The Immoral Estate Tax

The estate or death tax is simply immoral.  When an individual has spent a lifetime building wealth, he or she should be able to give that wealth in whole to whomever they wish.  It is particularly obnoxious that some people would stand between the dead and their own families or other loved ones.  The building of wealth is often motivated in good part by a desire to leave a significant estate to one's family in order to provide them with security.  Of course the Progressive Socialists Elitists do not want anyone to be provided with security unless they choose to have the government provide it to some select group among whom the family members may or may not be numbered.  The Elitist, who fancies himself god-like, thrives on making these choices and on having the chosen dependent upon his goodwill.

The Progressive Socialist Elitist commonly claims that the estate tax in not levied on the individual who died, but on the heirs.  Barney Frank just recently made such an often quoted claim:

Rich people should have a large chunk of their remaining estate confiscated by the government when they die because their heirs have done nothing to "earn" it themselves.

Strangely enough, the tax cut, to be 35% in 2011 and 2012, is made before and not after the money or property is put in the hands of the heirs.  The tax is made on the transfer of the estate, which really means before the transfer of the estate.  Thus it is more correct to say it is made on the dead than on the heirs.  Either way, this tax is made on those who generally did not choose to engage in an estate transfer, the dead usually not choosing to die and the heirs generally wishing their parent or other loved relation might have lived longer.

Unfortunately, the re-imposition of the death tax on 1 January 2011 for estates of $5 million or more has put dying people in the dilemma of choosing to die before then.  It is highly immoral that the federal government is forcing people to make such a choice.  Studies have shown that people do make the choice to die earlier in such cases.  Imagine yourself dying, but fighting to hang on to spend a last few days or weeks to say goodbye to those you love and allowing them to say goodbye to you and having to make this choice to cut off that incredibly important process.  You may have family members thousands of miles away who would wish to come to your side and spend a few last hours with you remembering the good times you have shared.  Imagine how important it is to hear one last time that you were a great father or mother and that your children will miss you greatly.  On the other hand, if you just stop fighting through the pain of dying, the business you spent a lifetime building may survive and your the employees you care about and trusted will continue to have jobs.  Maybe one or more to those who will continue to have jobs will be your children.  No one should ever be forced by a callous government run by Progressive Socialist Elitists to make such choices.

The Barney Frank claim begs several questions.  For one, it is simply assumed that the heirs did nothing to earn the estate.  Perhaps the children gave up many hours of time with their parent as the parent worked hard to accumulate the wealth.  Despite this, the children may have encouraged or given strength to the parent with their love to be so dedicated to his work and wealth-building.  In such cases, it is also often the case that the parent loved the work he or she did and the child understood that.  If, as is often the case, the wealth was accumulated from a business owned by the parent, the children may well have worked in the business as children and may still be working in the business as adults.  As adults working in the business, they may be the managerial succession plan of the business.

Yanking 35% of the business away from them at the difficult moment of transition may kill the business, causing much human grief as employees lose their jobs and as customers who have come to depend upon the business lose that relationship.  These are losses to which the power-grubbing likes of Barney Frank are blind and insensitive.  It may also be the case that the business owner had been retired for years and the business was in fact being run by his children for many years.  His children may already have greatly enhanced the value of the business.  One very important value enhancer is that a business gains value simply by having good managers it can count on for years to come, including tough recession years such as those of the Great Socialist Recession.  Family members are often just such valuable managers.  It cannot be correctly assumed that the children will not provide an even better manager and wealth creator than the family founder.  Or, the founder may have found the formula for success in a business after years of trial and error and passed it on to the children who will have much more time to use that formula, with such modifications as they will have to introduce themselves, to further build the business.  Destroy the business with taxation and the formula may also be destroyed.

Becoming an entrepreneur is a very difficult process.  The successful entrepreneur may have had, and probably did have, a long struggle to learn how to be successful.  One of the difficulties in becoming successful is the very fact that we already soak high income earners.  The top 1% of high income earners paid 38.02% of income taxes in 2008.  The top 5% of income earners paid 58.72% of all income taxes.  The successful entrepreneurial wealth-builder is just the person whose wealth will be again outrageously taxed at 35% on his death, with the frequent collapse of his business with all of his highly trained employees.  Such organizations are a wonder and should be highly valued in our society.  They represent incredible numbers of hours of hard prior work and difficult decisions, which are rarely appreciated at all by the all-knowing Progressive Socialist Elitist.  The founder or the heirs of the founder have built and maintained this organization.  In either case, its destruction or the act of harming it does harm to our society.  It has to be remembered that society generally is more benefited by the growth of the private sector than by the growth of government.  We must maintain rational priorities, despite Barney Frank's desire for us to irrationally further continue the transfer of private sector wealth to the government.

