Wednesday, July 12, 2006

Dan hates rich people

Dan and I had a pretty good discussion a few weeks ago regarding our differing views on the Death Tax.

Well, he's back on his soap box again. Dan hasn't changed his views (I wouldn't expect that from a political extremist like Dan). If anything, he is more hardened.

On the other hand, I have moderated my opinions somewhat after speaking with some very intelligent people whom I respect a great deal. (Of course, Dan's comments also had an effect, since I like and respect him as well.)

More on that in a sec. First I want to respond to a couple of Dan's points.
Dan said "Wealth may be earned, but real wealth is inherited"
This indicates to me that Dan is too young to have learned what real wealth is. Try watching It's A Wonderful Life a couple more times. More to Dan's point, however, Dan seems to think we're living in a time like the early 20th Century where Vanerbilts and Astors live off the dollars generated by accumulated fortunes.

To be sure, there are some superrich people out there. But unlike Dan's vision, most of the current day elite have earned their riches and actually are still working. They're more like Jay Gatsby than Tom Buchanaan. Think about Bill Gates, Warren Buffett, hell, even Ken Lay who built their fortunes on skill, talent and hard work (and in Lay's case, douchebaggery).

And the current superrich have a lower concentration of total wealth now [pdf] than they did in the early 20th century. In fact, contrary to what Dan seems to think, there hasn't really been an increase in wealth concentration since the mid-90s.
Dan said "It's not double taxation, etc."
I guess in theory this argument is true. But following Dan's logic, nothing should be sacred from taxation. And this is what worries me. Are we in a society like The Beatles imagined, where the taxman wants a cut of every little transaction you make? Am I going to eventually have to pay a "Taking a Dump" tax to help pay for sewage treatment? Come on...

Now, I mentioned earlier that I have moderated my view (that's what we moderates do). Don't get me wrong. I still believe that we all have the opportunity to start poor and end up well-to-do, even (dare I say it) rich.

It's not easy, it takes a long time and it certainly is more difficult at the bottom of the economic ladder than at the top. It's not popular to say it, but inequality can be a good thing. It provides an incentive to climb the ladder.

The important thing is to make sure the rungs on the ladder are solid. That means making sure there is access to the most important asset in climbing the economic ladder: Quality education and skills development.

The way to better your economic status is to acquire valuable skills. Flipping hamburgers, cleaning toilets and mowing lawns are not valuable skills. This is why an increasing the minimum wage is merely shooting at the flames. It won't be long before robots are performing these tasks.

All this is to say that I'm okay with stealing money from the rich when they die, as long as it isn't wasted on paying for enhanced cable television and cigarettes for the poor. Put all estate tax into funds for education, scholarships etc., and make access to those funds a competitive process.

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  1. Sorry its taken a few days to respond - things have been busy.

    So many misconceptions to correct in your post, I hardly know where to start. But the first, and most important point, is that I do not hate rich people. Not at all - and I deal with a lot of the very richest pretty regularly. Most rich people are generous, kind, well-mannered, well-read, decent-looking, interesting people. All things considered, if you put me into a random house in Mission Hills, I'd probably be happier and more comfortable than if you put me into a random house on the Eastside. Indeed, if poor minorities looked and acted like rich people, the Republicans probably wouldn't hate them so much.

    The next point I'll tackle is that I'm too young to understand that real wealth is non-monetary. Cute rhetorical turn, and I appreciate your yoda-like wisdom. If it helps the debate at all, then, I'll agree that we should hire a government worker to give a warm hug and a personalized thank you note to each of the multi-millionaires who have to pay the estate tax. As someone who has gone from practicing law to working for a nonprofit, I "get" the fact that money isn't everything. But it is the main thing in a taxation discussion, don't you think?

    You managed to find a study that indicates that wealth concentration hasn't really increased all that much. I don't care about that. I'm sure it was even more radical in feudal times. But the fact is that the vast majority of estate taxes are paid by those who inherited estates, and it is also true that Gates and Buffett do not oppose the estate tax.

    Then you express concern that taxes can happen on all transactions. Welcome to the real world, my friend! In fact, they do happen on almost all economic transactions, in the form of sales tax, etc., and, yes, you do pay taxes to support the sewage system. Certainly, the transfer of millions of dollars from one generation to another is a significant enough economic transfer to be viewed as a taxable event, don't you think?

    I don't really have much problem with the rest of what you write, except to note that the concept of putting the estate tax money into some sort of separate fund is a nice concept, but unworkable. As we've seen elsewhere, such an approach is just an accounting sleight of hand. Also, practically, most estate tax is federal, and most education spending is not.

    Finally, I want to address your assessment of me as a political extremist. I can see how my use of the term "Spoiled Brat Tax" could lead you to that term - it's my way of redefining the debate from the totally inaccurate "Death Tax" that the PR people have inserted into our vocabulary. I'll happily stick to "Estate Tax" if everyone else will.

    But you also claim that changing your views shows that you're a moderate, instead of a "political extremist" like me. Does that mean that you change your views on things where you were correct in the first place? Do "moderates" always wind up having to correct their "opinions somewhat after speaking with some very intelligent people whom I respect a great deal"?

    I change my views all the time when someone shows me that I'm wrong, but, in the absence of someone showing me that I'm wrong, I tend to stand up for what I believe in. I would be totally willing to argue in favor of abolition of the Spoiled Brat Tax (or Estate Tax, if you prefer) if someone can convince me that it is not good policy. I've changed my positions on several important topics based on better arguments.

    Would it make me less of an extremist if I were wrong more often, so I could be more wishy-washy in my opinions? Is "I was for the estate tax before I was against it" a sign of wisdom?

  2. "...I'll agree that we should hire a government worker to give a warm hug and a personalized thank you note to each of the multi-millionaires who have to pay the estate tax."

    The point is, we shouldn't rely on the government to do these kinds of things for us (including buying cigarettes and cable TV for those who can't afford it).


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