The Mises Institute monthly, free with membership
September 1995
Volume 13, Number 9
Left-liberals hate the idea, but the prosperity of everyone in
a market economy depends in good
part on the rich. The capital they have earned and saved
generates investments and creates jobs.
Their savings keep interest rates low. Their actions are
philanthropic in every sense. In their
professions, they help everyone prosper. In their charity, they
help the poor, and allow the arts
and education to thrive.
So, naturally, the rich suffer disproportionately in a time
dominated by the statecraft of envy.
They are vilified by the media and taxed to death by government
at all levels. Some have even
left the country. Last year, about 1,000 even gave up their
citizenship rather than have their
earnings further looted by a grasping federal government.
In the last year, we've lost Harding Lawrence, past chairman
of Braniff International, and his wife
Mary, the founder of the innovative advertising firm of Wells,
Rich, and Greene. New York
violinist Yehudi Menuhin and former Heinz executive Joseph
Bogdanovoich have had it too.
We used to shake a finger at foreign countries like Britain
that taxed the successful so severely
that they went into exile. Now the U.S. is doing it, and causing
a capital drain and a brain drain
too.
I run across people all the time who say: That's it, I'm
leaving. And some do. They are making
grave sacrifices: pulling up their roots, leaving their extended
families, forfeiting what's left of
the greatness of American freedom and culture. No one makes the
decision casually.
But for many people of large means, the costs of sticking
around are too high. Taxes at all levels,
on all kinds of income, are too high.
Neither political party has gotten the message. The
Republicans want to tax these victims of
fiscal expropriation another ten years after they've
given up their citizenship and left the U.S. But
that implies that the citizen is an indentured servant of the
state, and the expatriate a mere
fugitive slave to the tax police.
If the Republican plan is horrible, the Democratic plan is
downright tyrannical. The Clinton
administration proposed to confiscate the assets--with a special
expatriate tax--of anyone moving
from our high-tax country to a lower-tax one. The New York
Times feigned astonishment that
such a reasonable tax hasn't passed yet.
Neither party considers how embarrassing it is for the land of
the free to develop an emigration
problem. Everyone used to want to come here, to escape the
tyranny of the old world. Now we're
becoming the old world to the new world of North Asia, Eastern
Europe, Latin America, and
even Britain, not to speak of various tax-friendly islands
scattered about.
While our immigration and welfare laws have subsidized what
the Statue of Liberty's poem calls
"wretched refuse," our tax law has run our best citizens out of
the country. Immigrants are lured
by the lavish welfare state, while emigrants are repulsed by the
confiscatory taxes necessary to
fund it. The fiscal candle is burning at both ends.
If the rich--who also tend to be the smart--want to go, we
should try to keep them through
incentives. If they still insist, a free country would let them
go in peace. To confiscate the assets
of expatriates is not only immoral, it is beneath the dignity of
a free people. But nothing is
beneath the dignity of the current government.
With less onerous tax laws, we could not only prevent the
trend towards emigration from the
U.S., we could attract well-to-do families and entrepreneurs from
other countries. Who can argue
against old-fashioned capitalist aristocrats?
One way to keep the rich and the smart, and attract even more,
is to repeal federal taxes on
inheritances and bequests. This grave-robbing tax has already
destroyed too many good families
and businesses.
The inheritance tax hits the rich the hardest. But nowadays it
can even destroy middle-class folks
whose families have accumulated property in businesses, farms, or
ranches that have to be sold to
pay the tax. The federal inheritance tax is the enemy of these
people, and the enemy of every man
who thinks ahead to the welfare of his children and his
children's children.
As Murray N. Rothbard long ago showed, everyone should be
exempt from this most socially
damaging of taxes, to stop the long, bloody breaking up of family
fortunes for the basest of
egalitarian reasons.
The inheritance tax was instituted in the Progressive Era in a
fit of envy and socialism, to destroy
an old, private elite and replace it with a new, state-connected
one. The tax went up until the
Reagan administration, which did not cut it nearly enough.
The wealth lost to the inheritance tax has been incalculable.
It will raise $14 billion this year, but
this is "high-powered" capital, taken from the hands of people
who know how to use and invest it
properly. Who but a Marxist could argue that it should be spent
by Bill Clinton and Newt
Gingrich, instead of the families that have worked hard and
prepared for the future?
Democrats and Republicans should stop trying to pick the
pockets of people who have had
enough of big government. Likewise, they should scrap the
inheritance tax. That would allow
people to plan for the future. Savings would not just be for
retirement, but for grandchildren's
retirement, and for educational organizations and other charities
whose work should be carried
on into the future.
The mark of civilization is the desire to think and act with
an eye toward the very-long term. The
tendency of big government is to discourage us from this, for its
own gain. If D.C. had its way,
the only rich people would feed from the Beltway trough, and
exercise unchallenged power with
their ill-gotten gains.
We should, as a blow against this monstrous idea, repeal the
inheritance tax, and begin to restore
a great American tradition: free-enterprise dynasties with deep
roots and enough wealth to
challenge our masters in Washington, D.C.
-------------------------------------------
Llewellyn H. Rockwell, Jr. is president and founder of the Ludwig von Mises Institute
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