[OT]America. The land of the not-so-free (economy)

[Fred]

On Sat, 2005-01-08 at 18:19 -0500, Randy Edwards wrote:
>  > Unearned Wealth?
> 
>    My point about unearned wealth and the inheritance tax was that the wealth 
> being passed to the heirs is unearned by those heirs -- it should be taxed at 
> a far higher rate.

Why?

>   Public opinion polls report that people support the 
> "estate tax" but yet those same polls report people oppose the "death tax" -- 
> the magic, as the Republicans have learned, is in the wording of it.

Which means, of course, they have no clue what they're talking about.
People in general don't understand what this tax is all about -- or the
consequences.

>    I've got no problem with someone working hard and enjoying the money they 
> earned; but being born into a class where you never have to work a day in 
> your life because of your inheritance is a different matter. 

Those are your values; not mine.

>  The US used to 
> have clear distinctions about earned and unearned wealth -- with appropriate 
> tax policies to encourage earned wealth -- but this has changed radically 
> since the 80s.

Perhaps you have not thought much of the consequences of this. For
instance, what if the estate is a house, a business, or a farm I wish to
leave my heirs? The estate tax would force them to cough up half the
monetary value of the estate, or force them to liquidate the estate. 

A house is a place to live. Why should my heirs be forced to sell the
house just to meet the tax? Or the business? Or the farm? Or whatever I
leave them? What is so wrong with me leaving my heirs something that I
have worked for? Is that not my right to do so? And if not, I'm living
in the wrong country.

>  > Oh, so now it becomes a "class war".
> 
>    Correct.  There's always been a class war going on; people are just 
> actively discouraged from thinking of economics or gov't policy that way.

What it seems to be is envy and jealously manifested as law; those who
"have not" want to plunder those who "have" -- and there is nothing new
about that, as that is as old as human history. 

This is kind of an academic debate since there are ways to avoid the
estate tax anyway. I just hate to have to play those inane games.

>    Given the shifts that we've seen since the 80s, it's clear that the rich 
> are getting richer very fast, the middle income classes are treading water, 
> and many of the poor are getting poorer. 

I would disagree with that statement. Many in the middle class have
become "rich", and many have fallen the other way. Of course, it's all
in what you are calling "rich", "middle class", etc.

Clinton during his first campaign made much ado about "going after the
wealthy". Then, shortly after being elected, redefined what "wealthy"
meant -- anyone earning $75-80K and above. Gee, I certainly did NOT feel
wealthy back then, nor did I consider myself as such.

So, does this mean that you favor a welfare state to do what the
individuals should be doing themselves -- improving their skills,
looking for better opportunities, etc. to improve their own incomes
should they not be satisfied with it?

Also, these blanket stats don't take into account mobility that is going
on at all income levels. Back when I was a kid I used to bus tables for
money; but that did not last long once my computer career took off. My
income increased steadily over the past 25 years as I became better and
better at what I did -- that is, was able to produce better and better
results to my employers.

I'm not unusual. Everyone has this opportunity to excel, and many take
it.

Is it a bad thing to be rewarded for excellence? The tax system would
suggest it is.

>  This isn't a result of some magical 
> economic theory, it's a result of gov't policies which have changed.  When 
> you flatten out the income tax, it's obvious who benefits and who loses.  

Any delta in any policy will benefit someone and hurt someone else. This
goes along with my "transfer of misery" notions of government.

> When you get rid of the estate tax, ditto.  We'll see another large shift if 
> Bush manages to privatize social security.

Social Security is a failed institution. It should not be privatized,
but eliminated. Problem is, of course, what to do with all those who are
currently depending on it. The devil is always in the details.

At the very least, SS should be elective if it is not eliminated. I
don't want to have to pay for something I will not be able to use or
have no need for in the future, nor any assurance it will even be there
in the future. 

>    This isn't a secret.  As the second-richest person on the planet has said, 
> "If class warfare is being waged in America, my class is clearly winning."

It does not have to be that way. Alas, the government likes pitting one
class against another, one "race" against another, one demographic
against another for the sole purpose of "divide and conquer." That way,
we bicker at each other instead of focusing on the main problem.

>    Warren Buffett has been very blunt on the changes in the US.  He sees it in 
> his own self-interest, fearing a backlash when the vast majority of Americans 
> are squeezed too much.

>    Among his more blunt statements, "I personally think that society is 
> responsible for a very significant percentage of what I've earned[sic]. I 
> happen to work in a market system that happens to reward what I do very well 
> - disproportionately well." or "I pay a somewhat higher [federal tax] rate 
> for my combination of salary, investment and capital gain income than our 
> receptionist does. But she pays a far higher portion of her income in payroll 
> taxes than I do."

Of course, if we eliminate the income and payroll tax, the issue becomes
moot. There are so many other taxes -- many of them hidden -- that the
federal government could get along easily without the income tax.

>  > Gee, isn't this happening already? And now you know why.
> 
>    Sorry, I don't see the huge problem with the overall tax rate in the US.  
> What I do see is a problem with who gets taxed and who gets rewarded.

The ideal situation is that you should be rewarded in direct proportion
to your efforts and value. The tax system tried to undo that.

>    Having married a European woman and traveled Europe extensively, from what 
> I've seen (western) Europeans enjoy a standard of living equal to or *better* 
> than what we have in the US, with a social safety net that keeps them largely 
> free of worrying about catastrophes (getting sick, losing a job, etc.).

For now. From what I understand, many of those European countries are
starting to feel the squeeze from their socialist systems which are
inherently unsustainable. Their people have a greater expectation than
most USians do of what they expect from their mommy governments; and
when the governments are unable to deliver fully on the promises, the
people strike. I believe this very thing is going on right now in
France, for instance; it is only destined to grow worse.

Also, it's all in how you define "standards of living." I've traveled in
Europe too -- as well as a country in Central America. Though many in
Central America are much poorer than their European counterparts,
consider that getting food is easy -- just climb a tree or fish for it.
Housing is inexpensive since its warm year 'round so you don't need
central air, heating, or insulation.

So many of them do not suffer from the stresses we do in the States or
Europe. Kinda makes me wonder what "standards of living" is higher
where.

> Then again, those European countries don't hesitate to tax their corporations or 
> the rich in their countries, and they don't spend an insane amount of their 
> gov't budget on the military.

Yep, and they don't have to since the US will "protect" them with *our*
tax dollars. Well, with the debt whose interest is being paid for by our
tax dollars.

I think it can be said that the US military represents a HUGH negative
ROI. I think we can agree on that much. And negative ROIs cannot
continue forever.

-- 
-- Fred
"Don't let IE happen to YOU!"
- My daughter, who designs web sites for everything BUT Internet
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