Of course there are cases we all know about in which the children are undeserving wastrels.  This is not really relevant, since it is the parent who built the wealth who has the right to decide where that wealth will go.  It is not our decision to make.  Neither is it the decision of government to make.  WE know the 35% cut the government will take will be spent foolishly and unconstitutionally for the most part.  In fact about 75% will be spent unconstitutionally, making the proper government spending out of the 35% tax a mere (1 - 0.75) (35%) = 8.75%.  This is a wastrel record which most wastrel children cannot match.  Their spending, while unwise, may easily be less unwise than that of the government.  Besides, the wasted part of the government spending very commonly goes to the undeserving poor or to the corrupt parasites of big business, labor unions, and other special interest groups, such as trial lawyers and public employees, who take advantage of the general taxpayer to live large.  In these days in which half the voters pay almost no taxes and the high income earners pay an outrageous fraction of all taxes, the wealth accumulator in many cases spent a lifetime supporting wastrels with his tax payments and upon dying is to once again forced to support those same wastrels with another 35% of his wealth.  You can hardly get more immoral than to demand that.

The Death Tax is highly immoral because it is a very discriminatory tax.  It strikes a very hard blow against businesses which are capital intensive.  Farming, for instance, is very capital intensive, since farmland has a very high value in the aggregate when enough acreage is held to make a farm profitable and a farmhouse and barn must be a part of the capital investment package as well.  A tractor and truck and many farm implements are other capital investments needed in our high-productivity farming environment.  The plight of farms due to the death tax has been often discussed and yet this important issue is of no concern to the Progressive Socialist Elitists such as Barney Frank.  There are many other American businesses which are also capital intensive.  In fact, for Americans to maintain their high standard of living in a global economy of intense competition, it is critical that many businesses achieve a very high labor productivity by being very well-equipped and by having other appropriate capital investment.  But, the death tax is a tax aimed at the destruction of exactly these competitive types of business with high capital investment because they also have high asset value upon the death of an owner.

Our all-knowing Progressive Socialist Elitists have long been dead-set on damaging the private sector, particularly our productive businesses, with completely stupid policies such as:

• The Death Tax to destroy businesses with high capital investment.
• The highest corporate tax in the world, designed to cause many U.S. corporations to build more facilities abroad and keep more of the profits of those facilities abroad, while decreasing their ability to compete in world markets from production in facilities in the U.S.
• High personal income taxes on those with relatively high incomes which hurt the accumulation of cash to be re-invested in many small businesses, thereby decreasing their growth rates and the numbers of employees they have.  Of course, high marginal tax rates at moderate to high incomes also decrease the incentive of productive people to work hard and produce as much wealth and as many jobs as they otherwise would.
• High company personal tax rates by counties and states which hurt capital intensive and therefore asset-intensive businesses.
• High power costs owing to wrongheaded supports for expensive ethanol fuel, electric wind generation and solar power subsidies and mandates, and restrictions on oil and natural gas production.  The electric power supply dependability has already been harmed and will suffer much more as these policies are expanded.
• Some pollution controls have exceeded rational cost benefit ratios.  Those on carbon dioxide are clearly such a case since carbon dioxide does not cause the global warming attributed to it by some all-knowing Progressive Socialist Elitists.  Despite this, great expense is already incurred in the name of CO2 reductions and the expenses are to ramped up drastically if the Obama EPA has its way in raping the U.S. economy.
• Many safety controls and regulations are expenses on business with little to no benefit.  Food inspection, drug regulations, FCC controls on broadcast and now Internet information and entertainment, anti-trust, railroad regulations, the first-class postage monopoly, and many more costs have been imposed on businesses and individuals more for government control and power and to protect big industries selectively while punishing other industries than makes rational sense.  All such schemes were advanced by Progressive Socialist Elitists.
• Tariffs and many irrational trade prohibitions still restrict international trade which is only carried out when two parties are benefited.  These restrictions are harmful.
• The minimum wage law creates higher unemployment and keeps many under-educated young people from receiving necessary on-the-job training and a start to their careers.
• Government favoritism toward unions makes labor too expensive in some industries, suppressing the competitiveness of those industries and pulling down other industries dependent upon those industries.
• Restrictions on the freedom of information exchange harm the economy, as does the introduction of government propaganda on economic issues critical of Capitalism through our government-run education system and by the Progressive Socialist Elitist media.
• Subsidies and mandates favoring some industries distort our economy and greatly harm the efficient utilization of capital and brainpower.
• Policies by the government favoring some races and women over men create an impediment to the efficient use of human brainpower.
• The huge transfer of wealth from the private sector to governments for unconstitutional purposes moves that wealth generally from production to non-productive uses.

