Tuesday, January 1, 2008

Death and Taxes

by Captain Capitalist

Taxes are no doubt going to be a key issue in this presidential election once again. The tax cuts put in place after 9/11 are due to expire soon. Some want to make them permanent. Others want to allow them to expire. Which way to go?

The tax cuts in question probably spared the US from falling into a deep recession after the 9/11 attacks. Still, as some have suggested, they would have done better if they had been accompanied by spending restraints. Spending control is a must going forward, but I don't believe the case can be made that the US would have been better off if more money had been put at the government's disposal and less in the hands of the private sector over the past several years.

Yet the same people who point to the deficit as "out of control" want to give the government more money, and even use the deficit as justification! It's like pumping more water into a broken pipeline. How is that productive?

One of the worst tax policies in this country is the estate tax. This is a tax on money and assets that have already been taxed. The amount is irrelevant. Even if they raise the minimum to 100 trillion dollars, there is no justification for taxing it twice just because the producer has passed away. The person who created and/or accumulated the wealth, and paid his or her taxes while doing so, has earned the right to decide where it goes, all of it, when they die. This is a private property issue. Is what's yours really yours, or is it just on loan from your government? It's easy to see why politicians would like to fully reinstate the "death tax". As the baby-boomers age, this county is going to undergo the biggest transfer of wealth in the history of the planet. Politicians are licking their chops and don't want to think about all that capital going from point a to point b without them getting a cut.

We are at a critical point in our economic evolution. We can proceed to new heights as technology, communication and innovation enable more and more individuals to share their ideas, products and services or we can pull the "emergency brake" of higher taxation, bringing about a more sluggish, perhaps even stagnant or backwards economy in the name of "fairness".

Government is supposed to enable a free society, not dominate it. It is there for the protection of individuals, not their enslavement or indentured servitude. Society is a mutual convenience to be voluntarily participated in, not a master to be served. To fund government at levels appropriate to its legitimate functions we've got a long way to go, and it's all downhill.

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