A Clever Example of Tax Avoidance, but a Quandary for Leftists and Social Conservatives

I generally believe that social conservatives and libertarians are natural allies. As I wrote last year, this is “because there is wide and deep agreement on the principle of individual responsibility. They may focus on different ill effects, but both camps understand that big government is a threat to a virtuous and productive citizenry.”

I even promoted a “Fusionist” principle based on a very good column by Tim Carney, and I suspect a large majority of libertarians and social conservatives would agree with the statement.

But that doesn’t mean social conservatives and libertarians are the same. There’s some fascinating research on the underlying differences between people of different ideologies, and I suspect the following story might be an example of where the two camps might diverge.

But notice I wrote “might” rather than “will.” I’ll be very curious to see how various readers react to this story about a gay couple that is taking an unusual step to minimize an unfair and punitive tax imposed by the government of Pennsylvania.

John met Gregory at a gay bar in Pittsburgh nearly 45 years ago and immediately fell in love. …Now, as lifelong partners facing the financial and emotional insecurities of old age, they have legally changed their relationship and are father and son — John, 65, has adopted Gregory, 73. The couple was worried about Pennsylvania’s inheritance tax. “If we just live together and Gregory willed me his assets and property and anything else, I would be liable for a 15 percent tax on the value of the estate,” said John. “By adoption, that decreases to 4 percent. It’s a huge difference.” …the couple had considered marrying in another state, but because their primary residence was in Pennsylvania, which does not recognize same-sex marriage, they would still be subjected to the inheritance law.

The Judge who approved the adoption obviously wasn’t too troubled by this unusual method of tax avoidance.

The judge did turn to John and said, “I am really curious, why are you adopting [Gregory]?” “I said, ‘Because it’s our only legal option to protect ourselves from Pennsylvania’s inheritance taxes,'” said John. “He got it immediately.” The judge agreed to sign the adoption papers on the spot and handed it to the clerk. Then he turned and looked at John, “Congratulations, it’s a boy.”

So what’s your take on this issue? For some groups, it’s easy to predict how they’ll react to this story.

1. If you have the statist mindset of England’s political elite or if you work at a bureaucracy such as the OECD, you’ll think this is morally wrong. Not because you object to homosexuality, but because you think tax avoidance is very bad and you believe the state should have more money.

2. If you’re a libertarian, you’re cheering for John and Gregory. Even if you don’t personally approve of homosexuality, you don’t think the state should interfere with the private actions of consenting adults and you like the idea of people keeping more of the money they earn.

3. If you’re a public finance economist, you think any form of death tax is a very perverse form of double taxation and you like just about anything that reduces this onerous penalty on saving and investment.

But there are some groups that will be conflicted.

1. Social conservatives don’t like big government and bad tax policy, but they also don’t approve of homosexuality. And, in this case, it’s now technically incestuous homosexuality! If I had to guess, most social conservatives will argue that the court should not have granted the adoption. We’ll see if there are some good comments on this post.

2. Leftists also will be conflicted. They like the death tax and they want the government to have more money, but they also believe in identity politics and wouldn’t want to offend one of their constituent groups.  I’m guessing identity politics would trump greed, but I suspect their ideal approach would be to tax all inheritances at 15 percent.

In my fantasy world, needless to say, there’s no death tax and the entire issue disappears.

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Josef Stalin Would Have Admired the U.K.’s Government-Run Healthcare System

One of history’s worst butchers, Josef Stalin, is rumored to have said that, “The death of one man is a tragedy, the death of millions is a statistic.”

Sadly, there’s probably some truth in that statement.

I’ve shared a bunch of horror stories about the U.K.’s government-run healthcare system (see here, here, here, here, here, here, here, here, here, here, here, here, here, here and here) and I challenge you to read them without feeling some mix of anger, sadness, despair, and disgust.

Now read these passages from a story earlier this year in the UK-based Daily Mail.

As many as 1,165 people starved to death in NHS hospitals over the past four years… According to figures released by the Office for National Statistics following a Freedom of Information request, for every patient who dies from malnutrition, four more have dehydration mentioned on their death certificate. …In 2011, 43 patients starved to death and 291 died in a state of severe malnutrition, while the number of patients discharged from hospital suffering from malnutrition doubled to 5,558. …NHS hospitals have also stood accused of fiddling figures to mask the numbers of patients dying needlessly.

Without names, faces, and specific details, it’s easy to read the words, shrug your shoulders, and remain emotionally detached.

“I’m Josef Stalin and I approve government-run healthcare”

But there’s probably a gripping and tragic story for every one of those 1,165 people who died, as well as the 5,558 people who suffered from malnutrition.

You’re probably wondering whether the doctors and nurses in the United Kingdom are especially incompetent and/or inhumane. That may be true, but these nauseating statistics also are the result of a deliberate government policy to hasten death. If you think I’m kidding, read this story about children being put on the “Liverpool Care Pathway.” But only if you have a strong stomach.

Makes you wonder what Paul Krugman was thinking when he asserted that, “In Britain, the government itself runs the hospitals and employs the doctors. We’ve all heard scare stories about how that works in practice; these stories are false.”

By the way, I’m not implying that the American health care system is the ideal approach. Our system is grossly inefficient and wasteful thanks to government-caused third-party payer.

But with Obamacare being implemented, including the IPAB “death panels,” maybe we’ll have the worst of both worlds. The inefficiency and expense of American-style third-party payer and the clinical cruelty of British-style single-payer.

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