The September Jobs Horror Story - As Dismal as Dismal August

In September, 204,000 fewer people were employed than in August.  In August, 215,000 fewer people were employed than in July 2010.  Meanwhile, the working age population has been growing.  The September working age population grew by 223,000 people compared to August, at least 60% of whom want jobs.  Yet the usually stated seasonally adjusted unemployment rate remained about the same as it has been for several months.  This is because the number of people the government thinks want work shrank by 619,000 people in September compared to August.  In August the number of people supposed wanting work shrank by 378,000 compared to the number looking for work in July.  As always in a long recession or depression, the shrinking numbers of people known to be looking for work do not mean that more people are not looking for work or wanting work which is hopelessly unavailable.  Obama's promised change has brought an end to the hope for employment.  Many people, especially many of the young people who are coming into the working age now or recently, face horrible odds in finding a job.  They should be attributing this to Obama's transformation of America.  His many anti-business attitudes have certainly had destructive consequences.

The table below presents the jobs numbers taken from the Bureau of Labor Statistics unemployment report for September 2010.  The important ones are that the working age population is growing and so many new jobs need to be created for the majority of that increased number who want a job.  The next number of great importance is the number of people employed.  That needs to increase greatly simply to keep up with the population growth.  When it is falling, that is a disaster.  As noted above, it fell badly in both August and September.  The so-called unemployment percentage is not very meaningful in a long recession.  What is meaningful is the calculation of the number of jobs needed so that as large a percentage of the working age population has jobs as had jobs when the economy was in much better shape, such as in January 2000 when 67.49% of the work age population had jobs or were actively looking for them.  The unemployment rate then was only 4.04%, which was a figure with some meaning in those circumstances.  Of course some of the unemployed then were actually transitioning from one job or career to another and were anything but the long-term unemployed who dominate today's Obama World.

During this recession, the number of missing jobs grew until it reached a maximum number of 23,108,000 jobs in January 2010.  The number of missing jobs then started to decrease and reached a minimum in July of 20,418,000 jobs.  Since then, the number of missing jobs has grown to 21,129,000!  The % Missing Jobs number is less important because that has a similarity to the usual unemployment number: it depends upon the number employed plus the number actively known to be looking for work.  It is of some significance however that that number is considerably higher than the usual unemployment number.

Here are a few interesting employment changes from August to September:

• The number of employed men fell by 633,000.
• The number of employed women increased by 461,000.
• The number of white Americans employed fell by 41,000.
• The number of black Americans employed fell by 161,000.
• The number of Hispanic Americans employed grew by 93,000.
• The number of full-time employed Americans fell by 1,123,000!
• The number of part-time employed Americans increased by 919,000.

It is clear that the changes were very unfavorable to full-time employment, to men, and to black Americans.  They were relatively favorable for women and for Hispanic Americans, though it is likely many of their gains were for the increased number of part-time jobs, rather than in full-time jobs.

This is the last jobs/unemployment report before the election.  Obama's, Pelosi's, and Reid's economic policies and anti-business policies have certainly had a transformative impact on employment.  The impact of ObamaCare on business costs has begun.  The cost of doing financial transactions due to the Dodd-Frank legislation is already going up.  We still wait for news on what taxes will be next year, which is already almost immediately upon us.  Will personal income tax rates go up, will capital gains taxes go up, and will the death tax be collected again as a mechanism to destroy businesses?  We know that the EPA wants to put draconian requirements and costs on using energy that generates CO2, but how expensive will that be in the near future and then in the longer term?  Will the Obama administration ever allow drilling for oil and gas again?  There are many, many business uncertainties and hurdles that the Democrat presidency and Congress have created.  The current dismal jobs situation is the very predictable result.

