Death and Taxes

Dead Men Sell No Sales

It's easy to forget, when discussing politics with those we disagree, that all sides are looking out for what they think is ultimately the greater good.  Even the right-wing anarcho-capitalist sees that maximal freedom governed only by the free market will ultimately benefit everyone in the economy, though we quickly caricaturize his position as being self serving.   In some cases, it's only the veil of the position which aims to serve the greater good, such as bailing out a failed car company to ensure competition (as opposed to easing entry to the market for new car companies) or restricting emission requirements to keep clean air for all (ignoring that it acts as a barrier to entry for new car companies, including alternative fuel ones).   Either way, both sides of an argument deserve and ear, and even a college try at finding a win-win outcome for both.

Enter: Inheritance

Wealth earned by owners of a company may often go back into something productive, like their current company or a new one.  Such reinvestment of wealth is rather palatable especially if we felt that crony capitalism wasn't in the mix by using such wealth to make laws securing a monopoly.   However, wealth passed down between generations means wealth received by someone who didn't earn it and someone who may not already have entrepreneurial momentum to use a sudden cash influx for something productive.  The emphasis on productive use of money here is because a product necessarily helps its society.  If people didn't want what was produced, the producer would go out of business.  Apple must not pay "it's fair share" of tax to benefit society: it has already done so by easing communication and providing greater use of our cell phones.

Thus, it is inheritance which allows the rich to become evil rich - the heirs to have the power associated with health without the contribution to society often required for wealth.  Such wealth tends to corrupt, so what if inheritance couldn't be passed down?   "It's my money to do as I please!" says the libertarian, and I agree, but dead men have little will, or at least powerless wills.  But let's appease the libertarian side by decreeing that all money one makes during his lifetime is tax free - it is 100% his to do with as he pleases, but once he dies, it becomes communal, or rather, state money.  

The same would go for anything owned by the dead person

• His business would become state business to be sold by shares as investments for others and eventually become publicly owned, or possibly privately owned again if one buys all shares.  
• His home goes on the market to be sold and revenue gone to the state.  The same for any personal items.  
• To be kind to offspring, they will have first chance to buy things from the estate sale in case something was of sentimental value to him. 

This 100% tax rate for dying should, then, appeal to the progressive who wants to keep the evil rich at bay and provide for the state who must take a dollar from one taxpayer before giving it to another. And what taxpayer is happier to pay than a dead one!  Let's appease the progressive a bit further and say that all citizens get a monthly stipend.  This stipend serves as the sum of all welfare offerings, though is offered even to the rich, lest we fail to be fair.  In doing so, we reduce the waste of a middleman.  Everyone has a livable income, even if it requires moving to an area he can afford, and more importantly, all of the offspring for whom a rich may may want to provide by leaving an inheritance will now be taken care of anyways, so he need not worry about the new 100% tax on his death.

In such a world, those who want to live in a fancier place are still able to work and earn above their basic free money income.  Or, if they want to be an artist, they need not starve entirely.  What is prevented are dynasties, but opportunities are still hailed in a free market free of taxes.

Loopholes

Other currencies

Where this breaks down is that not every country would likely use the same tax system, so one could simply convert his dollars to pesos, then die, leaving nothing for uncle Sam to take as its due tax, yet leave instructions for his offspring to retrieve the pesos and sell back for dollars, effectively leaving an inheritance.  

Pre-death gifts

What if the deed to a man's house was quitclaimed to his son with the man on his deathbed?  It wouldn't be an inheritance so much as a gift, and without taxes, how can we insure the gummit gets its "fair share"?    Perhaps there could be a limitation on gifts: with all people already taken care of by the free stipend, there's no need for large giving, so perhaps giving is prohibited - a deed to an expensive item like a house or car can only be sold, not given.

Avoiding market value

The loophole now becomes selling something at less than market value to his offspring.  Perhaps the same man above sells his home to his son for $1.   It wasn't a gift, per se, but it sure smelled like one!  Thus, the no-giving rule would have to have a market-value boundary attached to it.  

Final thoughts

The rules put on giving would need enforcement, as would any similar rules on taking money out of the country to exchange for items of value in another land outside our own.  Such enforcement would have to invade privacy while traveling, as the government would be looking for money which doesn't belong to it (so what business does it have snooping through my luggage?).   Such enforcement would also promote a black market - or some bartered off-grid market - for small items of value which aren't tracked by the government to be handed off to others upon death, bypassing the giving rules.  

Also, money does nobody any good unless it's spent, so even in a system where a son gets all his dad's money, he will eventually spend it, even if on caviar and butlers.   He may even invest it to create a cashflow to ensure a lifetime of caviar and butlers, but the point is, his money is going back into the economy because he is consuming services and goods produced by others.  Others still benefit from the spoiled rich kid in some way.

Lastly, when it comes to caring for our offspring, leaving a legacy, and looking out for the poor, such acts are acts of love (or perhaps ego or vanity, but still human acts nonetheless).  Thus, they should be performed by humans capable of love.  A government is not a human - it cannot perform an act of love.  It is, however, made of humans, and elected by even more humans - all of whom are to love their neighbor as themselves.   While seemingly oversimplified and perhaps insufficient to take care of all in need, the only fully-ethical way to do this is to leave it in the hands of individual humans.