Socialism on the March

[Bono]

www.humaneventsonline.com/article.php?id=9093

Socialism on the March
by Chris Field
Posted Sep 15, 2005

President Bush has just concluded his obligatory speech from New Orleans to tell us how we're all going to be heavily involved and invested in the rebuilding of the Crescent City.

Let's take a quick look at his laundry list -- a list for which he neglected to name a price tag.

• The federal government will "do what it takes" and will "stay as long as it takes" -- great, just what I wanted to hear.

• States will be reimbursed for their efforts in responding to Katrina. Does that include states like North Dakota, Wisconsin, Minnesota, or Montana where some of the victims/refugees might have gone?

• Contrary to the strong suggestions of Jack Kemp, there will be no attempt to employ the idea of capitalism and free enterprise in this "recovery."

• The Katrina aftermath proved to be a massive failure of government. So, Bush and his men think that the correct response to major federal government mess-ups is what -- more federal government?

• He, of course, had to pander to the Left and note that "poverty has its roots in racial discrimination." What a load of malarkey. Poverty has its roots in the current welfare state -- which is exactly what Bush is proposing.

How much is this thing going to cost? Who knows! Could be $200 billion or more.

Who's going to pay for it? You are. I am.

Forget about making the tax cuts permanent. You know, the tax cuts that turned the economy around, pulling us out of a recession.

Want AMT relief? Too bad.

Want to get rid of the Death Tax? Not likely.

Sounds a lot like Marx to me: "From each according to his ability, to each according to his need."

Chris Field is Editor of Human Events Online.
He can be contacted at Chris.Field@HumanEventsOnline.com

[opebo]

Yes, socialism is good for most people.

[ilikeverin]

• States will be reimbursed for their efforts in responding to Katrina. Does that include states like North Dakota, Wisconsin, Minnesota, or Montana where some of the victims/refugees might have gone?

Actually, yes.  Obviously, this guy isn't from up here.

[Emsworth]

Yes, socialism is good for most people.

So is banning drugs, but I don't see you advocating that.

[Speed of Sound]

Yes, socialism is good for most people.

in some cases. (Democratic Socialism works for ALL people)

[A18]

Socialism (which is another word for slavery) doesn't work for me, or anyone else who has any regard for freedom.

[opebo]

Yes, socialism is good for most people.

So is banning drugs, but I don't see you advocating that.

No, banning drugs is bad for most people, since it annoys those that wish to use drugs, and has no effect at all on those who do not.

[○∙◄☻¥tπ[╪AV┼cVê└]

What's amazing is that with all of this increased spending, they're thinking of getting rid of the estate tax. What's Bush's goal? $1 trillion a year deficits? We're most of the way there. National debt / GDP has gone down under every Democratic President since World War II. Why does the fiscally irrresponsbile party have control?

[A18]

What increased spending?

The estate tax is a tiny share of federal revenues, and a very immoral tax.

[ag]

What increased spending?

The estate tax is a tiny share of federal revenues, and a very immoral tax.

From the standpoint of the orthodox economic theory the estate tax is one of the best taxes out there - much preferable to either the income or sales tax, or almost any other tax you might think of.

[Emsworth]

From the standpoint of the orthodox economic theory the estate tax is one of the best taxes out there - much preferable to either the income or sales tax, or almost any other tax you might think of.

The estate tax generates next to nothing in terms of revenue. The purpose of the estate tax is not to raise revenue; it is to prevent individuals from inheriting large sums of money. It is an unjustifiable exercise of the government's power to tax, insomuch as it exists not to raise money for the essential functions of government, but only constrain the liberty of the individual.

[ag]

From the standpoint of the orthodox economic theory the estate tax is one of the best taxes out there - much preferable to either the income or sales tax, or almost any other tax you might think of.

The estate tax generates next to nothing in terms of revenue. The purpose of the estate tax is not to raise revenue; it is to prevent individuals from inheriting large sums of money. It is an unjustifiable exercise of the government's power to tax, insomuch as it exists not to raise money for the essential functions of government, but only constrain the liberty of the individual.

Well. That's only an argument why the estate tax should be raised to the point at which it does generate the bulk of the tax revenue: this is an almost non-distortionary tax, so raising it in favor of sharply lowering or even eliminating the distortionary income tax would be very good for economic growth.

As for "constraining the liberty" - surely, the estate tax is no more "liberty-constraining" than any other tax.

[A18]

It, like all non- consumption based taxes, is absolutely distortionary. All money should be taxed only on the basis of use.

[memphis]

From the standpoint of the orthodox economic theory the estate tax is one of the best taxes out there - much preferable to either the income or sales tax, or almost any other tax you might think of.

The estate tax generates next to nothing in terms of revenue. The purpose of the estate tax is not to raise revenue; it is to prevent individuals from inheriting large sums of money. It is an unjustifiable exercise of the government's power to tax, insomuch as it exists not to raise money for the essential functions of government, but only constrain the liberty of the individual.

