Maggie's Farm

Buffett either regards as an economic-growth dead-zone the small biz & farmer folks who will die and thus owe IRS half of a few million taxable but illiquid bucks, or, as others have pointed out, he's cynically 'talking his book' as an insurance man whose stock-in-trade is protection against an estate's sudden need for liquidity to pay IRS.

Either way he's wrong. Sweet smile and affable manner is beside the point.

''
What is truly empty is the value that counsels A to live off of the wealth given to him by B and which B confiscated from C. And what is truly mindless is the notion that society progresses as greater numbers of us live as A's or as B's, and all the while thinking of C's as being nothing more than contemptible cows to be milked for the "general good."

http://instapundit.com/archives2/011841.php

Well, that's certainly the story line, alright.

But the question is, what is the real, actual effect, on boat-floating, of a 50%-range death tax ?

Research it, if you can tolerate the aggravation.

The NBA would have a lot more 6' players if it limited player height to 6'6".

NASCAR would have fewer wrecks if it limited speeds to 100 mph.

Nobody can fail where nobody can succeed.

It's a bad tax on principle, and a worse one when you net the 24bbl it harvests against what Treasury would harvest if it didn't confiscate half of the most productive 2% of the population's assets every generation.

Imagine the same principle applied to the NBA. Imagine what a 17 year old 6'5'' star might do to keep from growing past the 6'6'' limit. Well that's what a lot of small enterprises do, to keep from being forced to support a principle they detest on the merits.

apply ratio analysis--cost/benefit and risk/reward--to a family business which could expand (adding new jobs, creating new taxable income, lowering the cost-of-goods-sold, and allowing lower prices to end users) but chooses not to since the owner is 60 and the ratios, now having to include the death tax in the cost and risk numerators, no longer ''rationalize'' as they did for the previous expansion, or milestone, which was achieved back when the old boy was only 50 or so, say.

the Stalinists infecting our congress either do not understand the effect of dynamism at the margins, or they do understand it all too well.

''What shall I do?'' you ax. there seems to be two ways to suppress violent urges: (1) place thyself under the care of thine better angels, or (2) break out in boils and carbuncles and relieve the pressure thru voluminous pustulation.

Habu, that's why analogies work so well. Everybody knows what would happen to the purity of sports competition if it was regulated to keep the excellent from hurting the ordinary's feeling.

Leag, ok, Barry Bonds, the guy had better years in his late 30s than he did in his 'ordinary' prime. Is he 'spose to be the capitalism analogy, that low marginal taxation is 'extraordinary'--a steroid for the already talented? You may have a point there but I'd need a few more of them IQ points to ID it.

I'll concede the point that high marginal taxation does create a nice political appearance of "fairer" boat-floating.

But, you know, it's just an illusion, the facts indicate the opposite is the "truth" of the matter. like I suggested, do some research.

IF the paltry 24 bbl that goes into the several-trillion Leviathan maw was reserved as venture capital in a program that wouldn't immediately get gamed to to the nth corruption, and

IF the 24 bbl wasn't already in the hands of proven entrepreneurs and thus already perfectly placed to maximize economic growth, productivity, and technical innovation, and

IF removing it from said individuals in order to fritter it away in the gov'ts "fifty-cents of services for a dollar" make-work jobs program scheme, and

IF there was no issues of property, takings, or functional bills of attainder,

Then I'd agree with you a little bit more, probably.

alittle worried, habu, but the currencies are (here we go again) ratios, against each other, and all we control is the numerator.

The other mature currencies are for a variety of reasons having to do with forex surpluses, central bank rates higher than ours, sovereign economic growth higher than ours, no real-estate price devaluation in process, and most importantly, no political movement to the left (the rest of the developed economies are moving right), are controlling their own denominators.

But we're at or near a bottom, the markets seem to've been saying last week. Gold is way off it's recent high, and there's some other stuff, too. So, short/mid term we're not gonna crash the Dollar.

Trading partners diversifying into a ''basket'' of forex was inevitable--the USA is not the world's sole banker anymore, we've succeeded in spreading the wealth. Have faith and hold fast. Buy a little gold, tho, can't hurt. The whole world is gonna reflate a bit over the next few years and we may well see 1000 on the gold before we see 500 again.

Meanwhile, Treasury's bond auctions are strongly subsribed, ''indirect' (foreign) subscription is normal, and long rates are stable at low levels. This is key, so key it's almost the lock.

Job creation is good, wages are climbing, GDP is growing nicely, and we get away with only a mid-cycle slowdown in here.

Especially if world money managers get the idea that the Bolsheviks are not gonna take over DC next November. This is the biggest confidence problem our currency has, by far.

gator tail is great--a scallop like meat--used to eat in Louisiana back when. Snake, too--the pit vipers are delicious. kill 'em first tho.

I quit accumulating myself just lately--feeling 'toppy' in the near-term--been buying AU, NEM, and FRGOX, mainly. If you buy the miners then you're also investing in enterprise and not just the barbaric relic. plus you get P/E multiple expansion maybe.

i think the entire GOP stable has a clue. Rudy, Mitt, Fred, John, any of the four are easy to see as president. scuse the first name shorthand

no problem --helps to write down one's thoughts--blog comment short-form is a lot like conversation, so it sharpens one's phraseology in advance of the inevitable holiday debates with addled young student family members.

