Strengthening Constitutional Self-Government

No Left Turns

Fred’s 2006 advice

Fred Barnes offers this advice to the president on how to help his party keep control of Congress. He’s surely right that the battle is uphill at this point, but defeat is far from certain. He’s also right that the president’s strength is following his instincts and doing what he thinks is right, although I might add that some might say that most strengths are weaknesses too. Almost all of Fred’s advice amounts to looking and getting tougher on both Iraq and Iran. He does add, near the end, a quick paragraph on also becoming tougher on judicial confirmations and perhaps the repeal of "the death tax." Abstracting for the moment from foreign policy and military strategy, is it really true that what Fred recommends will be enough to produce electoral victory? If not, what else needs to be done? If I knew the answers, I would be happy to tell them to you.

Discussions - 35 Comments

Why anyone thinks that repeal of the estate tax is an electoral winner is beyond me. As taxes go it’s probably one of the most morally defensible ones around. Do we really want to be seen as the party of the Paris Hiltons of the world?

The estate tax also makes sense from a taxation perspective. Currently appreciation of assets (such as stocks, real estate, etc) that form the primary basis of many wealthy estate is not taxed. Everyone agrees that such appreciation is income, and that income is not taxed. Because of sec. 1014, the appreciation is "erased" for income tax purposes once that person dies. His heirs can sell the property and never pay any taxes on that appreciation. The current tax regime allows for $3 million dollars of untaxed appreciation.

When there is no estate tax (2010), Congress has modified sec. 1014 through sec. 1022. Sec. 1022 provides for an "estate tax" of 15% on estates larger than $1.5 million.

This means a couple of things: The current estate tax regime is favorable towards middle class and upper middle class individuals, while harsher towards wealthy people. The new non-estate tax regime will tax middle and upper middle class more, while taxing wealthier less, generally not a winning proposition.

The only real debate (given that appreciation is not taxed until sale of asset) is the appropriate rate of taxation. A 15% "capital gains" rate might be better than the current 50% estate tax rate (I believe this rate is correct, it might be 55%).

Finally, the estate tax seems to have no adverse impact on people’s willingness to work hard. Bill Gates still made Windows, etc. What it does do is strongly encourage wealthy people to devote a large portion of their estate to charitable, non-profit purposes (think Gates Foundation, or Warren Buffet), or basically any building at Ashland University. This seems reasonable.

I tend to agree with you guys on the estate tax and certainly don’t think fighting for its repeal could be a successful vote-getting strategy.

Now that we’ve (reasonably enough) knocked down one idea for helping the Republicans, what would we suggest?

I would suggest that Bush pay much more attention to judicial activism, something that people care about in their guts and that tends to unite the Republican party. It’s also an area in which Bush has delivered but that is also dependent on a Republican Senate.
Parading the many, many horror stories is a good way of talking about social issues as matters of democracy rather than primarily matters of culture.

While Bush cannot speak credibly to most of the base or to most other semi-conservatives on immigration, many other Republicans can.

While aggressive campaigning on Iraq and Iran probably makes sense, it is at least as important to campaign on homeland security -- which can now be neatly tied to judicial activism.

Bush should also stress the extremism of the people who would be chairing certain House and Senate committees. He’s not inclined to do this, but it’s something he should do, and that other Republicans actually might do. If they get scared enough, which they should be.

Bush has always wanted to campaign and govern positively. It is not in his nature to campaign against the Democratic party as such, although occasionally, grudgingly, he’ll attack a position of their now and then (almost always without naming the party). That is unlikely to change. But it’s what he should do, and, again, what other Republicans might actually be gotten to do.

Freddo’s advice is inside-the-Beltway. It’s not terrible, but one hopes that Karl Rove and the candidates have better ideas.