The estate tax is all about getting rid of entitlement. With no estate tax, we'd have more Paris Hiltons running around with no incentive to work hard or be a constructive citizen. After a long enough time, we'd be back to Europe in the nineteenth century with an entrenched aristocracy, who has no reason to be productive because they already have all the money, and a large impoverished class, with no reason to be productive because they can't compete with all the heirs. Competition is what has made America great and the estate tax is critical to maintaining a competitive economy in America. By the way, "Complete repeal of the estate tax would reduce federal revenues by $290 billion over the first five years" Source- Billings Gazette  Hardly "next to nothing."

[ag]

It, like all non- consumption based taxes, it absolutely distortionary. All wealth should be taxed at only one level.

All economic decisions should be taxed at the same level - not wealth. If you could tax leisure at the same level as income, implementing non-distortionary tax schemes would be a piece of cake.  However, that's hard to implement: aside from measuring problems, would you agree to pay a tax on the time you did not engage in a profitable employment (or engaged for fun in an employment below your earning capacity): think of the taxman showing up to charge you for a lunch break or for volunteering in a campaign.

A wealth tax is non-distortionary to the extent it does not affect future wealth accumulation: if we could commit to only taxing wealth once and never again, taxing past wealth accumulation would not be distortionary. Whether the estate tax is distortionary depends on whether parents save to bequest something to their children, or whether bequests are an accidental result of individuals not being able to perfectly forecast the timing of their death (and, hence, saving for the future they won't have).  Measuring preferences here is very difficult (for one, people tend to be a lot more optimistic about their survival chances than their health indicates, so one has to begin by measuring individual expectations of survival). From what I understand, the best estimates of the bequest motive we have indicate that it is of minor import.  Hence, a tax that does not affect an individual in his/her lifetime (which is what he or she cares about) is not going to be very distortionary.

If you want a good argument against the estate tax: if children do not expect an inheritance (as they would not if there were a large estate tax), they would not take care of their parents.  So, abolishing estate tax can partially replace social security and Medicare (at least for the rich): if you have money, promise it to your kids in exchange for care.

[ag]

Just making myself clearer: all consumption should be taxed at the same rate is absolutely correct, but impossible to implement unless you also tax leisure (which is a cosumer good).  Until you tax leisure, the statement "all consumption other than leisure should be taxes at the same level" is outright false.

[Emsworth]

The estate tax is all about getting rid of entitlement. With no estate tax, we'd have more Paris Hiltons running around with no incentive to work hard or be a constructive citizen.

It is not the function of the government to make people work hard. People should be allowed to dispose of their money however they please (assuming, of course, that the rights of others are not violated).

[A18]

Underlying your argument against repeal of the estate tax is an argument against savings and property itself.

All property is, of course, a reason not to produce. But it represents something else - a reason to produce in the first place.

At the very least, you should support banning inheritance. It doesn't make sense, under your line of thinking, that one person's $500 billion dollar inheritance be reduced to $100 billion, and another person's $100 billion inheritance be reduced to some other number. Both should bring about "aristocracy," correct?

[A18]

Just making myself clearer: all consumption should be taxed at the same rate is absolutely correct, but impossible to implement unless you also tax leisure (which is a cosumer good). Until you tax leisure, the statement "all consumption other than leisure should be taxes at the same level" is outright false.

Leisure is consumption? I don't follow.

Now, true, if you grow bananas yourself and consume them, that's consumption that couldn't really be taxed. But it is still reasonably non-distortionary to tax only trade-based consumption, and it could reasonably be argued that you have more right to what you produce yourself than what you trade for.

[ag]

Just making myself clearer: all consumption should be taxed at the same rate is absolutely correct, but impossible to implement unless you also tax leisure (which is a cosumer good). Until you tax leisure, the statement "all consumption other than leisure should be taxes at the same level" is outright false.

Leisure is consumption? I don't follow.

Now, true, if you grow bananas yourself and consume them, that's consumption that couldn't really be taxed. But it is still reasonably non-distortionary to tax only trade-based consumption, and it could reasonably be argued that you have more right to what you produce yourself than what you trade for.

Unless you don't enjoy leisure and are simply forced to do nothing by some outside force, leisure is consumption. It even has a price: what you could have earned had you not engaged in leisure. The logically absolutely correct statement that all economic activity should be taxed at the same rate can be shown to be correct only if you interpret leisure as consumption. If you don't, then it is logically false (ask your econ professor to do the two-line proof).

[ag]

Underlying your argument against repeal of the estate tax is an argument against savings and property itself.

All property is, of course, a reason not to produce. But it represents something else - a reason to produce in the first place.

At the very least, you should support banning inheritance. It doesn't make sense, under your line of thinking, that one person's $500 billion dollar inheritance be reduced to $100 billion, and another person's $100 billion inheritance be reduced to some other number. Both should bring about "aristocracy," correct?

