It is high time that federal and state governments
finish eliminating all taxes on wealthy persons. Perhaps 90% of this has been completed in recent decades, but remaining taxes on income, capital gains, realty, and estates still cause our most prestigious and most honored people and corporations enormous personal
anguish, not to mention accounting and legal fees.
The elimination of these taxes would not only ease the minds
of our most productive persons, but would also achieve desirable policy goals.
Tax considerations would no longer distort their allocations of capital.
Estate planning would no longer be contorted to minimize inheritance taxes. Corporate
compensation could take more productive forms if freed from the contortions required for the sake of tax minimization. And real property could be put to owners’
creative uses, instead of being forced into intensive use.
Another benefit would be a reduction of enforcement expense, or at least a
reallocation letting agents of the fisc pursue more easily adjudged tax cheats.
Moreover, the elimination of taxes on the wealthy would reduce crime the same
way legalizing marijuana does.
Some might object that the elimination of these taxes would
starve governments of the money they need to operate effectively. At the
moment, however, it is almost entirely the wealthy who block all tax increases.
If they are freed from taxes, opposition to tax increases would sharply
diminish and necessary increases could finally take place.
Another objection is that the elimination of taxes,
especially estate taxes, would cement the upper class into place. But that is
unlikely, given the high-spending propensities of rich children and the
opportunities they have to lose money on investments. Even if it does take
place, what exactly is wrong with that? England has enjoyed the noblesse oblige
of its wealthy for centuries. If people become secure in their possessions,
they can more readily afford to be generous and kind to others.
A third objection would be that eliminating taxes might
eliminate charitable donations from the wealthy, and many good causes depend on
those donations. But to a significant extent the private donations that benefit
from tax favors reflect the particular interests of their donors, rather than
public needs. If charitable organizations were to lose their private support,
they would have to pick up public support, which would only be available for
organizations truly operating in the public interest.
In conclusion, let us eliminate all taxes on our wealthy persons. Everyone would benefit.
This is an interesting proposal, Keith, but I worry that it might not work out in practice. Leaving aside the question of exactly how we define "wealthy persons" and speaking in only the most general terms, these wealthy persons pay essentially all our taxes now. "Poor persons", again leaving aside the question of how we define them, receive subsidies, and even the working poor now receive subsidies in the form of "tax refunds" on taxes never paid. And if you eliminate all tax revenue by eliminating taxes on the wealthy, there would be nothing left to fund the subsidies or the other critical functions of government, like running our bureaucracies and fighting our wars. I can't really see how this would fly.
ReplyDeleteBut then maybe your underlying point is that none of this really matters, since taxation is an obsolete concept anyway. Tell me if I'm starting to get it here. As our eminent Keynesian economists never tire of explaining, or at least implying, only old fogies worry about budget deficits anymore. And the far-sighted advocates of Modern Monetary Theory go even further by explaining how easy the miracle of modern fiat money really makes everything. Only a few keystrokes into the computers of our central banks, and everything can be funded and then some: more subsidies, more social services, more wars, and no taxes. If only the worrywarts in Congress would get out of the way, all would be possible in Age of Obama!
Mark, you are quite right in seeing that we have entered a new economic era. I would only draw your attention to one tech development that you may have overlooked: Apple's new Apple Pay program. If government departments simply bought iPhones and used them properly, budget difficulties would disappear. Just use Apple Pay instead of those cumbersome Treasury operations. In fact, we could probably abolish the Treasury altogether, and use its lovely building adjacent to the White House as a video entertainment center, or perhaps dedicate part of it to a museum about old-fashioned economics.
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DeleteYou may have detected, in my post, an echo of the 18th century economist J. Swift's "Modest Proposal." But times have radically changed since then. I fear that his idea about eating babies would be far too expensive these days to satisfy any but the most refined tastes. Nor could we use the cake eating advice of another renowned 18th century economist, the progenitor of the Austrian School of economists, Marie Antoinette. In today's health-conscious world, eating cake would not appeal to knowledgeable consumers. Hence my own economic proposals above.
ReplyDeleteKeith - I fear you've gone too far with this comment. As I think you well know, there is not a shred of historical evidence that Marie Antoinette ever said any such thing, and if she did, it was no doubt taken out of context or maliciously mis-translated. Hence, I would suggest you are continuing an irresponsible and sexist campaign of leftwing disinformation about a popular and fair-mind queen. Her attackers, who concocted the notorious 'eat cake' myth, were the political forebears of a totalitarian style of politics that would culminate in the Stalinist and Maoist atrocities of the mid-twentieth century. And while I almost hesitate to voice the observation, it is unfortunately clear that their twenty-first century descendants still lurk today on the leftward fringes of our modern-day Democratic party in America, always ready to initiate smear campaigns in pursuit of extremist ideology. I know, of course, that you yourself are dedicated to rational, albeit at times strained, principles and to responsible discourse. I must therefore in this spirit plead with you to refrain from posts of this nature on our blog.
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