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How should the burden of the inheritance tax be distributed, that is, how should the tax rate be scaled?
This demos issue would require the same kind of display on its
page and response from the voter as the previous two issues, the corporate and
business tax and the personal income tax. The issue would be presented as a line
graph. As with the line graphs discussed in the previous chapters, the vertical
axis would express percentage tax rates. The horizontal axis would express the
value amounts of inherited estates. As before, the voter would color various
portions of the tax rate line green, yellow, and red to indicate where the tax rate
should be increased, kept at the current amount, and decreased. The line could
approach the horizontal forming nearly a flat tax or ascend more steeply forming
a progressive tax.
In this area, the passing of wealth from one person to another
and from one generation to the next, the wealthy have been especially creative
in their endeavor to evade paying taxes. Rather than simple wills executed at
the time of death, every kind of legal maneuver, trust fund, and other creative
entities and methods of slipping wealth from one hand into another without
paying inheritance taxes has been created. The changing of the guard of
accumulated wealth often or usually does not take place in the singular moment
of a death but has advanced into the entire overlapping life spans of the giver
and of the receiver and even far into the years beyond the death of the giver.
Another dimension of complexity is added to the situation by the common sense
understanding that people have a right to feed, clothe, house, educate, and
lavish gifts upon their beloved children and others. Where this process ends and
where begins inheritance tax evasion by lifelong lavish gift giving, legal maneuvers,
tricks is a gray area.
A solution to the many evasions in this area of taxation lies
beyond the scope of this book. Very likely the government tax agencies
involved in the transfer of wealth from generation to generation are already
well versed in the many subtle nuances of family expenses occurred in the
rearing of children, the giving of gifts involving taxation, and in outright
inheritances. The beginning of a solution lies in the complete elimination of
all of the creative legal means for the evasion of inheritance taxes by whatever
names they may be called. It is not that wealth should not be transferred
creatively to protect both the wealth and the receiver and to educate the
receiver, but the wealth should not escape taxation during the transfer.
Whatever the direct or indirect means for the transfer of wealth, the wealth
should be subjected to the inheritance tax rates set by the demos. Given the
honest demos electoral process presented in this book that would result in
elective bodies that demographically resemble and honestly represent the entire
electorate, we could expect an honest review and updating of all laws and rules
having to do with inheritance.
Demos control over inheritance tax rates
would give it control over the net size of inherited estates after taxes.
As discussed in the preceding chapter on the income tax, this is similar to what we do today. The only difference is that instead of the
rich few setting the tax rates for themselves and for everyone else in the nation,
all of us participating together in the demos would set the tax rate on ourselves.
(With the current plutocrats in government claiming to know
the American people’s true hearts and minds on this matter, wouldn’t it be
interesting to see the manner in which a demos electorate really voted
given the chance.)
Given that the demos would have direct control over both the net size of personal income after taxes and of inherited estates after taxes,
it would in effect have control over the distribution of personal wealth in America. This power over the distribution of wealth is not new. In America today the wealthy few already hold this power. What would be new is that for the first time in American
history (and even in world history), “we the people” would hold this power
It should be clearly understood that in removing
control of the distribution of wealth from the hands of the few and placing it
into the hands of the entire electorate, we do not gain control over the amount of any
particular person’s wealth. The electorate’s actions could result in a wider or
narrower distribution of wealth in the nation than do the actions of the elite
few today, but how much wealth any particular person possessed within that
distribution would depend, just as today, on
accident of birth and the person’s talents, ambitions, hard work, and
If the demos elected to treat both areas,
personal income tax and estate inheritance tax, with a flat tax, then the demos
would not affect the distribution of wealth. If the demos consensus resulted in progressive tax
rates, then it would in effect be redistributing wealth.
However, the demos is only one branch of the government. If the other branches
of government handed the tax revenue back to the wealthy again via their
expenditures and disbursements, they could partially or totally nullify the
effect of the demos on the distribution of wealth. But remember, the demos would
also hold the power to elect the president, senators, and representatives. The
demos may or may not treat kindly those who undermine its will in the matter of
the just distribution of wealth. Thus, we have an interesting new system of
checks and balances of power among the branches of government.
Just as with the previous two issues, no
exemptions of any kind for anyone could be allowed in the inheritance tax. Again, people in need would
need to knock on the door of The Glass House, that part of government that
would handle entitlements and handouts.
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Beyond Plutocracy - Direct Democracy for America
© Copyright 2001-2017 Roger D Rothenberger