THE DEATH TAX HURTS THE POOR
It encourages
the rich to pick extra fruit, leaving the trees a little barer for the rest of
us. There’s a lot to be said for rich fruits and vegetables, but they sure
do consume a lot of resources, I wish they’d leave more for the rest of us. That’s why I’m against the
death tax.
It isn’t necessary to have rich parents
to be a victim of the death tax, or own a family business or farm. You only need to be someone works in a factory
or shops in a grocery store or gets sick and goes to the hospital.
If
we abolish the death tax, it’s true, rich people will consume less but their
heirs will consume more, but delayed consumption is better
than immediate consumption. If Scrooge McDuck forgoes a private jet so his nephew Huey can have a
private jet 20 years from now, we gets 20 years of additional production from the factories that
can be built in the interim.
Don’t
be so sure Huey ever gets that private jet. He will, after all, be splitting
Scrooge’s estate with his brother Louie and Dewey. A hundred million dollar inheritance, spit among three children, and then nine grandchildren, and the 27 great-grandchildren, gets whittle down in just five generations to less than half a million per heir-and that assumes that nobody spends anything along the way. So when Scrooge forgoes his private plane, it’s likely to be for the benefit of descendants who fly coach. I’m not just making this up. One of the great insights of modern economics is that taxes are often most harmful when they encourage overconsumption. In the mid-1980s from the research of professors. Since then, there’s been an explosion of research confirming and extending their fundamental insights. There are many reasons to oppose the death tax, this one is sufficient all by itself.
Do not confuse the death-tax issue with the question of whether the rich
should pay more taxes. Even if your goal is to soak the rich;
you don’t need a death tax to do it. You can do it, for example, with a graduated consumption tax, where
you tax form say: “How much did you earn Last year? How much did you save? Now pat tad on the
difference. With a tax code like that we’d be I for a big ongoing fight about where to set the top bricked,
but at least we’d be having a meaningful dialog about sensible policy choices.
Every tax discourages work, and every tax discourages risk-taking.
That’s sad but true, and it’s a reason to hesitate before you raise
any tax. That the death tax is a double whammy, compounding the damage by encouraging
overconsumption the same is true, incidentally of taxes on interest and dividends. So my message is this: If
you must tax the rich, please do it in a way that minimizes the collateral damage to the poor
DR KARL WALLACE DDS
To read more Karl Wallace go to: karlwallaceblog.blogsot.com