Anyway, re Dollar,

"The final statement of the oil cartel's November 17-18 summit did not include any reference to the falling dollar, in an apparent victory for U.S.-allied moderates led by Saudi Arabia."

http://uk.news.yahoo.com/rtrs/20071119/tpl-uk-iran-chavez-dollar-19346ad.html

look up ''kulak'' and see what Stalin did to them. This demonization, confiscation, and eventual liquidation was a part of the continuum which includes, albeit at some distance so far, the IRS estate tax.

If the tax was set at the level of the capital gains tax, that'd still be wrong (why is death a taxable event atop already fully-taxed assets?), but as non-confiscatory in nature it would be different in kind, and not just degree, from the fate of the kulaks.

great points, Leag --but aren't they already addressed via the progressivity of the income tax ?

You know, that the top 5% pay 60%, and the botton 95% pay 40% ?

As I've said, it's a matter of the amount. Those old boys you quoted --what was the state of the progressive income tax at the time they made those statements ?

Back to the drawing board for ye.

six thousandths of one percent?

2,500,000 Americans die every year, times .006 that's 15,000 families getting a royal screw-job every year, in order to stage a costly show for the class-warfare politicians.

Like I said, from a revenue POV it's counter-productive, so the point of it can only be to punish 15,000 of the country's hardest-working most successful risk-takers every year.

And, to pay to do it.

But 15,000 voters scattered out in 50 states don't have much clout, do they.

Leag, there's cases I can cite right here in the Texas hill country--people I know--old ranchers between Austin & San Antonio, whose families have raised a few skinny livestock on the hardscrabble brushland for five generations, who own a section (640 acres) which has never been worth much since it won't produce more cash than barely enough to feed the folks who work it, but whose acreage due to the nearby cities' boom is suddenly worth 4 million, and who will have to produce a million in cash for the estate tax when the oldest gen dies?

Exactly--the lucky bastards will have to sell the place and scatter across the land with their new cash in hand.

But, is this a heavy hand of government, or isn't it?

And again, net the GA and opportunity costs, the tax doesn't help pay for the guard, in fact the guard pays for IT.

And BTW, if these folks are "stacking legislative halls" it damn sure hasn't done them much good.

Also, the argument that it "only affects a few people" cuts both ways: if it's so paltry a thing, why persecute even a few families? What general welfare is served by knocking 15,000 small-biz & rural families on their ass every year?

Sure, their enterprise has succeeded or their property has appreciated, but they have created it, defended it, held it, bled for it, and paid taxes on it for it all the previous years, right?

So, what did they do wrong to have the gov't come in an bust up the operation and scatter the extended family?

No, the cap gains rate ought to to be the limit. Tax rates past a certain level are punitive because they have the effect of a heavy fine--and the people that are getting fined are wondering what exactly was their crime.

Forgive my being sharp with you here, but throughout this discussion you've seemingly had the hint of an idea that somehow these people are culpable--ever-so-slightly perhaps but nontheless guilty of something.

"Exploitation of the working class" was of course Stalin's catch-all criminal charge which allowed him to legally rob and kill the Kulaks.

The Kulaks' tax rate rose until it hit 100%. Heck, we're only halfway there so why don't i just shut up.

It's only a few families anyway.

NOW you're talkin'--it's the principle of the thing! Leag sees the LIGHT.

''Think of what citizens could do with the money they be pumpin' into tax avoidance''

The old coots around here will use the diff between cap gains and estate liabilities to improve their ops and thus act to lower the cost of beef on the grocer shelf.

The government will use it to deliver half the services that the same money could buy in a private market--if one wanted them at all of course.

Except for the military--those tax dollars are well spent--in fact there should be much more in compensation for soldiers.

I advise people to look at it that way--that the waste ("in by ten, an hour for lunch, and through by two") is part of the cost of buying into the solid-gold bargain the country gets for the money spent on defense.

It's a bargain because soldiers work cheap--and without them this whole topic--free discussion of gov't policy--would no doubt be impossible to have, safely.

We'd be mimeographing these posts, and handing 'em out clandestinely in the shadows.

same-same!

The Revenue Act of 1916, which introduced the modern-day income tax, also contained an estate tax with many features of today's system. After an exemption of $50,000 (over $11 million in terms of today's wealth), tax rates started at 1 percent and climbed to 10 percent on estates over $5 million (over $1 billion in terms of today's wealth).

Now in 2007 the exemption is one-tenth, in constant dollars, of the original concept, and the top rate almost 50%, or almost five times (500%) higher than the original concept.

Kulaks didn't get ruined all in one day --encroachment on their human rights, little by little.

No, they ARE kulaks--just about the same 2% of the population-- successful individual proprietorships.

But re paranoia, no I'm arguing in the area of philosophical principles--not from fear of the midnite knock on the door. otherwise i'd be more circumspect.

Fort Marcy Park is melting in the dark
All the sweet, green icing flowing down
Someone left the cake out in the rain
I don't think that I can take it
'Cause it took so long to bake it
And I'll never have that recipe again
Oh, no!
Oh, no
No, no
Oh no!

yes it do, don't it.

see late 60s song ''McArthur Park'' --i wuz just remarking on how well ''Fort Marcy Park'' fits into the lyrics & melody.

"Fort Marcy Park'' is also a real venue, whose name has become symbolic of something else entirely indeedy.

A woman calls her boss one morning and tells him that she is staying home because she is not feeling well.

"What's the matter?" he asks.

"I have a case of anal glaucoma," she says in a weak voice.

"What the hell is anal glaucoma?"


"I can't see my ass coming into work today."

LOL --whiskey marriages usually end up living in a car, where it's easier to pass the jug back n forth front seat to back