Comment by shahryc | Hacker News Reader

Comment by shahryc | Hacker News Reader

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Although I understand your argument, I don’t think” 1) death taxes “ or 2) “Keeping necessities in life equal access” actually help maintain societal equality

re: death taxes, Tyler Cowen writes in the WSJ, “ It isn't clear that the estate tax raises much, if any, revenue. The very rich engage in tax-avoidance strategies. The apparent revenue raised is often offset by a lower intake from income and capital gains taxes. Furthermore, it has been estimated that the costs of implementing tax-avoidance strategies are roughly equal to the (gross) revenue raise.” But, even if this premise is not true (that there’d a positive net difference in the revenue raised), that’s assuming that the rich will maintain the same level of spending before they die, which may not be the case if they will get taxed on it when they die. In other words, the rich would have a greater incentive to spend it while they are alive, which merely increases consumption inequality.

re: Keeping necessities in life equal access. I agree on that point. But, I think it’s very difficult to achieve because of the complex factors that differentiate people in society. For example, in a given National Blue Ribbon School, there’s mix of people from different socioeconomic backgrounds that theoretically have equal access to educational resources the school provides. But, in practice, the educational resources that the school does not provide (at-home support, extended social networks, etc.) will be heavily correlated with a higher socioeconomic background.

> Tyler Cowen writes in the WSJ, “ It isn't clear that the estate tax raises much, if any, revenue. The very rich engage in tax-avoidance strategies. The apparent revenue raised is often offset by a lower intake from income and capital gains taxes. Furthermore, it has been estimated that the costs of implementing tax-avoidance strategies are roughly equal to the (gross) revenue raise.”

Cowen is merely repeating the talking points of the propaganda campaign against the estate tax planned in the mid-90s:

  Yet in order to win over a specific audience to the issue,
  conservative discourse began to shift toward another frame,[1]
  as can be seen in important reports on the estate tax written by
  conservative analyst Bill Beach. Beach had been specifically
  brought to the Heritage Foundation, a prominent conservative
  think tank, thanks to funds raised by Alabama estate planner
  Harold Apolinsky, who formed the American Family Business
  Institute (AFBI) in 1992 to lobby against the estate tax. ...

  In a 1996 backgrounder ... [Beach] offered three main
  arguments for repeal: the estate tax is a diminishing source of
  revenue; it fails to achieve its purported goals of wealth
  redistribution; and the tax does more harm than good in lost
  productivity, lost jobs, and decreased revenue through other
  taxation.[2]

As I mentioned elsewhere in this thread, Beach was also the source of the myth that small businesses and family farms were suffering from the tax, and the same campaign carefully developed the term 'death tax', which they credit with much of their success. Also, as mentioned elsewhere, the cited article will change forever how you read political commentary on any issue, as you realize that much of it, including by unwitting lay people, is parroting propaganda developed by special interests.

> ... even if this premise is not true (that there’d a positive net difference in the revenue raised), that’s assuming that the rich will maintain the same level of spending before they die, which may not be the case if they will get taxed on it when they die.

This seems very speculative. I've heard so many arguments with a similar argument: 'don't tax the wealthy or they will do X'. For example, the Reagan administration and others at the time argued that reducing taxes on the wealthy would increase their productive use of the funds, causing wealth to 'trickle down' to everyone else. As it turned out, cutting taxes on the wealthy (and thereby relatively increasing the burden on everyone else) made the wealthy wealthier (surprise!), and everyone else's income has been stagnent since then. The wealthy need to do their fair share and make the same sacrifice as everyone else; they are not a special case.

----

[1] "frame", as in a way to 'frame' an issue or debate

[2] "Death and Taxes: Issue Framing and Conservative Coalition Maintenance" by Richard Meagher: https://www.psqonline.org/article.cfm?IDArticle=19132

Re: “Cowen is merely repeating the talking points of the propaganda campaign against the estate tax planned in the mid-90s…” Cowen’s argument is not the same.

1) Cowen is saying that the rich engage in tax avoidance. While, in the article Meagher is describing “how and why the estate tax became part of the pro-family agenda of social conservatives.”

(There’s a ton of data on it: see “Tax Avoidance Saves Wealthiest Americans $3 Trillion Each Year” http://www.huffingtonpost.com/2013/01/07/tax-avoidance_n_242...)

2) re: “This seems very speculative.” The point that I’m making is about the time value of money. (I’m not making a Reaganomics supply side argument.) My point is, a dollar before a death tax is worth a lot more than after the death tax --- there’s enormous evidence for that (and even without a death tax based on time value decay alone it is true.) Admittedly, I am assuming that rich people would rather not voluntarily give money to the government, even if they don’t want to give it to their heirs. (ie. The Giving Pledge the super rich make to philanthropy.)

> Cowen’s argument is not the same. ... Cowen is saying that the rich engage in tax avoidance. While, in the article Meagher is describing “how and why the estate tax became part of the pro-family agenda of social conservatives.”

I'm a bit confused by this. In the quote I included, Meagher describes the talking points planned by Beach as including "decreased revenue through other taxation", which is what Cowen claims happens due to tax avoidance. I'm not sure why you refer to a sentence from a summary of Meagher's article (though I realize the article is behind a paywall, sorry), which I didn't mention and doesn't seem to apply.

> I’m not making a Reaganomics supply side argument.

I didn't mean to say you were, sorry. I meant, like those Reagonomics arguments, it's yet another speculative reason why the wealthy shouldn't pay their share of taxes. But regarding its speculative nature you say that ...

> there’s enormous evidence for that

I believe there is an enormous number of arguments behind it, but given the organized propaganda campaign and the fact that this point matches one of its talking points, I'd have to judge the evidence for myself. It's not reasonable to expect you to do research and provide it for the sake of a HN discussion, but if you could happen to recommend any I'd appreciate it. Thanks.

> death tax

As I mention elsewhere, this term for the estate tax, it's proper name, was a major, carefully implemented part of that same propaganda campaign.

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