Questions for conservatives

[Politico]

Do liberals realize that all of one's estate has already been taxed, in some cases multiple times already, and an estate tax is ultimately one last tax for dying? After all, all of one's assets were at one point purchased with taxed income, many items incurred a sales tax, property incurred property taxes for years in most cases (if not decades), etc.

Estate taxes also create a perverse allocation of resources in the sense that it leads to lawyers/accountants spending time/labor/capital on finding ways around the estate tax, or enforcing the estate tax, rather than doing something that is actually productive. It can also induce parents to find other ways around the estate tax such as selling off investments in favor of liquidity in order to buy consumer goods for their children. The purchase of these consumer goods are probably not as beneficial to the economy than the aforementioned investments would have been had the parents been able to pass them along to their children as would be their top preference.

If a parent wishes to pass along something they have bought and paid for, whether it is onto a charity or an heir, who are we to say, "no, your wishes will not be fulfilled because we know what is better for you and society than you do?" The people own the state, not the other way around. The bureaucracies are too fat, to the point of being morbidly obese, and most people are taxed enough in their lifetime as is.

[Politico]

Do liberals realize that all of one's estate has already been taxed, in some cases multiple times already, and an estate tax is ultimately one last tax for dying?

I am not a liberal (in the US sense of the word), but why is that even relevant? What's wrong w/ taxing things in different ways - especially if some of these happen to be relatively non-distortionary?

I am not opposed to different forms of taxation, but I am philosophically opposed to essentially taxing somebody for dying. If people are dying without having paid enough taxes in their lifetime, the remedy is to ensure people do pay enough taxes in their lifetime rather than relying upon a death tax.

I strongly believe that individuals should be free to choose what happens to their estate without state interference. They can do a better job of passing along their legacy than the state. In my opinion, the honorable thing to do is pass along the vast majority of one's estate to productive organizations (e.g., charities, universities, etc.), not Opebo's beloved bureaucracies. But I do not think anybody has the right to tell somebody they cannot pass along everything they have bought and paid for onto their relatives, or whomever they please.

[Politico]

Ag,

I tend to see eye to eye with you on issues of economics, but I think you are going a bit too far with regards to my comments on the estate tax. However, I do concede that I descended into the realm of politics a bit too much with my rhetoric about "the death tax."

This is nonsense (what Politico says). Dead people do not pay taxes: once you are dead, you don't do anything. The taxes are paid by the heirs.

If we want to get into semantics then you are absolutely correct that the taxes are actually paid or not paid by the heirs. However, by the same token, we have to consider that the estate is ultimately not transferred until the estate taxes are paid. This begs the question of who really owns the estate in the time between death and the payment of taxes: Who the dead person bequeathed the estate to, or the government? I believe the people of a free nation own the government, and it is not the case that the state implicitly owns the people and their possessions until they "pay their dues," or at least from the standpoint of the transferring of estates. I do not think this is a radical notion, at least not anymore than your comments on collective bargaining (which I agree with you on).

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You have to consider that the estate tax creates a forced market for lawyers/accountants who specialize in avoiding or enforcing the estate tax. I say forced because this market would not exist without the estate tax. It would probably be better for the economy if those lawyers/accountants were involved in other, more productive, areas. Furthermore, consider the case of a farm that has been passed along from generation to generation. Sometimes the heirs of these "family farms" are now forced to sell off their family farm to big agricultural companies in order for the estate tax to get paid. I think it is patently wrong for the government, intentionally or unintentionally, to create these types of distortions in favor of special interests.

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I agree with much of this, but you jumped to the conclusion that I believe people are taxed too little while they are alive, specifically in old age. That is not the case. My positions on this board have made it quite clear that I believe people are taxed enough already. If somebody else believes people are not taxed enough in their lifetime, they should make that argument in the court of public opinion, and let the chips fall where they may. In my opinion, the estate tax is pushing the envelope even further than it ought to. Finally, it is an especially unsavory tax, IMHO, especially with regards to many families that inherit farms.