Whoa, Nellie! Go make $250K of ordinary income. (You *can* do it. Just do a major gut check and go out and do something entrepreneurial. After you fail, try again. After you fail again, try until you figure out what people are willing to pay you a profit to do for, or sell to, them.) Willingly pay 40% of it in federal and state taxes as part of the price of freedom and the proper support of government. Defer your gratification on the after-tax amount, $150K, and invest it for 30 years. Leave it to your kids. Then watch from your grave as the feds demand 55% of the unrealized gain on an unsold asset from your kids, in cash. How is it fair, or American, to tax an unrealized gain on an asset which itself was paid for by after-tax dollars?
I realize that real-world estate tax laws are more complicated than that, with varying exemption levels, etc. And that the truly wealthy opt out of these nettlesome laws altogether by establishing foundations. But what I outlined is a generally accurate description of the estate tax. It’s patently unfair and should be abolished, politics be damned. And, no, I don’t think it’s a significant issue on the radar screens of most American voters. Some small business owners and farmers might have their votes effected, but not enough to change the outcome of a federal election.
Paris Hilton’s wealth won’t even reach her kids, if she has any. Inherited wealth is lucky to reach the third generation.

I agree that repealing the estate tax won’t really change things. Coupling judicial activism and national security might, if the message can get out often and clearly, a challenge that neither the President or the media is likely to carry through.

Also agree that immigration enforcement is not something that Bush can rally the troops around, simply because he’s not made a strong push for any real enforcement (that I can recall) thus far. Better to leave that to 08, when I hope it will be a center issue (along with national security and boosting military manpower).


Gary Seaton:

Your example suffers from a fundamental flaw in its premises. The appreciation over the course of 30 years is income, and that income is not taxed. You are passing on some after tax dollars (the $150,000 principal) but also passing on some not taxed dollars (the interest). I think if we are to have an income tax, that should be taxed. There is nothing unfair or unAmerican about taxing it at some point, whether before or after death.

Like I said in comment #2, the only real question is at what rate should that appreciation should be taxed. One could argue that 55% is too much, and could probably work out a deal. Like I also said in comment #2, when there is no estate tax for one year, it will harm people like your example more than they are now and benefit the very wealthy by a lot.

Steve: I respectfully disagree. There is no "interest" income (from appreciation) until it’s realized. The increase, for instance, in a house’s market value is not taxable for income tax purposes until it is sold, and the appreciation (hopefully) realized. (I realize that is not the case with property taxes.) Too often (and by "too often" I mean if only once), current estate tax laws force the sale of assets in order for heirs to pay the tax, whether or not the heirs would prefer to continue owning/operating the asset. Government should not be able to {effectively} compel the involuntary liquidation of assets acquired with after-tax money.
Given your premise, why shouldn’t the unrealized appreciation on real estate and financial assets (mainly securities) be taxed annually? By your definition (not, I believe, the IRS’), it’s "income" and should be subject to taxation. Why wait until death? Because the wealth creator isn’t around to protest? (OK, *maybe* that’s a cheap shot.) Lord knows the treasury could use the money NOW. If the income tax code mandated an annual levy on the unrealized appreciation of homes and other assets (boats? RVs? classic cars? Isabella?), then this would indeed become a front burner issue for many voters.
I’m sorry, but the estate tax mightily discourages what should be the simple act of passing assets on to one’s children and grandchildren. The amount of money, time and talent that’s devoted to minimizing estate taxes by entrepreneurs (and land-rich farmers) and their tax advisors (attys and CPAs) is scandalous. The estate tax disincents the very behavior that should be encouraged: deferral of short-term gratification in favor of providing for one’s heirs.
My youngest "heir" just got up, so I’d better feed her and get to Mass. The other heirs have already left for Mass in order to get down to the final day of competition at the horse show. Yeah, I’m hoping this estate tax issue becomes relevant to my future estate.

