I recently wrote about the unfairness of ‘carried interest’ tax breaks targeted to hedge fund and private equity owners. In fact, I’ve covered the topic before as well.
Some readers became angry about my view of this tax break and took umbrage at my lack of sympathy for ‘job creators’ like hedge fund owners.
Among other complaints, readers wondered why I didn’t write about tax atrocities like the ‘death tax,’ known in other circles as the estate tax.
Inspired by that critique, I will offer my thoughts on other taxes that I pay and tax breaks that I enjoy, both from an objective standpoint – taking into account ‘what’s fair for society’ – and from a subjective standpoint – taking into account my own personal situation and ‘what’s fair to me.’
For this post: The Estate Tax.
Fair to Society
Honestly, estate taxes are my favorite ‘fair to society’ tax. When I am declared ‘Lord Of All Catan’ over this entire country I will quickly and happily raise the estate tax rate and lower the exemption for estate taxation. Estate taxes are fair to society because:
Very few pay this tax, which makes it ‘fair’ in my view
1. They are ‘progressive’ in the sense that they tax the upper levels of wealth and leave less wealthy households unaffected. Half of the estate taxes in this country are paid by the top 0.1% of income earners, and virtually all estate taxes are paid by the top 10% of earners.
2. All taxes distort the efficiency of markets, but estate taxes distort consumption and other economic activity less than other taxes. That minimized distortion makes it more efficient than other taxes.
3. Estate taxes contribute in some (small) way toward ‘churning’ the stratified wealth levels of society, something that is fair in a society that values socio-economic mobility.
