Last week, Forbes magazine identified 946 billionaires, a record. "The net worth of the world’s 4 billion poorest souls actually dropped, to less than $35 dollars each," a stark contrast to the average net worth of $3.6 billion for the world's wealthiest 1,000. How stark is the contrast? 100 million times more. (You might want to read that again. The average net worth of the world's wealthiest 1,000 is 100 million times greater than the average net worth of the world's poorest 4 billion. If you stopped reading now, I'd understand.)
At this point, blogging traditions suggest that I rail against the rich. I have other intentions: I plan to rail against their children.
As I get older (something that happened again this morning), I have more admiration for entrepreneurs brave enough to risk starting a business and who are clear headed enough to succeed. More than 90% of the American work force works as an employee; the days of independent businessmen are largely gone. We work for these entrepreneurs and our ability to pay the rent literally depends on their business acumen. The fact that such people have a shot at wealth strikes me as perfectly just. Their success means jobs for us and tax monies for roads and schools and more cool stuff to buy. Unlike most Americans, I neither resent their wealth nor expect to join them.
But what has this to do with their children?
We’re eager to wean families of welfare. Reliance on easy money breeds sloth and bad habits. We should be as eager to wean families of inheritances. It, too, breeds a propensity for parties, a disdain for work, and a sense of detachment from the struggles of everyday working men and women. It makes little sense to me that a working, single mother would pay a higher percentage of taxes than Paris Hilton. Wait. Let me restate that. It makes no sense to me. Estate values over, say, $3 to 5 million should be taxed at a minimum of 50%.
Beyond the benefit of sloth reduction, such a tax policy could address an odd relic from the age of capital. In this country, returns to labor are taxed at a higher rate and more consistently than are returns to capital. Warren Buffet has pointed out how his dividend income is taxed at a lower rate than his secretary’s income; this doesn’t strike him as fair. He doesn’t even mention something that strikes me as worse: the tax rate his children will pay on an inheritance is lower yet. (Of course, such a policy is irrelevant to Warren - he's giving away most of his money.) It would be hard to explain to a Martian why returns to income are taxed more than returns to capital which are taxed more than inheritance. If we value work, such policies seem backwards.
I don’t much resent Sam Walton’s wealth (particularly since he's dead and unable to enjoy it). I do resent his children’s. 50% of their $60-some billion could help to offset some of the government costs of providing health care to WalMart employees. If they wanted to be one of America’s top ten wealthiest, let them do what their father did: build their own business. Somehow, that just seems more American.