Gary, whatever its technical merits, your post comes off as a rich guy’s whine. Imagining trying to campaign on it! I do agree that the most overtaxed Americans right now on married couples with or without children who earn btwn 100K and about 300K, because they can’t quite afford to shield a significant amount of their income or hire very clever accountants and lawyers--and they often don’t benefit from the recent pro-family tax breaks etc. And of course then there’s the genuinely regressive self-employment/social security tax. I agree with Steve that a modest inheritance tax is not un-American, and that it’s not simply a tax on dying or whatever. But even if we are wrong, you ain’t going to win elections with your platform of justice for successful entrepreneurs. Most people may, with good reason, appreciate the Bush tax cuts, but they’re not really lusting for me.

Peter: I’m more against the estate tax for reasons of principle than anything (although the money is a close second!). It’s confiscatory at even the most modest rate. It’s forcing a free people to pay taxes on something before THEY DECIDE TO REALIZE THE GAIN IN THE FORM OF CASH. And, if I come across as a whining "rich, white" guy it’s because I am! And there’s absolutely nothing wrong with that! (It only makes it more difficult, not impossible, to get into heaven.) More folks ought to aspire, and work, to become rich. It’s how jobs are created for........Berry College grads! I’m in the trenches on this one, and the confiscators generally aren’t.
As the law is currently written, the estate tax exemption reverts to ~$1.6Mil in 2011 (the CPAs can correct me on this). Even a "modest" tax on anything over $1.6Mil is going to be real money. Money that could be used for my grandkids’ college educations at.........Berry and Oglethorpe and Ashland College(s)! But mainly I oppose it because of the principle of the thing. And at the current 55% rate, it ain’t "modest"; It’s government-sanctioned theft, by lawmakers who are currently refusing to disclose, on the web, where every single dollar of our tax monies are being spent.

Last point before I clam up. I agree that the estate tax isn’t, and won’t be, a big campaign issue BY ITSELF. It’s not something to RUN on, but it *is* an issue to RAISE FUNDS on. And the pols know it. Entrepreneurs and farmers/ranchers don’t form a determinative voting bloc; they do, however, give a disproportionate amount to political campaigns, motivated in large measure by taxes in general. So the issue’s effect on campaign financing indirectly influences (remember Charlie Keating’s classic declaration before the Senate panel: "Well, I certainly HOPE that my political donations influenced the issues important to me!") other issues that *are* on the front burner for most voters.

1. Could the college education costs be paid by the first $1.6 million? Now you rich guys might get roused up by the fact that elite colleges only make people like you pay retail tuition, but that’s not the government’s fault.
2. Too many people are going to look at the fanastic appreciation of rich guys’ houses as a sort of windfall profit that shouldn’t go completely untaxed. The same thing with the huge amount of money they make on real estate and similar investments with very little of their own sweat and brains (to be as confrontational as possible!? nothing personal).
3. With this tax like all others, I’m for lowering the rate and making the modest rate flat and loophole proof--laying off all a lot of rich guys’ lawyers and accounts. So I’ll concede a lot to you in the sense that I’m a mend it, don’t end it, guy.
4. But to return to our real topic, I take it you concede that your matter of principle here couldn’t really have electoral legs.

It was a good point that Republicans have and maybe should continue to use the death issue to raise money. But their big problems now aren’t about lack of money. And even in our troubled times I think the Republicans have most of the horse show vote locked up.

So most of the posters here seem to agree that a tax that they don’t expect to pay must be a good one, envy of those better off is OK (justified as "principled" opposition to large accumulations of private wealth, use of tax policy for redistributionist social ends is fine, etc. In my view, only proportional taxes can be morally justified, and taxes on consumption are much better than taxes on income (they can be adjusted for regressivity).

Thank goodness Thucydides arrived! (I’m normally a Herodotus guy.) Last I checked envy was a sin, and not just a moral failing. How much of the rhetorical justification for the estate tax really boils down to envy?

Peter: I’m certainly in agreement that the estate tax issue is {one of} the least of the Repub party’s problems.

