Sunday, April 17, 2005

Taxation for Taxation's Sake

"Jane Galt" of Asymmetrical Information proposes an alternative to the estate tax:
Why don't we just get rid of the estate tax entirely, and set the basis on anything one inherits to $0? That way, if you sell whatever it is you inherited, you have to pay 20 percent or so of its value to the taxman, while if you just use it (i.e. a family small business) you pay no inheritance tax.
To which I say: What's the purpose of the tax? To penalize those who choose to work hard and invest prudently in order to leave something to their children? "Counterproductive" is the mildest epithet that comes to mind.

But "Jane" seems bent on proving that she's "not against taxing people; [but] against the special, complicated, economic-value-destroying structure of the estate tax." So, she'd rather have an economic-value-destroying capital-gains tax. Same thing.