxed, the house has been taxed, the assets have all been taxed many times already over a lifetime.
The property does not belong to the government by default just because a person is taxed to death.
"a tax on inheritances is not intrinsically more immoral than a tax on working, or investing, or owning a nice house"
How many times do you feel it is appropriate to tax the same earned income?? (when you're working (initially earn it), or investing that earned income, or owning a nice house (that you paid for with that earned income), should it appreciate) plus you get taxed on all personal property as long as you "own" it. No one really owns anything in this country, we are just renting it. Forget to pay the taxes and the state takes it!
Ya, it's a tough sell to talk about any taxes at all with Bernanke just running his presses. As long as they are leaning on the print button if you eliminated waste fraud and abuse from the SS, Medicare/Medicaid, the Military/Intelligence complex, the Financial sector and such you could probably make a case for eliminating all federal taxes. That said, if you are going to tax earned income, you might as well tax UNearned income, which is what inheritances seem like to me.
How about less government?
doesnt seem to be an option, because its the only one that makes a lick of sense
if your wife was spending you into a hole you'd take away the credit card
govt option is more cards used to pay off other cards, mix in a dab of check kiting and they are off to the mall
"A few years ago Bill Gates, Sr., George Soros, Warren Buffet, and other prominent guilty rich people were making a cause of this, declaring so in an ad they bought in the NY Times. Buffet whined about us becoming a nation of pampered, fat idle heirs. He complained about the growing disparity of wealth in the U.S. yet he is leaving his wealth tax free to charity instead of letting the government redistribute it." Hypocrite.
Typical of the "elitist" attitudes in this country.....Rules apply to everyone else but not them............
It's called an 'Estate Tax'.
I'm pissin' in my sty at this.
And Snowflake bitchin' that his secretary pays more % taxes than he does. lmao. As he signs up to the O-Plan while dissin' each point.
Local example here: http://www.jordans.com/ family biz-got bot by BRK because, well, the "death tax" on the biz was bad for the family.
- Ned