I don’t mind the "wind-fall" on the rich guy’s house being taxed WHEN HE OR HIS HEIRS CHOOSE TO SELL IT!

As to the distinction between (and proper taxation of) earning ordinary income from the "sweat of one’s brow" and capital gains earned from....what, if not one’s brains and....cajones?; you need to experience risking one’s capital and good name before judging whether capital investing doesn’t involve "the sweat of one’s brow", not to mention churning stomach acid when you find out a client has turned to cocaine to anesthetize his business failure.

Gary, well, sure, envy is a sin, and it’s one we all commit. And it’s at the core of every democracy there ever was. So obviously I was trying to be as populist as possible in expressing my objections. On the other hand, the MDs in my town who get very rich from the cleverness of their financial analysts don’t seem to sweat much, or have big brains, and actually seem to have smaller than average cajones. When you have surplus capital, the risk is pretty bearable. But at the end of the day I don’t really care about any of this, think rich guys in America have it pretty good and sometimes deserve to (in relation to the minimal burdens govt. places upon them), and am only making the point that their whining seems laughable to those who thru sloth, envy, gluttony, stupidity, testosterone deficiency, or whatever have to pretty much have to use their money to pay their bills. Anyway, this was fun and the relevant pts. on both sides made.


I am sorry my misuse of "interest" added to any confusing. I lapsed and confused trust income concepts with individual income concepts.

The classic Supreme Court case Eisner v. Macomber held that appreciation was not "income" [though this is a vast simplification] until a realization event occurred. This gave rise to the realization doctrine as embodied by sec. 1001. Eisner has been overruled [sort of] however and the Court has said that appreciation is income whenever it occurs and the realization doctrine is around as mere administrative convenience. Congress and the IRS would have EVERY legal right to tax appreciation every year, as you suggested in comment #9. The reliazation doctrine is still around because there would be huge transaction costs in having appraisers appriase real estate and other illiquid assets every year (although stock appreciation would be easy to declare).

The current system is as generous to appreciation (which is income) as is possible. Owners of assets may defer taxation on appreciation until a realization event, which results in tremendous tax savings due to the time value of money. Because of sec. 1014, if assets are not sold, then the apprecation is "erased" from the income tax system, and no one will ever pay any taxes on it. Because of current estate taxes, people may have $3 million of non-taxable appreciation, which seems reasonable.

I should repeat that I’m for low, flat taxes, mainly to ensure that everyone pays their fair share--I’m not for progressive taxation at all. And financial issues just make my eyes glaze over, I can’t help it! So any reform that would make me know my tax burden in 10 mins I’m for, even at my level the tax law is ridiculously confusing--almost an engraved invitation to waste lots of time getting around what I owe. I’m not an entrepreneur or hopelessly chained to immediate necessity. It’s my own damned fault that I just spend whatever amount happens to come in.


I think these are the issues we are dealing with, tell me what you think of them:

1. Is appreciation income? If yes then it should be taxed, if no, why not?

2. If appreciation should be taxed, then what should the tax rate be? The current estate tax system allows $3 million of appreciation [sort of] without taxation, and then 50-55% for anything over that. The non-estate tax system allows $1.5 million of appreciation, and then a 15% rate on anything over that. Which system do you prefer, and why?

I appreciate the comments on appreciation: What’s wrong w an estate tax along the non-estate system’s line? With maybe a somewhat greater amount not taxed to deal w the ordinary guy businessman/farmer problem.?

It was encouraging to see that there are now 20 posts on this thread.

Perhaps, I thought, it reflects an interesting debate on how to get through to voters in order to save the Republican Congress.

But no, it’s a drawn-out squabble over the technical and philosophical cases for and against the inheritance tax.

Can we refocus on Professor Lawler’s original question: How good are Barnes’ recommendations, politically speaking; and what else would we offer by way of recommendation, politically speaking?

And thank you David, we have established that the inheritance tax is not the ticket. What is? Can immigration, for example, just be ignored?

