08
Jan
The New Feudalism
I was reminded by Doug Bulleit today of one of my recurring reflections that is perennially unpopular (but with which Doug largely agrees): I believe that inheritence tax should be set at 100%.
OK, perhaps there should be a few carve outs, such as the ability for surviving spouse and pre-majority offspring to be looked after, but as a general matter of principal I feel the case is clear. How can a society that espouses equality permit a child born into inner city squallor and a terrible school system to grow up with no alternative but welfare, or drugs (and jail), whereas another child sent to expensive schools but who never passes an exam, inherits a huge sum of money and never has to work a day in his/her life?
Not only is this grossly “unfair”, but arguments that “I worked hard for my money; I should be able to leave it to my children,” carry about as much weight as “I worked hard for my money; I should be allowed to spend it on cocaine, or pay to have my spouse killed.” You see, to me the social harm done by the silver spoon - children of the entitled growing up into entitlement through the simple act of inheritence - does greater social harm than many other non-permissible activities would. Combined with ever-more-sophisticated tax planning, the modern feudalism of inheritence is creating a growing divide between the haves and the have nots, and this is clearly visible to the disenfranchised “have-nots”, which will become a huge problem in this country.
It is unfortunate that so much attention is paid to income taxes rates - though this happens for precisely the same reason that it is understandable: the vast middle doesn’t have insufficient assets to care much about capital gains or inheritence tax, and are wholly dependent on their earned income. This distraction allows specious arguments of “right to pass on wealth” to go unnoticed, and permits feudalism to thrive, unnoticed. The great modern examples include families such as Kennedy, Bush, and Walton, but there are thousands more.
Doug pointed out to me a corollary for which I thank him. The spoilt children who never have to work are often raised in an environment of unusually high learning, decisiveness, and intelligence, and are frequently genetically graced with high intelligence themselves. I know many who are the children of the system who support his argument: while most are not complete wasters, the majority underperform against their potential. That a system should actively discourage the more talented and well positioned children of the elite to give of their best to society seems particularly short-sighted.
But, I am afraid to say, this is an inevitable consequence of feudalism.
January 10th, 2007 at 9:17 pm
Garth -
I’m faltered that you found something in my ramblings that warranted further cooment.
But, while you’re at it, IMHO another important acillary concept to grasp here is precisely what money (or “entitlement”) really is: i.e., a claim upon us all. So, in bequething unearned wealth, what one is doing (often inperpetuity) is garnted his descendents indefinite claims upon the rest of our time and property
January 11th, 2007 at 5:01 am
I think that someone who has accumulated wealth (1) does actually have the right to spend it all on cocaine if he wants, and (2) is much more likely to do so if he can’t bequeath it to his children. Why remove one of the more benign aspects of wealth?
Also, wealth does not distribute itself according to any kind of merit, so why pretend that it does? Even if we all started at square one, some weak, lazy, unintelligent, unimaginative and (in most of our minds) undeserving people would still wind up with huge chunks of it for no apparent reason. I think the real misunderstanding of wealth is that it is widely perceived as some sort of indicum of merit. It’s the myth of the economic democracracy. We’d be better off if we understand like our pets and some primitive peoples that some things, just are.
January 11th, 2007 at 5:55 am
I am reminded of a quote forwarded to me some time ago by John Hane “The moral flabbiness of the exclusive worship of the bitch-goddess SUCCESS. That — with the squalid cash interpretation put on the word ’success’ — is our national disease.” Letter from William James to H.G. Wells, September 11, 1906.
Thanks Bob
January 11th, 2007 at 1:09 pm
Being of modest inheritance and modest financial means I dare not take the time to address this fully. The inheritance tax issue is but one of many ways in which “wealth”, in the sense of finite resources, is transferred intergenerationally. We tax our children with environmental costs that are impossible to quantify, with housing costs that are more easily summed, and in a thousand other ways. We also dividend our children with investment in technology, culture, society and government.
There are some practical issues with a 100% inheritance tax, including small businesses; some general fairness issues (even people who have reached majority may rely on parents for a decade or more for school, housing down payments (see above), etc)); chattels in the grey area (personal property that may be of real sentimental value but also financially valuable) and the inevitable message that those in the middle class should CONSUME.
We should find a balance that protects what I see as legitimate interests of the poor and disadvantaged while not creating unnecessary burdens and counterproductive incentives for the middle class. Should vast fortunes be passed down? Ummm. No.
When you have a moment google “veil of ignorance” or “Towards a Theory of Justice” by John Rawls. A nice bit of jurisprudential social philosophy to savor on a Thursday evening in January.
January 28th, 2007 at 6:59 pm
Hi,
I found your blog via google by accident and have to admit that youve a really interesting blog
Just saved your feed in my reader, have a nice day
January 28th, 2007 at 7:24 pm
Thank you Florian. Gareth’s blog appears to have gone international!