Art Laffer on the effects of the Death Tax

From Art Laffer, economist and inventor of the Laffer Curve, comes an excellent and timely piece explaining why we should all care about the death tax, its effect on society and on people's behavior: Spend it in Vegas or Die Paying Taxes

President Barack Obama has proposed prolonging the federal estate tax rather than ending it in 2010, as is scheduled under current law. The president's plan would extend this year's $3.5 million exemption level and the 45% top rate. But will this really help America recover from recession and reduce our growing deficits? In order to assess the pros and cons of the estate tax, we should focus on its impact on those who bequeath wealth, not on those who receive wealth.

Advocates of the estate tax argue that such a tax will reduce the concentrations of wealth in a few families, but there is little evidence to suggest that the estate tax has much, if any, impact on the distribution of wealth. To see the silliness of using the estate tax as a tool to redistribute wealth, realize that those who die and leave estates would be taxed just as much if they bequeathed their money to poor people as they would if they left their money to rich people.

So, the death tax is ineffective. Yet its supporters claim that the idea is worthy nonetheless. Laffer shows that this, too, is a ridiculous bunch of nonsense...

Advocates of the estate tax argue that such a tax will reduce the concentrations of wealth in a few families...

This argument could be taken more seriously if the threshold was $135 million, rather than $3.5 million. I suspect there are more than just a "few" families with estates at $3.5+ million.

Hating the wealthy and wishing to punish them - these are twin tenets of the socialist mindset. Never mind that the vast majority of these people worked like dogs all their lives to set aside something for their families, all the while paying income taxes, capital gains taxes, corporate taxes, and a whole laundry list of other taxes, while, at the same time, drawing far less on the government teat than most others.

You can fund a socialist regime by penalizing the wealthy, but once there are no more wealthy, then who pays for your socialist regime?

The only way to guarantee a prosperous nation is for government to get off the backs of businesses with extensive deregulation, and to put its own house in order with responsible and frugal economic and fiscal policy. Nothing else will work. Period. No matter how much fun it may be for socialist ghouls and goblins to kick the corpses of those who worked hard and maintained well their families and their society.

If the people of a society don’t have the character to resist baying after the belongings of others, then it is up to government to restrain them; anything less is simpy mob rule, which is clearly the direction in which the United States is headed; indeed, such mob rule is the ultimate fate of every nation which opts for a socialist government.

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