The contrarian suggestion might be made that what’s needed to thrill -- or perhaps "reward" is a better term -- the conservatives who put Bush in office is more action at home and less abroad. Gambling the administration’s (and perhaps the Republican Party’s) legacy on Iraq seems bold when controlling for the domestic situation, but looks reckless and feckless given the headlong plunge into Johnsonian government that has characterized the past six years.

It should be beyond dispute that the fiscal disorder and gigantism gripping the Federal regime is unacceptable -- and whereas foreign adventures can always be abandoned, it is not so easy to walk away from the ruin of disciplined economic and political conservatism. All that we seem to have emanating from Washington is cultural conservatism of a certain stripe and hawkish foreign-policy conservatism of a certain stripe. But, while nationalized religious conservatism is applied to federal politics, is cultural conservatism under continued attack locally? And is it more conservative to "fight ’til you win" or to "stand down" according to a flexible, circumstantial standard?

These dilemmas that the Bush administration has had to grapple with do not suggest sure-fire ways to win in ’06 -- at least not as far as conservatives are concerned, I don’t think. Sorer points -- clearer points -- are to be found in spending and immigration. But these hurt the GOP in the general election: the public is used to expanding out into the abyss, as part of the exercise of the cult of "more," enervation of the American purse and character notwithstanding. The inevitable tradeoff may be satisfying conservatives at home and war unenthusiasts abroad.

Here are a few things to keep in mind: income taxes are bad enough, but the estate tax is a tax on capital, not on income. There is a stepped up basis to the heirs, but that is small consolation for the confiscatory rates. Those worried about large accumulations in private hands forget that the super rich aren’t affected by estate tax; they create foundations like Gates has and these foundations employ their heirs (in Gates case, even his father is on the foundation payroll), forever and ever free of estate tax, or for that matter, capital gains or income tax of any kind. The estate tax causes large lifetime gifts to be made to children in lower brackets, such that most revenue estimates that consider the indirect effects hold that the estate tax is a net revenue loser. So why bother to perpetuate an unjust tax?

David Frisk:

What you consider uninteresting may be interesting to others. Remember that.


Judging by your post it seems pretty clear you are confused about the status of appreciation. Any increase in capital is a gain, and any gain is income unless expressly exempted by Congress (see sec. 61). The estate tax might be a tax on capital, but that would hardly disqualify it from being income. If your theory were correct then "capital" gains would be a crazy tax, yet lots of people like the "capital gains" rate of 15%. Do you seriously think if someone buys stock for $100, and sells it for $1000, he has not had a gain, as income, of $900?

I am uncertain about your "lifetime gifts" objection. If you mean a carved out interest, any income derived from a carved out interest is taxed to the donor (see sec. 673), so there would be no income tax loss. There is also no estate tax loss because if the donor merely parts with a life estate, it is still included in his estate for estate tax purposes. Your example would result in no tax loss because the donor would be taxed on any income, and the asset would be included in his estate for estate tax purposes. Even if the donor were to make a transfer before death this eats up the unified credit (between the gift and estate taxes). Although right now the unified credit for gift taxes is $1.5 million, in olden days the estate and gift tax unified credit were the same. If a donor gave away $1.5 million during his life, then he got no exemption for the estate tax. He could choose to be taxed now or later. The current system would allow $1.5 million in tax free gifts and then $1.5 million exempt from the estate for estate tax purposes.

