Of course I'm liberal, I believe in liberty.

Friday, December 31, 2004

Inheritance Tax and Aristocracy

From the comments:
Mark writes, "When this cycle goes unchecked one ends up with a group of people born into fabulously rich families. One word often used to describe such families is "aristocracy". Intellectually, I don't see how you can argue that this won't be a long term effect of eliminating inheritance tax. Feel free to try."

You must have a different definition of aristocracy. Here's the correct one. You'll see that eliminating the inheritance tax doesn't equal aristocracy. (Unless you think that the government only loans people money, and that they deserve it back when you die; which by your support of the inheritance tax would suggest that you believe that.)

Yep, an aristocracy is a hereditary ruling class, just like the dictionary says. You certainly can argue that class of people who are allowed to control great, unearned wealth for generation after generation might not qualify as a ruling class, but I believe that is a natural consequence. Historically, it was the king who owned the land and the land owner who became the noble.

The argument about loans could apply to just about any tax. I don't believe the government loans people their money but simply believe government is how we humans organize ourselves and in a democracy how the we people collectively determine what sort of world we want to live in.

I don't want to live in a world where the wealth is distributed like a pointy-top triangle where only a few control the most. I want to live in a world where the wealth is distributed more like a diamond, with most of the wealth held by a very large middle class. I know many on the right will call this socialism or worse, but I don't believe in socialism and that isn't where I'm coming from.

You see, I agree with the libertarians that one of the great goals is to maximize freedom and liberty for all. However, libertarians seem to believe anarchy is somehow a natural state and it is only (or at least, mostly) government that takes away our liberties; this is where I part company. I don't believe anarchy is a natural state. I believe that power begets power leading the rich to get richer. I think history supports me on this. And power corrupts. Eventually such wealth and power, left unchecked, becomes an aristocracy. (And eventually revolution.)

The same phenomena happens in the business world. One of the great ironies is a purely free market will not remain free on it's own, there will be winners and losers and the winners will gain power. Corporations grow, merge and form monopolies. Monopolies tend to be anti-capitalistic and, left unchecked, use their power to smash any competition.

The bottom line is I distrust concentrated power in any form, uncheck and unbalanced government, great personal wealth, mega-corporations, media, all of it. But I also believe in capitalism, the spirit of entrepreneurial-ship and that creativity and hard work should be rewarded. At times it feels these believes are in conflict, but really they are not; at least they don't need to be. Perhaps the fairest and most powerful tool we have to impede the concentration of wealth and power is the inheritance tax. I have no problem will the Bill Gates of the world; he earned that money. It is Gates' great-grand children that concerns me.