A few nights ago, I was chatting with my friends when an interesting topic came up. It was about money, taxation – how they charge an “Estate Tax” on the fortunes that wealthy people pass down to their children or whoever is inheriting from them.
It is a very huge tax, especially if you’re inheriting quite a sum. I was quick to say that it was wrong for the government to be taking a huge chunk of people’s inheritance but, to my greatest surprise, my friends thought it was the right thing to do –they applauded it.
One reason I cherish my friends is that they are always open to reason. When we have divergent opinions, we discuss and debate them, raise points and counterpoints; very respectfully and intelligently too!
So debate we did, and I want to present the points they raised to support taking away almost half of people’s inherited wealth from them, and the points I raised to counter them.
My aim is to get feedback from you on what you think –am I right to think this way or are they?
So, here goes.
Equal Distribution of Wealth
As we got talking, I found out that not only did they have a problem with those who inherit wealth; they also had a problem with those who worked for their wealth.
Jeff Bezos, the founder of amazon.com is worth $93billion for example. He has the amount of money that can feed close to half the world’s population to himself. He should feel guilty for having that kind of money while there are people suffering all over the world.
Government taxing the rich heavily is to extract from them sufficient funds with which to take care of the poor. It is therefore fair to tax them heavily.
First of all, Jeff Bezos is worth that much because of the value he has added to the world. Money is the echo of value. Add value to people and money will flow your way –it’s just how the world works. If you then add ownership to the mix (i.e. owning your own company) ALL of the money will flow to you and you then decide how much of it to keep and how much to pay your workers. That’s Jeff’s current set up, and he should not be made to feel guilty for improving people’s lives.
Secondly, making money is not the same as taking money. Making money involves improving people’s lives while taking money involves stealing from them and making them worse off. One could even argue that that’s what heavy taxation does to people –makes them worse off.
Jeff should therefore not be cajoled to “give back” to society because he never took from it in the first place. On the contrary, he gave enormous value to society in the process of building his wealth and really owes it nothing.
Lastly, there is still a lot more money than can be made in the world, because there is still a lot more value that can be added. “Equal distribution” of the current wealth means we are placing a cap on the amount of money that can ever be created. We are saying that no matter what people do, this is the most amount of money we will see in this generation so let’s just go ahead and share it equally.
We should avail people the struggle of wealth creation, rather than giving them a handout in the name of distributing wealth. That way, more people will add value to society and more wealth will be created. Instead of focusing on equal distribution of wealth, let’s focus on equal opportunity for all to create their own wealth.
The Rich Abuse Their Wealth
One of my friends then brought up a true story she had just read about a wealthy woman who willed millions of dollars to her dog. Now, the dog has been able to pass that fortune down its pedigree to other dogs and we now have some dogs that are way wealthier than most humans as a result.
This made all of us (including me) mad, but I still did not side with my friends who said that the right solution to that kind of foolishness is to tax the rich heavily so that they won’t misbehave with their own money.
The government did not give them that money in the first place, so it really has no right to control how they spend it. The most they should do is put policies in place to ensure that people don’t will their fortunes to non-humans, and I’m not even sure that that’s not meddling still.
We have free will as humans, and we should be allowed to do as we please where our money is concerned, as long as it doesn’t hurt humans or go against God’s law. A free society should respect people’s freedoms, provide for them the platform and equal opportunity to build wealth, and afford them the option of doing as they please with the wealth they build.
I know there’s the ongoing argument of altruism vs. egoism; which is more intrinsic. I have no answers to that but I know for sure that if you take away food from a child’s plate and put it in the plate of his brother –just because the brother had less, the child is more likely to throw a huge tantrum (he might even throw away the remaining food in his plate in protest) than when he decides by himself to give some food to his brother.
Humans are more likely to do good for one another when no one’s forcing them to do so. If you meddle in their affairs, like taking from one in order to help the other, they’ll rebel and do stupid things with their resources just to spite you for not respecting them in the first place.
Government Needs More Money
If it taxes the rich a lot more, government will have a lot more money to do “good” things with, for the people.
A boss of mine once refused a pay raise because it was going to take him into a higher income tax bracket, and he’d lose a larger chunk of his income to the government.
Now, imagine if everyone else in the company came to realize this and started refusing raises and promotions? Project this onto the entire society, and that would mean that fewer people would be willing to increase their income. This also means that fewer people would be willing to increase their production, and value added to society as a whole would decrease drastically.
Government would then have less and less of people’s money to impose taxes on. If government were wise, they would tax only a little percentage of people’s income, encouraging them to be more productive and make more money. As a result, more money would flow government’s way. But if people begin to reduce their income potential because of your 50% tax, you’ll have less money flowing your way as a government because fifty percent of a hundred dollars is way less than ten percent of a thousand.
There’s a reason tax havens have more productive bustling economies than countries that impose huge taxes on their citizens, more so the rich ones.
So, what do you think? Do you think it’s right to take away a very huge portion of people’s generational wealth from them just to make sure they are equal with everyone else; they don’t abuse their wealth; and the government of the day has more money to work with? And why do you think so, too?