Just back from the horse show, where Paul’s nephews cleaned up by winning 7 blue ribbons and two classes. :-)
I am very happy to cede my seat at the table to Thucydides, who represents my views on the estate tax exceedingly well. And I enthusiastically concur with James Poulos’ comments in #23 above. The "expanding into the abyss" and "fiscal gigantism" are scary realities which I only wish I had described so freshly.
Steve: I’ll try to answer your questions regarding appreciation later. Bummer to read about the SC decision. But I’ll need to "deal" with it. Right now I’ve got to prepare to host a birthday party for Paul’s nephew who turned 9 yrs old today, and who won his very first blue ribbon today.
Someone’s going to win the Congress and the Presidency in ’06 and ’08. But it won’t be with much enthusiasm from any quarter. The country and the electorate are divided and polarized. Given Mr. Poulos’ observations, it will almost certainly come down to which party and candidates can best pander to the great "sacred" middle of "undecided" voters. The issue of illegal immigration will be a boon to the party that dares seal the borders and sanction employers of illegals. No deal is better than the Senate deal, both objectively and politically.
David, my apologies for sidetracking the issue of what’s expedient politically for the Repubs. Sometimes I get maniacally focused on what’s the best public policy, not what’s the best campaign strategy. I realize they’re not always the same. Seldom? Never?

Gary and Peter Lawler, thanks. I made my recommendations much earlier. I guess they have since been lost in the arcana about economics, which the public isn’t interested in, even if Steve is.

My main suggestion is that Bush should hit judicial tyranny and homeland security, hard. Senate and House members and candidates should use those, plus immigration.

Gary, to answer your question: Is good public policy often, or ever, good campaign strategy?

I would say never. Because policy cannot in itself be a strategy. A president or legislator, qua president or legislator, should focus on good public policy. But he must carefully tailor his campaign strategy to reflect those good policies which the relevant sections of the public will find most interesting and inspiring. And, equally important, hammer on the bad policies of the other side -- when the public already believes, or can easily be convinced, that they’re bad.

George Bush used to say that "deeds are eloquent." Usually, that’s wrong.
Things do not speak for themselves.

Robert Taft, who never got the chance to run for president in a general election, once said that "the way to handle a man like Truman is to hit him every time he opens his mouth."

Given the rhetorical style of most leading Democrats today, which is similar to Truman’s, I would think there is some wisdom in that apparently brutal advice.

I second the notion about immigration...Bush needs to change his spots right quick. He and the MSM think that Lebanon has pushed immigration out of the minds of Americans, but that’s utterly wrong. For me (and several people I know), immigration is THE’s rather pointless to defend us against isolated terrorist attacks if we are undergoing a full-scale invasion.

Steve: To perhaps close out this topic, let me respond to your questions, below:

Comment 19 by Steve Sparks [E-Mail]

I think these are the issues we are dealing with, tell me what you think of them:

1. Is appreciation income?

Legally, yes, because of the SC decision you cited. In my common-sensical understanding? No......, but I’ve apparently lost that battle. :-) Has FASB ever ruled on the issue?

If yes then it should be taxed, if no, why not?

Yes, it should. But not until the heirs choose to realize the gain. You were correct to point out to Thucydides that the estate tax is not simply a tax on capital. It is, inter alia, a tax on *appreciated* capital.

2. If appreciation should be taxed, then what should the tax rate be?

I would prefer a tax on consumption (with as-simple-as-humanly-possible credits for taxpayers below a certain income level.) Absent that, I’d favor a flat-tax (and let’s be real, it’d need to be closer to 21% than 17% to responsibly fund the
"rising into gigantism" federal budget), with all deductions eliminated. (And I’m a big itemizer.)

The current estate tax system allows $3 million of appreciation [sort of] without taxation, and then 50-55% for anything over that. The non-estate tax system allows $1.5 million of appreciation, and then a 15% rate on anything over that. Which system do you prefer, and why?

The latter; 15% sounds lower than 55%. :-)

Exeunt omnes.

Gary Seaton:

I am afraid I do not know if the FASB has ever ruled on whether appreciation is income. I am fairly certain that "gain" results when an entity sells an asset for more than it paid for it. This gain is considered income. I think accounting holds that gain is income and spends more of its time worrying about what economic events trigger recognition of that gain (sales, exchanges, etc.).

