Taxing Upward Mobility

A recent article in the Christian Scientist Monitor called “'Upward mobility' in real decline, studies charge”reminded me how many Americans equate “democracy” and “capitalism.” These are probably the same Americans who are sure we live in a democracy, whereas, strictly speaking, we live in a Republic, not a democracy.

Personally, I suspect that unfettered capitalism is more likely to lead to an oligarchy than to a democracy. In fact, if recent statistics are to be believed, America is moving away from a mobile society where people rise or fall based on merit to a society where people’s fate is largely determined by their birth status, not merit. One has to ask whether democracy is truly possible in such a society. Certainly, equal opportunity would have to take on a new meaning in such a society.

Some argue that taxes attempt to promote the kind of society that America wants. For instance, taxpayers are allowed to deduct the interest and taxes on their home because lawmakers felt that owning a home was an essential part of the American dream. Recent tax breaks for educational expenses and more recent breaks on savings all attempt to promote positive behavior.

If the purpose of taxes is to promote positive behavior, one has to wonder what kind of behavior the government is trying to promote by getting rid of the inheritance tax.

As far as I can see, repealing the inheritance tax because it is an unjust “death” tax will tend to buttress, not bridge, the divide between the “haves” and “have nots” discussed in the Monitor article.

The inheritance tax was originally seen as a way of insuring that America was not burdened with a permanent aristocracy the way Europe was. Yes, the richest families have found ways to get around most such laws, but at least the laws tried to level the playing field.

Today’s aristocracy is based on inherited wealth rather than on inherited titles, but the end result is not too different. If such wealth is allowed to build without any legal restraints, the divide will continue to widen and true democracy will become less and less viable.

3 thoughts on “Taxing Upward Mobility

  1. Certainly one of the sickest things about the ending of the estate tax is the phoniness of the commercials that the Bush regime has been using to propagandize their decision.

    One of the big arguments the Bush administration has used gainst that tax is one of saving the family farm. The administration has implied that inheritance taxes will cause the family farm to be sold off on the death of the parents.

    There is a problem with this though – well actually there are secveral problems. First, despite repeated requested to farming agencies and organizations to find an example of a family farm being forced to sell out due to these taxes no one has been able to find an actual instance of this. Second, the rancher that is used in the commercial that addresses this “serious” problem is one who apparantly is being subsidized by the government to the tune of around $250,000 per year. Now it seeems to me that given those circunmstances his estate damned well better be taxed, in fact that subsidy should be thought of as akin to a reverse mortgage. Last, but not least, if taxing the estates of ranches/farms is such an imminent and serious problem then it is easier and more just to simply write an exclusion into the current legislation for that industry in order to protect it.

    This is just a blatant attempt by this administration to help their friends pass their wealth on to their families. It goes against the spirit of american industry and personal responsibility and more than any orther thing this administration has done or is proposing to do this will vastly widen the gap between rich and poor. Welcome to the plutocracy.

  2. Loren, I apologize for all the trackbacks. I can’t seem to stop MT from continuing this every time I edit. I’ll have to turn off trackback auto-discovery.

What do you think?