Discussion: Taxation of Wealth and other ramblings

Joe, thanks for the clarifications on the flat tax. It still seems to me that it could be a very fair and simple method of taxation - the debate here seems to be about whether we tax all wealth in addition to (or excluding) income. This seems like a very challenging issue - exactly what wealth do we tax and how do we value it? Who decides the value? If I own land, should the number of trees, water resources, minerals, etc., be accounted for in determining its value? Some, but not all of these factors, may be accounted for in the present market value.

On another note, I am wary about letting the federal government have such access to wealth taxation. They seem to have proven themselves fairly incompetent at managing taxpayer funds. I would be reticent to give them any more. If there were an extensive wealth tax (whether flat, progressive, or whatever) I think that the state, county, or municipality should take precedence. All we need is another trillion dollars for our B2 bombers and missle defense that isn't worth my own ass. Yup, I know, Jefferson vs. Adams all over again. I don't think this debate will ever end (unless Dubya has the ring, of course). By the way, speaking of State vs. Federal rights, I thought you might find the commentary below on Mr. Ashcroft interesting. It's from the latest issue of The Economist.

FYI, I am also in favor of a forfeiture of wealth upon death, although I see no reason for the threshold to be so high. Any reason for $50 million, Barry? Who needs that much money? Another cool idea would be to allow the soon-to-be-dead dude to alot money over the threshold to soon-to-be-dead dude's favorite charities. Is there any such provision in current tax law? At any rate, I propose something like $1 million as the threshold for forfeiture.

In other news, I thought you might be interested in reactions to the Oxfam Fair Trade Report that have been published and are linked on the Oxfam web site. I haven't looked at them yet, but it appears that there are arguments for and against the Oxfam story.
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United States: Steamroller Ashcroft; Lexington
The Economist; London; May 3, 2003;

Volume: 367
Issue: 8322
Start Page: 56
ISSN: 00130613
Full Text:
(Copyright 2003 The Economist Newspaper Ltd. All rights reserved.)

Conservatives beware: an out-of-control attorney-general is trampling on your principles

SO FAR, the debate about John Ashcroft has focused mainly on the war against terrorism. Libertarians moan that the hyperactive attorney-general has hugely expanded the government's power to monitor citizens (by wiretapping their telephones and so on); that he has made it much easier to detain and deport immigrants and foreign visitors, particularly Arabs; and that he has ruthlessly accumulated power over the country's sprawling judicial system in his own hands. Conservatives wearily retort that wars force everybody to rethink the balance between freedom and security. Surely the attorney-general is duty-bound to err on the side of vigilance to thwart another September 11th?

Well, yes. But what if you examine Mr Ashcroft's record in other areas, such as medical marijuana, assisted suicide and the death penalty? You find precisely the same pattern of John-knows-best centralisation. The country's terror-fighter has also become the country's self-appointed moraliser-in-chief. And he is trampling all over two conservative principles he used to espouse: limited government and localism.

Begin with an idea precious to most Republicans: states' rights. Mr Ashcroft has prosecuted "medical marijuana" users in California despite a state initiative legalising the practice. He has tried numerous ploys to challenge Oregon's assisted-suicide law (including encouraging the Drug Enforcement Administration to revoke the licences of participating doctors), thus snubbing both the state, which has passed the law not once but twice, and the Supreme Court, which has explicitly left policymaking in this area to the states. He has repeatedly tried to bully local federal prosecutors into seeking the death penalty, despite a long tradition of local discretion in death-penalty cases.

Mr Ashcroft's new reverence for central government is beginning to seem downright Democratic, if not Gallic. The whole point of the American political system is its sensitivity to local differences. Federalism, as Justice Louis Brandeis put it, means "that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country." It also means that a huge country with a richly diverse population can try lots of different approaches to moral issues. People in rural Nebraska can adopt a different approach to lap-dancing from people in San Francisco; Vermont can demonstrate its uniqueness by favouring both gay marriage and tight controls on internet porn.

"Moral federalism" has deep roots in America. The English Parliament's Act of Toleration (1689) left religious issues almost entirely to local discretion. People with different religious views congregated in different regions--Puritans in Boston, Catholics in Maryland and so on. The Founding Fathers laboured mightily to keep the federal government out of dictating civic virtue. James Madison noted (in Federalist Paper 56) that different groups progress at different speeds. Alexander Hamilton (in Federalist 17) argued that any attempt to impose a centralised morality would be "as troublesome as it would be nugatory". The local administration of justice is "the most powerful, most universal and most attractive source of popular obedience and attachment".

This tradition of moral federalism would seem particularly practical now. The country is still basically split down the middle politically, and this political divide reflects a deeper division about values. When it comes to matters such as God and sex, many of the people who voted for George Bush live in a different moral universe from Al Gore's supporters.

There are clearly some areas where the federal government has to step in to protect individual rights. It was right to use its might to dismantle segregation in the South. Mr Ashcroft has legal grounds to argue that the constitution guarantees individual citizens the right to bear arms. But in general the Justice Department needs to err on the side of caution on issues where reasonable people can disagree. It should recognise that different communities have very different views: large cities, for instance, voted for Mr Gore by a 71% to 26% margin, while small towns and rural areas voted for Mr Bush by 59% to 38%. And it should try, as far as possible, to allow those communities to make decisions for themselves, rather than forcing them to bow the knee to Washington. Agreeing to disagree offers the country the best chance of avoiding an endless culture war in which both sides use the federal government to enforce their views.

Nobody should be more worried about Mr Ashcroft than conservatives. Hasn't it usually been the Democratic Party that has championed big government and Washington-knows-best morality? And hasn't it usually been the Republican Party that has stood for local variety? In the 1990s the Republicans owed many of their biggest successes--from welfare reform to school vouchers--to their enthusiasm for federalism. Mr Bush owes his job partly to the quintessentially federalist Electoral College.

A mistake by any measure

Mr Ashcroft's conversion into a centraliser is both hypocritical and short-sighted. It is hypocritical because Mr Ashcroft was once a leading critic of big government. As attorney-general and then senator for Missouri, he resisted a federal injunction to desegregate St Louis's schools so vigorously that the Southern Partisan, a neo-Confederate magazine, singled him out for praise.

It is short-sighted because, as an evangelical who refrains from smoking, drinking, dancing and looking at nude statues, Mr Ashcroft represents a minority in his own party, let alone the country. He has no chance of winning the culture wars: the forces arrayed against him, from the media to the universities, are too vast. The best he can hope for is a live-and-let-live attitude that gives minority views like his own room to flourish. Mr Ashcroft will come to rue his Faustian bargain with the federal government the next time a Democrat sits in his office.