Property taxes are indeed immoral

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Michael Tomasky wrote a seriously flawed article column for The Daily Beast this week in which he not only made a case for wealth and inheritance taxes, but even said those taxes were moral. He made four arguments to support this position: that heirs do not deserve great wealth, that society has helped make such achievements possible and therefore deserves a share of the wealth of the rich, that wealth taxes do not reduce entrepreneurship incentives; and that inheritance tax only applies to a small number of people. Let me rebut each of these arguments in turn.

It is easy to say that heirs do not deserve great wealth, but to make such a sentiment a law, one must make an arbitrary judgment on what denotes “great” or excessive wealth. Mr Tomasky clarifies that he wants the inheritance limit to be greater than $ 1 million, but after that it remains vague.

Yet if an inheritance is morally acceptable, then society has no way of drawing a line where the acceptable ends and the immoral inherited wealth begins. The fact that declaring any inheritance above a certain limit as immoral involves such an arbitrary line is a clue that drawing such a line is the faulty part of the process. Who among us has the right to choose how much is acceptable to inherit?

After all, if it is my property to dispose of it as I see fit during my lifetime, how does the property become that of the company at the time of my death? Obviously, there is a very small step between believing inheritance taxes to be moral and believing the same thing about all wealth taxes. Why wait for the rich to die? Let’s take their money now. After all, our lives would all be better if we could divide Bill Gates and Warren Buffett’s billions.

We don’t do this because we each have a right to our property and there is no limit beyond which society can suddenly decide that we have lost that right.

This brings us to Mr. Tomasky’s related point that society has helped the rich acquire their wealth, so society deserves a (large) share of it after they die. Even if we state in his highly questionable assumption that the rich have been helped and therefore owe society a payment, wouldn’t all the income taxes they paid while earning their wealth count as a refund? With America’s top earners paying total tax rates approaching or even exceeding 50 percent of their incomes, and with the top 1 percent earners paying nearly 40 percent of all income taxes, I think we can make a better case for the rich who have paid no obligation in return than we can for them still owe society anything.

Turning to his argument on incentives, Mr. Tomasky has fallen into a common mistake here. He rightly points out that we have a current system of progressive income taxes and that we had a very punitive estate tax until recently, yet people were inventing, innovating and getting rich with these taxes in place. He jumps from this observation to the conclusion that such taxes should not destroy the incentive for entrepreneurship. His mistake is that while it is true that some people have taken risks and succeeded anyway, we have no way of knowing how many other people have been discouraged from doing the same and therefore are not being observed.

High income and wealth taxes have surely discouraged some people from taking steps to earn more money and accumulate more wealth. The extent of this lost innovation and creativity cannot be measured because it never happened. We can attempt to measure the negative impact of such taxes, but cannot extrapolate the impacts beyond the range of our data (i.e. the lowest observed tax rates).

Finally, the worst part of his argument is that the newly amended estate tax with an exemption of around $ 10 million per family means that we only capture the wealth of a small number of people. I can’t imagine any religion or ethical system that says harmful actions become moral if you only do them to a few people. It is not okay to murder people in small numbers and it is not okay to grab the wealth of the rich if you only do it to a few of them.

Ethics and morals are not changeable according to the situation or the scale. It’s okay to discriminate against a large group of people, but okay if you only discriminate a few. The same logic applies here. The number of people abused doesn’t matter when you talk about morality.

Michael Tomasky is free to favor higher property taxes with lower exemptions or even advocate for the seizure of all property of the rich. After all, communism is taking over everyone’s property. However, where he goes wrong is in trying to disguise his political argument in morality. The tenth commandment is that you will not covet, which should be a clue that arguments for seizing someone else’s property cannot be made on the basis of morality.

Follow me on twitter @DorfmanJeffrey



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