I will point out explicitly that men and black Americans should be especially eager to see the present Democrat tyranny replaced and punished in the up-coming election.  Most white men will do just that.  Someday, one cannot help but believe that black Americans will catch on to the fact that the Democrats are poison to them and understand that the free market is their only real friend.  Meanwhile, Obama continues to tell us that transferring wealth from the private sector to the public, government sector will somehow create more jobs.  How could he be more wrongheaded on this critical issue?  We are now in a situation in which local and state governments are letting their employees go because the private sector cannot supply the taxes it could in better times, before business fell prey to the Democrat super-majority in Congress and to Obama.

Obama's Job Creation Summit

This is really a funny event.  Obama has gathered together some executives from large companies, government Labor and Commerce Department people, and his ever popular labor union leaders for a jobs creation conference.  After taxing small business owners to death and wanting to tax them still more beyond the grave, after threatening everyone with energy restrictions under the ridiculous claim that CO2 is a pollutant causing catastrophic man-made global warming, after telling businessmen in industry after industry that he has a Marxist hatred for them, after threatening to saddle companies with new health care expenses, after a Stimulus Package that creates no private sector jobs, after threatening business contracts and property, and after making all investment decisions a roll of the dice, Obama is having a job creation conference.  Is he admitting finally that he who sits at the feet of every Marxist professor he can find in college has no idea how the economy works?

Indeed, he does not.  Including labor union leaders in such a meeting flies in the face of its purpose: job creation.  Labor union leaders are experts in one thing related to jobs: killing them.  This is why private sector employees have been avoiding labor unions now for decades.  They have come to understand this.  This is also why the labor union bosses so badly need card check.  Without intimidation, they cannot force private sector employees to join the unions.

The executives of large businesses are not really interested in spurring job creation either.  The large businesses do not hire many people.  It is small businesses that hire most people.  So, if a large business executive were to spur more jobs in the economy in general, he is doing more to grow his competition, the lean and mean small companies who are always trying to make inroads in his product and service areas.  The big businessman usually fears small business.  The last thing he wants to do is to help them grow.

With 15.7 million Americans unemployed, this jobs summit should have an easy job creating new jobs.  There are plenty of sufficiently skilled and interested potential employees available for hire.  All we need is for large numbers of small business owners to gain the means and the confidence to hire them.  Within a framework of Marxist theory, there is no way to motivate the small businessmen to hire.  No, it would require Capitalist theory to understand what government actions and inactions are needed to spur job creation.  The answers are tried and true.  Most small businessmen can tell you what is needed.  They just need these very simple encouragements:

• No new payroll taxes.
• No threats to take down their businesses when they die with a death tax.
• Lower individual income taxes for higher income brackets.  Finally come to understand that the net government revenues increase with lower upper bracket income tax rates than those we presently have, while encouraging growth of the economy.  The onlyreason for higher rates is to punish the rich.
• Remove the minimum wage laws or at least lower the minimum wage.
• Stop increasing unemployment insurance rates.
• Control Workmen's Compensation Insurance costs with tort reform.
• Do not raise the cost of health insurance as ObamaCare will certainly do.
• Do not increase energy costs and lower energy reliability as carbon cap and trade or the EPA's plan to declare CO2 a pollutant will do.
• Do not threaten businesses with union takeovers as card check will do.
• Cut back on government spending so investment capital is available for the private sector.
• Lower corporate income taxes, so American companies can compete with companies abroad, almost all of which now have lower taxes than do American corporations.
• Reduce barriers to trade.  Simplify both import and export laws and regulations.
• Understand that Medicare and Social Security will both be turning in their IOUs in just a very few years and that increasing payroll taxes on them at that time will kill many jobs.
• Reduce the burdens of government regulations, instead of constantly increasing them.
• End subsidies that distort the markets into inefficient activities.
• Allow the drilling of oil and gas fields in the US and its offshore waters.
• Sell off much of the federal lands which are not being used productively, so that private owners can use them productively.  Use the income to reduce government tax rates.
  
• Encourage the states to stop business discouraging activities, such as those common in California, New York, Michigan, and Ohio to name a few.

OK, so if we saw Obama and the Democrat Congress doing these things, rather than the opposite in every case, we small businessmen would be hiring people instead of firing them.  As long as Obama and his cadres of comrades refuse to recognize these basic factors in the economy, there is simply no justification for companies to hire.  It is all very simple, if you are not a childish, Marxist blockhead.