100% "Death-Tax"   (Read 5117 times)

On the surface, a pretty straight-forward proposal.

The 100% "Death-tax": Equitable Distribution of Wealth

All proceeds from the estates of individuals who have died in a given year are redistributed to all persons obtaining their citizenship* during that same year.

There is no such thing as personal inheritance - wealth is returned to the society as a whole and redistributed to its new members in equal portions as a ‘grubstake’ upon reaching their majority. The current mythology proposes that all will get wealthier from the largess and generosity of a few. This proposal says that the wealthier one gets, the more there will be for all (including their own children and grandchildren).


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* in another proposal I make the suggestion that citizenship become an earned privilege rather than a conferred right. For this purpose, it can just as well be taken to mean "upon reaching voting age."


Some points of departure for discussion:

1. historical: Where did the idea originate that personal inheritance and bequest was to be the sole model for how cultures or societies were to progress and reinvest the product of the past into the future? The economic structure (Socialist, Capitalist, Communist or some variant) does not change this seemingly universal implementation. Whether personal legacy becomes the property of other individuals or of some more abstract entity such as "the state", its distribution still depends entirely on schema devised by the system (which may be more or less equitable; but, are rarely, if ever, equitable).

2. philosophy: Society as a whole, as the structure which actually creates wealth through its schema of transactions, legal conventions and distributions of resources (inclusive of education and knowledge transfer) may be said to be the original and continuing 'creditor' of wealth; and, that wealth only appears to be created by individuals within the society. This is separate from the ideas of marxist/socialist canon which claim such wealth as their own during the period of time (an individual's lifetime) that persons 'borrow from it' for their own applications.  Seen in this way, it would be a natural and non-confiscatory activity for a society to reclaim such wealth upon the death of an individual and to redistribute it equitably back into the society as a whole. That 'society', my proposal suggests, is not every individual nor to the works of the state (which would make such distribution a 'tax'), but to new members upon reaching their majority or adult citizenship. This, it seems to me, makes the bequest an investment in the future which I think befits the proper usage of any legacy. It goes without saying that this distribution would make some allowance for those who were truly dependent on that wealth and needed to be sustained; at least until they can be retrained or otherwise become independent and self-sustaining.

3. anthropological:  at present, I know of no cultures which have dealt with the actual transference of wealth between generations in this fashion. I would be interested if any have, and what the results of such treatment were.  If not, then what I am suggesting would seem, indeed, a species of cultural evolution without precedent.

4. thorny issues remain:  The schemes to circumvent this prescription would, of course, be myriad. People would simply attempt (from some basically 'family-centric' selfish impulse?) to insure that their wealth was transferred to others before their death (as we now do with living-trusts and the like). How could this be dealt with?  Second, if projections of logarithmic increases in life-span are correct, fewer and fewer people will be dying each year and the pot to be distributed would get proportionally smaller.  These and other questions are what I call 'administrative details', though not less important for that.  Still, I think the first step is to examine the main proposition and see if and where it falls apart. Then, one can tackle these and other problems of implementation.

It is interesting the waves I go through when I think about this topic. I read it for the first time quite a few days ago and have come back to read it again on a few occasions. The reason I have not replied with my thoughts before this point is that I have been unable to take up a position for or against the idea; the waves have me swaying backwards and forwards as quickly as I can begin a paragraph of response.

My initial reaction was "Fantastic idea!". This was what I expected it would be having only read this topic's title. I expected my reaction to be this because I am from a family that was not left any, and will most likely not leave any monetary wealth to the next generation. Emotional and sentimental wealth is everywhere but my family has barely had as it is let alone excess to pass on via inheritence. The point I am making is that my initial judgement of the idea was biased by a not-so-well-off entry into adult citizenship.

A bit of extra financial assistance could have made many things - such as education, living arrangements etcetera - easier. At about the time I was thinking how it could have been easier, one of the waves came that made me ask myself "Would it have been easier? Everyone else your age would have had the same advantage. Would you have made the same choices and had you made different ones, would you have been as happy with them?". If everyone gets wealthier (financially this is), no one does. It is a sad fact that wealth is relative, if the average wage is a million dollars then a millionaire is 'Joe' next door.

A point that gets my philosophical gears moving is the benefit that may arrive if such a tax became the norm.

Picture:

"
I am an incredibly successful businessman, I earn and continue to earn more than enough to support myself and my family. I know that the money I have today, will be distributed among the community when I die, it will go towards spreading the opportunities that I had around to all. My money will eventually help the community but why should I wait? I can take this money now and put it towards the community now.
"

Perhaps an absurd monologue but the general idea is that wealth may not be seen as something to sit on and grow; if a death tax will distribute it for you anyway, why not spread it around while it's in your warm living hand?

