Inheritance Taxes Discourage Oligarchy. Hence libertarian types hate inheritance taxes

The inheritance tax discourages saving, and thus reduces the capital stock. This lowers the real wage of workers who work with physical capital

The ideal tax system would be:

1. Externality taxes such as a carbon tax.

2. A land tax

3. A progressive consumption tax, preferably on wages and salaries (as the VAT is harder to make progressive.)

4. If we opt for the high-tax Nordic model, you might also need a VAT.

http://www.themoneyillusion.com/?p=7091

 

And I trust you have empirical evidence of the estate tax' depressing effect on saving & capital stock to validate this hypothesis?

 

I trust you have empirical evidence that it doesn't?

 

I see that your argument appears verbatim in a 2012 Congressional Republican paper- though if you dig deep, you see that this is actually based on research from 1998 - which if you dig really deep, comes from a formula dredged up in 1988.

If you actually wad through this though, and believe me, that's about 10 minutes I wish I had back, you can see that most of this is based on projections - i.e., they assume intuitively that the estate tax reduces savings/capital stock etc, assign a formula to it, and then project what the reduction is - there's no control group during the experiment to really compare it to.

We do have a nice natural experiment though - the repeal of the estate tax from 2001 to 2011.

Here is a graph of US Capital stock over time - do you see any impact on US Capital stock during these years or in any years up to the present day? The only obvious factors that impact capital stock are recessions, which tend to, unsurprisingly, reduce its rate of growth. The real remarkable thing about the data is how constant it is despite the dramatic changes in tax policies that have occurred (most of which were the kind making the tax code less progressive than it was in the 50's when the data first began to be gathered) in the time period covered.

http://research.stlouisfed.org/fred2/series/RKNANPUSA666NRUG

So to answer your question - this is empirical evidence that in my view, tends to validate the hypothesis that the estate tax's effect on capital stock is either nonexistent or de minimis. And it tends to invalidate the hypothesis you were citing, let alone the effects on wages that you posit.

 

That natural experiment had plenty of confounding factors.

My argument did not rely on that republican report and was not verbatim at all. Horrible troll job attempt I'm not falling for.

Still waiting for your study that shows it has no depressing effect on savings or the capital stock.

 

Still waiting for your study that shows it does...

 

http://books.google.com/books?id=UPuYCYpq0Z4C&pg=PA223&lpg=PA221&ots=LQzaZhxyAT&focus=viewport&dq=effect+of+inheritance+tax+on+savings+laitner&output=html_text

 

You can make inheritance tax kick in at two three or even four million. How many small business or farm will be affected by it then? It should be only used for the very wealthy.

 

Like what? What other noise is hiding the significant increase in capital stock you/Holz Eakin/Kotilokoff etc projected?

I didn't say you lifted it - but is it a coincidence that Bullet point number 1 on the republican dreck they produce on this every few years is exactly the thing you cite?

All of Heritage foundation's inveighing against the estate tax tends to lead with/harp on this point too:

It's not a " horrible troll job attempt" to point out that you're either consciously or subconsciously parroting talking point #1 from all Republican-sponsored pablum on this dating back decades.

Not only are you parroting it though, you're treating it as an unassailable truth that is the foundation of your hypothesis, which must be disproven by me, or else it's true by default. Do I need to explain more here? I think not.

Sure, from a CRS report in 2009:

http://www.naepc.org/journal/issue02c.pdf

If you actually go on to read it - it basically states that there's almost zero empirical data that finds that the estate tax has any effect on savings at all, both because it's so tiny, and because its difficult to disambiguate any effects - pretty much exactly what I was trying to show you with the utterly unchaning rate of Capital Stock growth historically (you dismissed this as "confounding" - indeed it does "confound" standard right wing dogma, in that it presents a universe in which they are wrong, because in their universe, they never are.)

I dont' really think it's unreasonable to ask you to provide some evidence for your underlying assumptions - or at least acknowledge that your grandiose pronouncment is potentially misleading - given the empirical reality in which the estate tax has almost no discernible effects on the things you are expounding upon.

You consider this unreasonable, apparently, and you consider this trolling - I'm inclined to disagree.

I dont think we're gonna settle this - you've dug in, so I guess it's back to schlocky one-liners from the sidelines for you, eh Mr. Clutch?

 

Just look up the economist John Laitner from the University of Michigan. He has one of the most in depth and cited studies that the estate tax reduces savings.

Nice try though, Sam. A for effort if not for results.

 

Theoretically, the estate + inheritance tax should be a tax on savings (if you aren't spending your disposable income, you save, and if your saving eventually goes to your descendants and get taxed by the inheritance tax, then it's a tax on savings). However, the reason why there isn't much empirical evidence for it is because it affects so few families anyway. I for one dislike the inheritance tax, mostly because it seems kind of silly to tax a house/asset that already had tax when you first bought it. However, the benefits to the rest of society do seem to outweigh the benefits to the one family receiving the assets.

 

I know that. A handful of states do have an "inheritance" tax, but the OP is incorrectly referring to the "estate" tax as an "inheritance" tax.

 

Not sure what this is supposedly in response to - anyway I did look up John Laitner - who seems to be predominantly an environmental/energy economist - which of his papers validates your theories? A link perhaps? Are you citing him because you have always found his work in the area especially persuasive? Why? Does he have an answer to the notable lack of empirical data validating the intuitive work you/heritage/republicans are always citing? Some context would be nice....

Yep...smooth segue into a submerged state...

 

I doubt this is true. Oligarchies will persist because wealthy families can invest heavily in bringing up their children to be highly educated, highly functional and well-connected adults. It certainly helps to also have a billion in the bank, but I expect dominant families will continue to be dominant even with a heavy estate tax.

We've created all kinds of crazy loopholes in the tax code to favor this or that constituency. I don't see why they couldn't do the same to save the small family farms.

 

Do you feel that there should be a $0 exemption amount on estate taxes?

 

A cowardly cicada you are.

 

I don't know how things work in your mind, but in the reality I live in, I negotiate a rate of pay with my employer before performing the work. They control how much they are willing to pay just as I control how little I am willing to accept, but once an agreement has been made and the work performed, they are legally obligated to pay me and they have absolutely no say in how I spend the money.

I don't know what part of that transaction you think corresponds to my employer "control[ling] the fruits of [my] labor."

 

Given that 261 of the Forbes 400 wealthiest Americans are self-made, it doesn't really seem to me that we're moving toward an inherited oligarchy.

http://cafehayek.com/2014/05/to-a-correspondent-about-piketty.html