Friday, April 15, 2005

Happy Tax Day!

Happy Tax Day! In light of the occasion, I thought I'd repost something from before, since none of the old posts are available, which raises another question: should I import all of the old posts by hand? Feel free to share your thoughts on whether clicking through to LiveJournal or the old site is too much of a hassle. Here's the (shortened) March 9th post:

Alan Greenspan discussed (here, here, and to a lesser extent here, although that article misses the point, I think) the possibility of a consumption tax in some incarnation. This is mildly interesting to me because if it gets passed anytime soon it could vastly change how much I have to send to Uncle Sam.  In general, and without getting into my personal finances, I would probably be better off under a consumption tax of some kind, although that seems counterintuitive…anyway, I’ll be watching you, Alan.

(End of March 9th post)

While on the subject of taxes, the estate tax, aka the death tax, has been in the news as well, so I thought I'd mention that. While I like the idea of everyone starting off with a level playing field, there is bound to be a disincentive to earn if you think it's all going to get taxed away instead of left to your progeny, and a surprisingly high number of Americans do think that the estate tax will affect them. Whether this is the eternal optimism or misinformation, I don't know.

2 comments:

  1. I read an interesting article by Larry Bartels about people's perceptions of the death tax with the basic thesis that people are stupid, unrealistic about their prospects for becoming millionaires, and incapable of bringing their moral intuitions into line with their policy preferences. It was admittedly very oversimplified. Peter Singer's written a short thing I've read about it, too. I guess it's much more justifiable from an economic perspective...but I'm not too crazy about it. I especially don't like when people try to justify it with moral arguments, saying "these people shouldn't be taxed twice" or claiming their children are being forced into poverty or something.

    And I think moving the posts over here is a hassle that probably outweighs the hassle for other people of clicking over to LiveJournal.

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  2. I'm guessing you're talking about "Unenlightened Self-Interest," which can be found here.

    One Republican argument about the children being forced into poverty cites the number of people who inherit farms and have to liquidate assets to pay this egregious tax...the number of people, however, that actually wind up paying the tax is small, 63,000 in 2004.

    While there is the initial implication that having an estate tax would decrease savings since people don't want it to be taxed away, there is also the logic that it could in fact increase savings because people want to leave, say, $100,000. If there is an estate tax, they have to save $200,000 to do so; without the tax, they only save $100,000 since that's all they have to save to hit their "target." It all depends on people's behavior, which the CBO admits is hard to predict (p. 53, which is also where they present these dueling arguments).

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