Tuesday, October 09, 2007

Letting Americans Acquire Wealth? Gimme a Break!

The Clinton campaign has released yet another economic plan that is reminiscent of the politics of the New Deal. Mrs. Clinton has proposed a tax credit system by which Americans earning less than $60,000 per year would be allowed matching tax credits for retirement saving, with up to $1,000 in matching credits per year. Those earning between $60 thousand and $100 thousand would get $500. The credits, she says, would be financed by estate taxes on “wealthy Americans.”

The plan is thus based on taking property away from those who are “wealthy” and giving it to “middle class” Americans. Of course, who are “wealthy” for purposes of measuring the future estate tax under a Clinton regime is a matter of some concern. This is a matter of profound moral concern. To the extent you have been a saver, or to the extent you have built wealth through business or investment, you will not only be taxed to finance the social security system and refundable credits for redistribution through the income tax system, but you will also be taxed after your death. The “tribe” will vote (for all you Survivor fans) and take away some of your stuff from your orphan children for the benefit of the tribe, for redistribution to other members of the tribe. Is this behavior moral? What is the basis for the claim of the other tribal members to your stuff when you die (or your parents’ stuff, as the case may be)? Does this kind of statist approach to property trouble you?

Mrs. Clinton is quoted as saying: “I think it’s imperative that we begin to let people acquire wealth again.” However, such a statement is purely absurd in light of the program she is describing. Query whether Americans will get it, and whether they will have the gumption to say no, I will save and earn for myself (and breathe the sweet air of freedom and self-sufficiency).

The story can be found here:


1 comment:

Anonymous said...

Hi Ed,

I have a few things to add here dealing with social security.

1.) Social security provides economic opportunities for those who without the program would be in economic trouble. These include retirees, but are obviously not limited to them.
2.) The generations following your baby boomer generation, mine being generation Q as described by Tom Friedman, generates much smaller savings than your generation consumes out of the social security program. If Medicare is included, the disparity between savings and consumption expands.
3.) As a result, Fed Chairman Bernanke said the U.S. must incur an increase in taxes or a reduction or shift in benefits soon or else the economy will fall into recession soon as a result of savings not matching consumption.
4.) I see you do not agree with Clinton’s social security financing proposal. What are your recommendations to finance this program? I don’t recommend abolishing social security as this is not politically feasible.

My moral concern thus is not with funding the program. Rather it is with continuing not to fund it when my generation will reach the age where we will depend on it.