Is wealth better deployed in the hands of the children of the idle rich, or through distribution to the masses? That's the primary question.
Not in my opinion.
Your main objection seem to be that wealth should not be taken from its holders, which I agree with. However, under this scheme, the children of the idle rich never get the wealth and are thus never become its holders.
The 2nd generation gets and has the wealth. While in some ways you are seizing it from the third, technically it could be said that you are seizing it from the estate of the 2nd. That still doesn't get around my objection. If you think the primary question is "where is wealth better deployed", and you are convinced that the government would deploy it better, those two beliefs might in your mind over rule my objection, but I don't agree with either of those two ideas.
No, it makes the recipient of great wealth incented to declare as much income as possible during his lifetime, because that is the amount that he will be able to pass on to his heirs. If he hides his taxes, he gets to pass on zero (or at least much less). The wealthy will be highly incented to declare income in order to keep their wealth in their family.
So it gets passed on in a trust, or the wealth gets hidden in offshore accounts, or whatever. There are many ways to hide income and wealth. It hasn't been worth the costs and risks because for most the burden of taxes, while high, usually isn't confiscatory. Move to confiscatory taxation, and both legal tax avoidance, and illegal tax evasion while soar.
In Bill Gate's case (assuming he doesn't follow through on his announced plans to give the bulk of it away to charitable causes), his wealth is mostly in a publicly traded stock. It might be hard for him or his heirs (or their heirs) to avoid the tax. But other people have private corporations. And maybe you could evaluate and grab that wealth too (forcing the sale of the company), but it might be harder to fairly value. Still others might make, or park their wealth in various overseas companies with less transparent ownership, and less effective reporting requirements. I'm not an accountant, or a tax lawyer, or a person who runs tax dodges, or a wealthy person trying to avoid taxes, and I've tired to think of schemes for all of about two minutes. Sharp people with much greater incentive, and a lot more time could certainly think of a lot more. Maybe government responds by trying to close down the loopholes. They close some, and the money squirts out to others. Trying to close them all requires to much government regulation and action to be beneficial in my opinion. And if you can close the legal loopholes (which I don't think is going to happen), you get both lobbyist pushing for new ones, and a greater degree of illegal tax evasion.
Gates earned the money. It his to dispose of it as he sees fit.
Using this logic, his children didn't earn the money, so why is it theirs to dispose of as they see fit?
Saying Gates earned his money so he can dispose of it as he wishes, does not mean that if and only if you earn money do you have a right to dispose of it as you wish.
Once he disposes of it, it belongs to his heirs. Now it is their money and they have a right to dispose of it as they wish.
but the point is whether society is better off with wealth concentrated in the hands of the idle rich, or distributed amongst the people
Again not in my opinion. That is not the primary question or point, either as a matter of principle or as a practical matter. As a matter of principle I would again say "its their money". As a practical matter high taxes are almost never a good thing. It could in theory be better to distribute the money, but the system required to distribute the money provides for negative incentives. Also the money would not be distributed amongst the people. It would go to the government.
Tim |
