Is Sarah Palin Right about Taxing Polluters? A Thought Experiment

I think it’s time to cut Sarah Palin a little slack. After all, not many of us would forsake the bright lights for more winters in Wasilla. Besides, with her opposition to a cap-and-trade policy to slow climate change, the soon-to-be ex-governor of Alaska—her last day in office is Sunday—has a point. Europe has tried this approach, and it was a bust. And does anyone really think it wise to entrust the fate of Earth’s atmosphere to another Wall Street circus of kinky new “investment vehicles”? (That’s the “trade” part of cap-and-trade.)

True, these aren’t Palin’s reasons. She opposes cap-and-trade because she thinks it would work too well, not because it wouldn’t work at all. But that’s a minor detail. Let’s take her advice one step further: Put cap-and-trade aside—and consider another way to curb carbon emissions. The Alaska way.


Anna Nicole and the Estate Tax

Our friends in the Yesterday Forever lobby continue to spin the estate tax as a “death tax”, as though the departed fill out tax returns from their graves, and as though a death tax – even if it were one — would be worse than the alternatives,which are life taxes. In truth of course, the estate tax is exactly what the name says – a tax on the estates that the wealthiest people pass along to their heirs. The departed don’t bear the tax; the heirs do.  Which means it’s really a tax on trust fund babies, as opposed to people who work for a living.

If this strikes you as a bad idea, then you might consider the case of Anna Nicole Smith.  Ms. Smith, who usually is described as a “former Playboy Playmate,”  entered celebrityhood for a surgically-enhanced physiognomy, a marriage to an oil-rich octogenarian, and a proclivity – it was not quite a talent – for garish self-presentation.  She died last week in her hotel room in Florida under circumstances that are still under investigation.  It does not seem likely that the estate tax did her in, the Yesterday Forever lobby notwithstanding.  It is conceivable however that a higher tax could have saved her.


How to Fix Almost Anything

If a problem can be fixed, there’s a way practically to guarantee that it gets the attention it needs.  Just make sure that wealthy and important people have to suffer from it too. Junk faxes became an issue in Washington because Congressional fax machines were loaded with them. Magazine editors in New York became interested in ocean dumping when medical wastes and the like started showing up on their beaches in the Hamptons.

To put this another way, when big shots can glide through life in gilded cocoons, it breaks the social feedback loop.  Those in a position to do something about a problem do not feel an urgency to do so.  This, and not class envy, is the true reason for concern about the wealth gap in America; and is one reason why maintaining an estate tax is so important.


The Estate Tax and the Nature of Wealth

When I read last week that the U.S. House of Representatives had voted to eliminate most of the federal estate tax (75% of it to be exact), I was at a conference at the former Rockefeller family estate in Pocantico Hills, New York. There is a connection, but it is not the one that many assume.

One reason I never will be a bona fide member of the Left (at least as portrayed on the Wall Street Journal editorial page et. al.) is that I do not feel resentment of the very rich, nor for the most part do I envy them. More often I think how pathetic some people are, to feel compelled to pile up lucre upon lucre long after they have enough hundreds of times over. Donald Trump is in love with being Donald Trump; and I say he can have it.


“Jingoes Should Pay for Jingoism”

A couple of days ago I saw a story about a Texas family that just had lost a second son – second and last — in Iraq. That same day, I read that Republicans in the U.S. Senate have renewed their efforts to repeal the estate tax, or diminish it to practically nothing.  I doubt those Republicans have thought much about the connection between the sacrifices they expect of others and the ones they are not willing to make themselves.  They should.

There was a time, not that long ago, when military service was something the children of the rich did not entirely avoid.  As recently as the 1950s, about half the graduating classes at Harvard and Princeton went on to serve. Bush Sr. left Yale to fly missions in the Second World War.  His son of course used family connections to avoid Vietnam; and the distance between the two defines the distance between the father’s time, and ours.


Subsistence and the Commons

Southern planters faced a major dilemma after the Civil War.  Not only had they lost their slaves; now many former slaves refused to work on the terms the planters offered. … More

Turning Kids into Capitalists

The campaign to abolish the estate tax shows the strange priorities in Washington these days.

Some 20 percent of American children live in poverty. Roughly 40 percent of all families have no financial assets to speak of, which means little for their children’s education. Yet Washington is obsessing over the relative handful of kids who must endure the estate tax. The place has become a virtual Wailing Wall of concern for trust-fund babies.


Every Baby a Trust Fund Baby

Estate taxes are a problem that most Americans would like to have. Not many do. To qualify, one has to have a nice piece of change–at least $1.3 million for a married couple and, taking loopholes into account, more like $5 million. At present fewer than 2 percent of Americans achieve that kind of affluence. Some 40 percent die with no assets at all to leave behind for the kids and grandkids.

That’s the problem today: too little wealth at the bottom and in the middle, and not too much burden on the wealth at the very top. The fortunes of the Rockefellers and Fords have survived through generations, despite the estate tax. New fortunes are arising at a staggering pace even though the estate tax looms. But the wealth of most Americans has not increased in a corresponding manner. On the contrary, for the lower 40 percent, net assets have declined by some 75 percent over the past two decades.


Green Taxes

There’s a different way to think about tax reform that the Washington opinion establishment seems to have missed. Instead of using taxes simply to raise revenues, the government could raise … More

The Green Revenue Path

For all the talk of radical tax reform in Washington, there’s a basic question that the politicians and experts have somehow missed. The leading proposals, whether Democratic or Republican, are justified by what they wouldn’t tax — capital gains, interest income, etc. — not by what they would tax. Purporting to encourage savings and investment, these proposals would all tend to shift the burden of taxation in one way or another from income onto work — that is, onto the folks who, in Sen. Phil Gramm’s apt phrase, “pull the wagon.”

There’s a better way, one that doesn’t penalize the things — work and enterprise — that America needs most. Instead of taxing the creation of wealth, the government ought to tax the depletion of it. The federal government should be moving toward elimination of payroll and income taxes and toward taxation of the use of finite natural resources and the pollution that results. Instead of using taxes simply to raise revenues, the government could raise revenue in a way that helps reduce the need for both government and taxes.