Beware Tax Policy by Cute Names
Shakespeare was wrong. A tax smells sweeter, or nastier, based on its name.
The Death Tax.
There is a reason this country has had an Inheritance Tax longer than it has had an Income Tax. When the government needs money, it only makes sense to go after the large chunks of unearned money floating around before going after the small chunks of hard-earned money. This all made perfect sense until the phrase Death Tax was coined.
I once got a thing in the mail from my Republican Congressman. This is what he had to say about inheritance taxes.
There is a subtle point apparently missed by Republicans – no one pays any taxes when they die. They are dead. They don’t do, or pay, anything. They no longer have savings, or businesses, or farms. They have no income. They have no thoughts or concerns about money or taxes. The government has lost jurisdiction to be fair or unfair to the dead. So, let me assure the Republicans: No American - no matter what their income - will ever be forced to pay even one penny of their savings, their business, or their farm in taxes when they die. The issue is not whether Conrad Hilton had to pay taxes when he died, the issue is whether Paris Hilton has to pay taxes when she inherits.
I know this is a tangent, but I want to bring Baby Boomers into the discussion. I have very little good to say about Baby Boomers as a group. A more spoiled and selfish generation has yet to be born. For almost a hundred years the simple logic of taxing unearned inherited money before earned money has been crystal clear. Now, just as Boomers are starting to be on the receiving end of a lot of inheritances, suddenly that simple logic is twisted into a sound bite called the Death Tax. Get a grip, Boomers.
If the Estate Tax and the Inheritance Tax are names that need replacing, I would nominate another term. How about the Windfall Tax?
Double Taxation.
Money circulates. It moves from person-to-person, business-to-business, etc., etc, etc. There is nothing inherently wrong with taxing the same money every time it moves. I get a paycheck; I pay a tax. I buy something with my money. I pay a sales tax. The business takes my money, makes a profit, and pays a tax on that profit. That same business took part of my money and paid employees with it; and those employees paid a tax. I don’t see anything “double” or evil in any of this. In fact, it seems self-evidently natural and proper. Should that business take a part of my money and pay a dividend, there is no reason why a tax on that transfer of money should be called “double.”
Should I pass over to the land without taxation (Heaven, not the Grand Cayman Islands), my heirs will get my money. I see no reason why a tax on that transfer should be called “double” either. I truly love my heirs, but while I have toiled for my money, and while they have toiled for their money, they have not toiled for my money, and they have never paid any taxes on my money.
The Consumption Tax.
There is talk these days that best road to simplicity is a national sales tax, a VAT, or something called a Consumption Tax. The claimed benefit of such a tax would be to eliminate all the current deductions and credits. This would be a good thing. This would be a true thing if the proposal would apply the sales tax to charitable contributions, mortgage interest payments, and the purchase of stocks, bonds, mutual funds, certificates of deposits and other vehicles of saving money. In other words, each conceivable way a person can spend, invest, save, transfer, or park his/her money without invoking the new tax, is, in essence, creating a deduction. Another word for deduction is loophole.
Every proposal I’ve seen appears to create a loophole for money that is “saved.” In the abstract, this sounds good, except when you think of who saves the most money. The people who save the most money are the people whose monthly income greatly exceeds their monthly bills (i.e., the rich).
Excuse me while I state the obvious. Taxes are a necessary evil. Someone has got to pay them. The more others pay, the less I have to pay. The subject of Taxes is too important to be influenced by catch phrases.
I suspect the fellow who coined the term “consumption tax” might be the same guy who termed inheritance taxes “the death tax,” and who claims a tax on dividends is “double taxation.” As an economist, this fellow is not so bright, but as a marketer of tax policies that favor the rich, the man is a genius.
C E Sutton
The Death Tax.
There is a reason this country has had an Inheritance Tax longer than it has had an Income Tax. When the government needs money, it only makes sense to go after the large chunks of unearned money floating around before going after the small chunks of hard-earned money. This all made perfect sense until the phrase Death Tax was coined.
I once got a thing in the mail from my Republican Congressman. This is what he had to say about inheritance taxes.
End the Death Tax Once and for All
No American - no matter what their income - should be forced to pay 55% of their savings, their business, or their farm in taxes when they die.
There is a subtle point apparently missed by Republicans – no one pays any taxes when they die. They are dead. They don’t do, or pay, anything. They no longer have savings, or businesses, or farms. They have no income. They have no thoughts or concerns about money or taxes. The government has lost jurisdiction to be fair or unfair to the dead. So, let me assure the Republicans: No American - no matter what their income - will ever be forced to pay even one penny of their savings, their business, or their farm in taxes when they die. The issue is not whether Conrad Hilton had to pay taxes when he died, the issue is whether Paris Hilton has to pay taxes when she inherits.
I know this is a tangent, but I want to bring Baby Boomers into the discussion. I have very little good to say about Baby Boomers as a group. A more spoiled and selfish generation has yet to be born. For almost a hundred years the simple logic of taxing unearned inherited money before earned money has been crystal clear. Now, just as Boomers are starting to be on the receiving end of a lot of inheritances, suddenly that simple logic is twisted into a sound bite called the Death Tax. Get a grip, Boomers.
If the Estate Tax and the Inheritance Tax are names that need replacing, I would nominate another term. How about the Windfall Tax?
Double Taxation.
Money circulates. It moves from person-to-person, business-to-business, etc., etc, etc. There is nothing inherently wrong with taxing the same money every time it moves. I get a paycheck; I pay a tax. I buy something with my money. I pay a sales tax. The business takes my money, makes a profit, and pays a tax on that profit. That same business took part of my money and paid employees with it; and those employees paid a tax. I don’t see anything “double” or evil in any of this. In fact, it seems self-evidently natural and proper. Should that business take a part of my money and pay a dividend, there is no reason why a tax on that transfer of money should be called “double.”
Should I pass over to the land without taxation (Heaven, not the Grand Cayman Islands), my heirs will get my money. I see no reason why a tax on that transfer should be called “double” either. I truly love my heirs, but while I have toiled for my money, and while they have toiled for their money, they have not toiled for my money, and they have never paid any taxes on my money.
The Consumption Tax.
There is talk these days that best road to simplicity is a national sales tax, a VAT, or something called a Consumption Tax. The claimed benefit of such a tax would be to eliminate all the current deductions and credits. This would be a good thing. This would be a true thing if the proposal would apply the sales tax to charitable contributions, mortgage interest payments, and the purchase of stocks, bonds, mutual funds, certificates of deposits and other vehicles of saving money. In other words, each conceivable way a person can spend, invest, save, transfer, or park his/her money without invoking the new tax, is, in essence, creating a deduction. Another word for deduction is loophole.
Every proposal I’ve seen appears to create a loophole for money that is “saved.” In the abstract, this sounds good, except when you think of who saves the most money. The people who save the most money are the people whose monthly income greatly exceeds their monthly bills (i.e., the rich).
Excuse me while I state the obvious. Taxes are a necessary evil. Someone has got to pay them. The more others pay, the less I have to pay. The subject of Taxes is too important to be influenced by catch phrases.
I suspect the fellow who coined the term “consumption tax” might be the same guy who termed inheritance taxes “the death tax,” and who claims a tax on dividends is “double taxation.” As an economist, this fellow is not so bright, but as a marketer of tax policies that favor the rich, the man is a genius.
C E Sutton
Related Posts (on one page):
- A Simple Tax Proposal
- Beware Tax Policy by Cute Names
- The Self-Evident Truths of Income Taxation