Again, as I write I still experience the waves sending me both ways on this topic. I would be interested to see your thoughts on how the 'grubstake' could benefit and not fall victim to the inflationary wealth problem that sees everyone increase in wealth by the same factor meaning no change occurs at all.

rakuli,

That's good; i mean the 'waves'. I call them 'giddies' for the giddiness, the feeling of instability, they seem to produce in me when I encounter an idea (or worse, make one up) that is way out-of-the-box from what I am accustomed to thinking about on a particular subject. The feeling used to make me apprehensive. Now, I use it as a barometer of how embedded my own thought was in old paradigms that must be relinquished in order to appreciate a new paradigm or idea. It often tells me something about where I was coming from, and I liken the feeling to having a foot in both camps and swinging back and forth between them. The old idea is ingrained and doesn't want to let go - its a conservative impulse and has its own value for that reason. A new paradigm can only set up that reaction when it is, for some reason, truly compelling - then it competes fairly, on its merits, with the old paradigms.

Turning to your question, I think the matter does raise questions about the nature of 'relative wealth'. My instinct tells me that the resolution lies in the fact of separating out something that isn't much touched upon. This is how I put it in another paper:

"A succinct rendering of my complex thoughts about a just and humane economics has always alluded me. I got it down to my 'National Service' program, but could not put my finger on where, in our present view, things got torqued. Then, it finally dawned on me:

Marx identified the problem nexus as the question: "Who owns the means of production?"

That still has importance with regards to things like preventing the damage corporate structures do, through their manipulations and through their product offerings, pricing, toxicity, pollution and the like. But, all that is irrelevant when it comes to labor, which was what Marx was talking about and why capitalism is so fiercely opposed to his program. The question for labor is not "Who owns the means of production"; but, rather,

"Who owns the means of survival?"

Even with the farsightedness to provide an answer such as, 'the worker owns the means of survival by virtue of his ability to work', the hidden agenda of conventional economics remains, "Yes, but it is only through attaching that ability to the means of production that his survival can be realized." From that viewpoint, the argument becomes a self-referencing tautology and we're back to the question "Who owns the means of production?". That is exactly the Gordion Knot which my proposal [ie. 'National Service'] unties. It removes the means of survival, and only that, from dominance by the means of production (en toto), whether it be a communist or capitalist structure that claims ownership.

Though my proposal achieves the required separation between the means of survival and the means of production, until now I never saw that clearly and did not understand exactly how the trick was accomplished. Only that I had found one way of accomplishing it. Now I can see why my solution, though it may not be the most elegant, is a stunning achievement. I don't think the problem has ever really been understood in these terms. - r"

In my 'National Service' proposal, the basic 'survival elements' are listed as modest provision of food, shelter, health care, transportation, information, and education. These are the basic stuffs of life, without out which any other test of wealth must collapse - the person who suffers from deprivation in one of these areas cannot compete at all.  The 'everyone else is at the same place as me' notion simply fails to be applicable to those who suffer starvation, exposure, ignorance, isolation or disease. So, the first grade on the platform of relative wealth is whether those being compared stand on a footing from which they can survive and participate in any discussion of wealth beyond those basics.

After that, the 'grubstake' idea does not imply any statement about how those who share an 'equal start' in life with everyone else will use their capital. Will they squander it, invest it, save it? Will they increase its value or diminish it over time?  Will they try their best and still fail?  Will small turns of fortune make large differences?  No one can say.  So, while the initial state under the 100% formula does say that everyone begins with an equal dip into the largess of the society into which they were born, nothing is changed about those who will find that their grubstake makes them relatively wealthy, and those that find it did them little good. It only says, no one gets a whopping advantage at the expense of everyone else - that's what the present system of inheritance says.  It says, if, by accident of birth, you are born into circumstances of wealth (or poverty) you will start out with advantages (or disadvantages) which had nothing to do with you at all. 

The second part of your question is a little out of my competence. I'm not really certain about the effects on inflation and such matters. It really needs a bonafide economist to sort that out.  My first thought is that the proposal does not create any new wealth or credit, it merely redistributes it from one generation to the next.  I would guess that part of the answer lies in whether the 'market' will simply try to advantage itself (as it often does) by attempting get whatever it can from the consumer. This is a clear aberration of the principle of 'supply and demand' and one that is rampant in unconstrained economies.  Still, it happens. 

However, since wealth is simply parceled out in smaller packets to a much larger number of consumers, I think the real shifts would be in the valuation of 'luxury goods' which demand market-price based on large excesses of disposable-income among a very few. Big-ticket luxury items would probably suffer the greatest hit and be forced to adjust downward, or disappear altogether. I think the proposal does allow for a much clearer picture of 'real-world' wealth, and that is a healthy thing, I would think.  It means that top-end goods which can no longer be supported were things that world could not really afford anyway -- they were goods that were bought at the expense of other people's necessities.  Would ordinary goods, foodstuffs, housing and the like be priced upwards as well, to capture as much of the largess from ordinary grubstake recipients as possible?  If this idea is coupled with the 'National Service' proposal, the answer is a definite no. The market will no longer be able to threaten consumers' survival and price-gouge them for necessities. For the rest of it, I simply don't know. But, at least the consumer will have the option not to buy if they think the price too dear, and that is the way a real 'free market' should work.

Finally, the 100% proposal only touches a small number of people in any given year (those who are born/become adults in any given year, and those who die in a given year. What %of of the population or its wealth is that?  I don't know the answer, off-hand, but I imagine its small enough that such ill effects can be absorbed and leavened by the economic activity of the rest of population.   


Again, I'm not an economist, so I don't have any real answers. I do wish there was one on board here. (is there one?)  - r.