Even if the FASB had decided the issue, that in NO WAY would bind Congress who writes the tax code subject only to the Constitution. The tax code differs from GAAP in several ways. The most concrete way I know how it differs from GAAP is allowable depreciation methods. I believe GAAP allows various methods of depreciation, while the Code only allows the 200 percent and 150 declining balance methods and staight line. Furthermore allowable depreciation varies per asset.

Tax Code accounting must vary from FASB and GAAP because Financial Accounting and Tax Accounting are different fields of accounting with different methdologies.

I am a bit confused by your 15% with $1.5 million reasoning. It is true that 15% is less, but the tax base is bigger so more people are being taxed. It could be that 15% on $1.5 million would raise MORE taxes than 50% on anything over $3 million. Furthermore, if we care about the estate tax inhibiting beneficial economic activity, it seems that a tax on a smaller estate ($1.5 million) would be more apt to discourage people who are hard workers but not geniuses (the majority of the population) and these people are less likely to work and create additional wealth than geniuses and people who feel compelled to work all the time. I think geniuses and compulsive workers (Rand notwithstanding) will always feel compeled to create value and taxation will not stop that.

Steve: Understand and agree on the FASB vs. Code accounting. Unfortunately, my dismal view of the current plasticity of Constitutional interpretation discourages hope of the code being anchored in reason.
Confiscating 55% of anything, anytime strikes me a the worst kind of retrograde communist thinking. It’s *rushing* to kill the milk cow.
At the margins, I think the estate tax does discourage wealth creation. And at the center, it encourages wealth sheltering through foundations and the widespread use of estate planners. Not the highest and best use of those (generally very bright) folks.


I do not know if I see anything wrong with encourging people to give their estates to charitable causes. It is true that those assets cannot be used as capital to help new businesses grow, but foundations can be used for research (think Heritage foundation) or education (any college) which seems just as productive, if not more so, than giving capital to businesses since educational and research organizations help form human capital. Disregarding fairness and property rights, etc; what do you think would be better for society, making people invest in research organizations or passing it to heirs that will most likely spend the money on businesses with little social utility (such as yatch builders, or mansion builders)?

I do not think there is anything remotely unconstitutional to 55% income tax rate. The 16th amendment authorizes taxing income, it does not set a limit to the rate. The income tax was 94%(!) in 1944 (I am certain of this) and the early 50s (I believe) and this was not thought unconstitutional.

I am sorry about the last paragraph. My thoughts lapsed for a moment. The estate tax cannot be justified through the income tax amendment, so your argument has some force. However, my argument concerning tax rates is probably still correct because the Constitution gives the Congress power to levy certain kinds of taxes, and I do not believe it specifies a maximum rate. See the Constitution, Article 1, sections 7 and 8.

Steve: I agree with your comments about the good that many foundations do in promoting the common good. I just want people to do it voluntarily, and not by indirect inducement of the tax code. That’s why I’m in favor of eliminating all deductions from the personal income tax code, including charitable contributions and mortgage interest, both of which are material numbers for me.
I’d say the social benefits of contributions to a research institute are no better, and no worse, than commissioning yachts and mansions. I used to build (as in wielding a mallet and chisel) high-end timber frame houses for people. As a blue collar worker I appreciated the pay check, AND the psychic satisfaction of building truly beautiful homes. (See the front cover of Tedd Benson’s third book: I helped cut the intricate valley rafters in the kitchen in the VERY rich guy’s vacation home on Nantucket.)
There’s nothing inherently unconstitutional about any tax rate. It’s just terrible public policy to enact confiscatory rates. But the duly elected pols are free to do pretty much whatever they want in that regard. If it becomes unduly burdensome, the producers will vote with their feet. We get the behavior we incent.

Gary, No deductions is the key to an equitable flat tax, and I’d be thrilled with any policy that would just make what I owe very easy to figure out. Not going to happen, though. I’m amazed at the staying power of your discussion of what to me is a dreary issue. I’ve learned a lot and with very little envy.

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