Archive for April, 2009
I provided the opposing view to USA Today’s pro-death tax editorial today. In my column, I pointed out that the tax was inherently unfair, and also noted that it is a perverse from of double taxation:
If there were a prize for the most destructive tax, the death tax surely would be a prohibitive favorite. Known to policy wonks as the estate tax, this levy is a punitive form of double taxation that penalizes people for trying to create a nest egg for their children. …This matters because every economic theory — even Marxism — agrees that capital formation is the key to growth. Higher living standards are possible only if people invest by setting aside some of today’s income. But a punitive death tax, especially when combined with other forms of double taxation on capital gains and dividends, reduces the incentive to save and invest. Scholars who have examined this issue estimate that the death tax has reduced America’s stock of saving and investment by nearly $850 billion. Moreover, the death tax is a job killer, reducing employment by 1.5 million. Ideally, the death tax should be abolished. Nations as diverse as Russia, Australia and Sweden have killed this unfair levy.
In their pro-death tax editorial, the folks at USA Today offered a rather absurd argument about double taxation, claiming that the dead person is not taxed twice because he or she is dead when the death tax is paid:
Another canard is the double taxation argument, which goes like this: Someone becomes wealthy through hard work and enterprise, all along paying hefty taxes, and then is walloped again at death. This argument has one slight problem: Dead people don’t really pay taxes. Estate taxes are effectively paid by the people who are alive to feel the effect of the tax: the heirs.
Not only is this argument morally dubious, it is economically nonsensical. The death tax is bad for growth because it encourages wealthy people (who are still alive) to be less productive because they want to minimize a future tax. That is the reason America has a huge “estate planning” industry. This industry exists to advise people how to use their money less productively, which is why academics have found the big negative effects I cite in my column.
This video (hopefully) makes the case that smaller government is the best way to reduce sleaze in Washington.
Last week, I went to New Hampshire to give a speech to the University of New Hampshire Students for Liberty (some members of the University of Southern Maine chapter came down for the speech as well). Yesterday, I spoke to the Young Republican state convention in Virginia. While both speeches were about the negative impact of ever-expanding government, I was intrigued by the differences between my audiences. The folks from the Students for Liberty (the picture below is me with the leadership of the UNH and USM chapters) reminded me of my college days as head of the University of Georgia chapter of Young Americans for Freedom. These kids are motivated by ideas, not party affiliation. I did not have much opportunity to socialize with the YR crowd, but I got the feeling that party affiliation came first. The audience was reasonably sympathetic to my remarks, to be sure, but nobody spontaneously cheered when I explained how Bush’s statist policies helped drive the economy into a ditch.
On MSNBC, I warn that the reckless spending increases of Bush and Obama almost certainly will mean big tax hikes. Not only will investors, entrepreneurs, and other “rich” people be victimized, but I explain that the rest of us are in the crosshairs of the politicians.
The Center for Freedom and Prosperity has taken the footage and powerpoint presentation from my March 23 speech on tax havens and turned it into a two-part video series.
The quality is not as good as the videos we film in studio, but the two videos are a good summary of why tax havens should be applauded, not persecuted.
I took my first trip to Paraguay last week, courtesy of the good folks at Fundacion Libertad. I gave a couple of speeches (the photo below is from a speech to business leaders in the Parliament), did a few interviews, and met with a bunch of policy makers, including the Vice President. The purpose of the trip, at least I think, was to help build pressure to block an income tax from being implemented. Paraguay is not a free-market paradise, but the fiscal burden of government is low and there is a serious debate in the nation about whether to be one of the few places in the world without the plague of an income tax.
As far as I can tell (given my total lack of foreign-language skills), the trip was successful. The Paraguayan equivalent of the House of Representatives voted to suspend the tax, joining their colleagues from the Paraguyan Senate in voting against the income tax.
The ultimate goal, of course, is to permanently kill the tax. As such, I’ll definitely have to return for another visit – especially when the weather is cold in Washington.