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Author: altoflaco Three stars, 500 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 884325  
Subject: Re: Thoughtful article against repealing estate Date: 9/14/2000 7:29 PM
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This whole thread should have been marked OT.
Since we are already WAAAYY of LBYM, I'll assume anyone not interested has stopped reading this thread.

Here are my rebuttals to some of the responses to the original Washington Post article:

tobeworth said:

First, I believe that individuals are the best determinant for the proper and most efficient allocation of capital. The government, which by its nature practices the social allocation of capital, <stuff clipped> is inherently inefficient.

Some government is necessary. The scope of government is open for debate. But let's drop this pretense that government is always the worst choice. Those freeways you're driving on? Federal money. Probably the single most efficient infrastructure project ever. Made possible much of modern American commerce. And its not like Uncle Sam pushed GE or some other corporation out of the freeway building business. Uncle Sam was going to build those, or they weren't going to get built. And remember that internet thing? The one Al Gore inveneted? Well he didn't, but it was made possible by US government spending. Creating wealth? We'll all your net infrastructure stocks WOULDN'T even have been possible if not for this little bit of government (military, actually) research and development. Government can screw up too (can you say billion dollar bomber?) but so can the private sector (see entry under "Iridium").

tobeworth also claimed the article was "full of good points" but wrote:

Second, I personally believe that Taxes are inflationary, once again I would argue that the private sector would make use of the funds to boost productivity better than Uncle Sam.

The Post writer specifically mentioned that she thought taxes could/should be lowered, but wondered why the estate tax should take priority (over say, a tax cut for the middle class). You've done nothing here to support repealing the estate tax other than to claim you dislike taxes. Fine. So do I. But I also see that they do some good. If you want to lower this tax, defend it versus some other tax cut.

I don't mean to pick on tobeworth (but the arguments were more coherently stated that many of the others, making it easier to organize my response :-). Tobeworth (last time, I promise) also noted:

"I think the authors negative portrayal of those in favor of cutting the death/estate tax was beside the point and not relevant. Unfortunatly, this type of character asassination detracts from the issues and distorts the truth."

I'm sorry, but did you even READ the article? She was responding to opposition and HATE mail she received after an earlier piece in favor of keeping the estate tax. Given the context, her comments seemed restrained and appropriate. Of course, I would say that, wouldn't I?

Let's move on to the next issue. Geoff argued (in several post):

"we need to get back to the idea of equality under law. That means that the government, including tax laws, treats everyone the same"

When arguing about taxes, someone always brings up the point about treating people "equally". They keep using that word, but I don't think they really know what it means.

To be fair, it is a nebulous concept. To illustrate: two people, one makes $10k annually, the other makes $100k annually, followed by the amount paid.

Let's tax everyone an EQUAL amount: $5k; $5k
Let's tax everyone an EQUAL % (say 10%): $1k; $10k
Let's have an EQUAl tax BURDEN (say): $1k; $20k

Yes, you can quibble with the numbers or which version you find more palatable. But recognize that you cannot settle a complex argument simply by calling for "equality".

In the case of the estate tax, it applies to about 2%(or less) of all estates. That means the WEALTHIEST estates. For all the complaining about how much the wealthy pay in taxes, consider that they also (sorta by definition :~) take home the largest portion of income and control the largest share of wealth in the country. Is it really so awful that they also pay the most taxes?

I feel similarly about people who whine about capital gains taxes. People always draw attention to the fact that they are paying some outrageous amount (say 25k) in tax. Rarely do they celebrate the fact that to have paid 25k means you made 100k (and are keeping 75k). I'm happy when I have to pay capital gains taxes. (seriously) I choose to take it as confirmation of my Foolish investing skills.

AF




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