Not at all. To begin with, my argument had nothing to do with fairness - just with efficiency.  Since you can't tax all econ activity at the same rate, nor you can impose lump sum taxes that don't affect economic activity, you should be taxing at a higher rate the activity that is less likely to be affected by taxation.  Now, some of that you can' really do: it would be non-distortionary, but cruel to tax life-saving medicine.  But, to the extent that people leave bequests, mainly, accidentally (they'd like to consume it in their lifetime, but they die or become incapacitated before they can do it), taxing their estates is non-distortionary. Of course, if people live bequests because they really love kids, that's not the case. 

Ideally, I would figure out how much each individual cares about his offspring, and than impose high taxes only on those who don't care.  Since I can't do this, and since existing estimates indicate that most people don't care that much about the bequests their kids would get, a uniform estate tax is a good idea.

Once again, my argument had nothing to do with the "amorality" of a large estate or desire for equality. Simply put, one has to get revenue somewhere, and this is the way to do it without damaging the economy much. That's all.

[memphis]

It, like all non- consumption based taxes, it absolutely distortionary. All wealth should be taxed at only one level.

All economic decisions should be taxed at the same level - not wealth. If you could tax leisure at the same level as income, implementing non-distortionary tax schemes would be a piece of cake.  However, that's hard to implement: aside from measuring problems, would you agree to pay a tax on the time you did not engage in a profitable employment (or engaged for fun in an employment below your earning capacity): think of the taxman showing up to charge you for a lunch break or for volunteering in a campaign.

A wealth tax is non-distortionary to the extent it does not affect future wealth accumulation: if we could commit to only taxing wealth once and never again, taxing past wealth accumulation would not be distortionary. Whether the estate tax is distortionary depends on whether parents save to bequest something to their children, or whether bequests are an accidental result of individuals not being able to perfectly forecast the timing of their death (and, hence, saving for the future they won't have).  Measuring preferences here is very difficult (for one, people tend to be a lot more optimistic about their survival chances than their health indicates, so one has to begin by measuring individual expectations of survival). From what I understand, the best estimates of the bequest motive we have indicate that it is of minor import.  Hence, a tax that does not affect an individual in his/her lifetime (which is what he or she cares about) is not going to be very distortionary.

If you want a good argument against the estate tax: if children do not expect an inheritance (as they would not if there were a large estate tax), they would not take care of their parents.  So, abolishing estate tax can partially replace social security and Medicare (at least for the rich): if you have money, promise it to your kids in exchange for care.

This is outrageous! People don't take care of their parents because they expect an inheritance. They take care of them becuase they love them and are reciprocating the care that they received when they were children. I do not anticipate a large inheritance from my mother (certainly not anything remotely compared to the estate tax threasholds), and I fully intend to help her when she becomes elderly. Your suggestion that "if children do not expect an inheritance, they would not take care of their parents" is disgusting beyond belief! There are more important things than money in the world. 

[○∙◄☻¥tπ[╪AV┼cVê└]

From the standpoint of the orthodox economic theory the estate tax is one of the best taxes out there - much preferable to either the income or sales tax, or almost any other tax you might think of.

The estate tax generates next to nothing in terms of revenue. The purpose of the estate tax is not to raise revenue; it is to prevent individuals from inheriting large sums of money. It is an unjustifiable exercise of the government's power to tax, insomuch as it exists not to raise money for the essential functions of government, but only constrain the liberty of the individual.

Next to no money? All the more reason to keep it. Of course that next to no money was $50 billion a year in 2000, probably higher now. Let's face it, you're just a right-winger on economics and don't like any tax on the rich.

http://www.cbpp.org/8-30-00sfp.htm

[memphis]

The estate tax is all about getting rid of entitlement. With no estate tax, we'd have more Paris Hiltons running around with no incentive to work hard or be a constructive citizen.

It is not the function of the government to make people work hard. People should be allowed to dispose of their money however they please (assuming, of course, that the rights of others are not violated).

I'm saying that the government has to make decisions that are in the sound interest of national security. The United States cannot afford to become a less competitive nature. Large inheritances reduce the competitiveness of the workforce.

On a different note, I would like to point out that I think the estate tax should be much smaller for those who have children under the age of 18. These people have families to support, and I recognize the importance of ensuring that children have access to funds because they are not yet to the point in their life where they can take care of themselves. On the other hand, I think the government should tax much more highly the estate of an older person whose children are grown. These children have already most likely grown up in privilige and ought to have to work for a living like everybody else. I have no sympathy for heir of large estates, whining that they "only" get x numbers of millions of dollars. They should get a job like the rest of us and make their own money. I oppose the estate tax for the same reason I oppose a lot of welfare programs, I don't like people with a sense of entitlement because they are not contributing to the progress of our nation, and I don't think it's fundamentally fair for anybody to get to go through life never having to lift a finger.

[Emsworth]

I'm saying that the government has to make decisions that are in the sound interest of national security.

National security is not implicated by large estates. But if you mean the "common good," then I would disagree; individuals should not be expected to sacrifice their rights for the "common good."

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Why should your sympathy matter? Since when does one person's sympathy determine if someone else should or should not be denied their rights?