Unexpectedly, maybe, I can agree with a few of your points.
I’ve never been a fan of estate taxes. Thinking of the vast majority of families, probably over 99%, I’ve always considered a couple of points: first, that they have paid all their taxes over the years and decades, and hence an estate tax would be a form of “double” taxation; second, that they have accumulated their family wealth legally.
The first is or should be (in a modern high-tech society) fairly easy to check and confirm. If, however, all taxes haven’t been paid, what’s the next step? Should the heirs lose their “tax immunity”? This might be a good way to tackle the problem of tax evasion and tax avoidance. Incentivize correct and proper income and capital gains reporting over the decades, in order to qualify for the lowest (or zero?) estate tax bracket.
The second, of course, is the tough one. Proposing a reduction in or elimination of the estate tax in Europe, for instance, always causes an uproar because people, i.e. the common people, pull up on their memory screens images of the storied aristocratic families that have been at the center of all things European, both good and bad, and often in tophats, over the centuries, and have tended to inbreed to keep a tighter rein on their interests. We know, or are sure we know, that some or many of the richest super wealthy 0.1% families did not always amass their heirlooms above board. But how to prove it? Again, it shouldn’t be impossible, except maybe where Swiss banks come into play. Who should the burden of proof lie on?
I find the line “For the most part, however, politicians talk and the economy takes its own course”, astonishing. When it comes to political economy, when have politicians ever limited their actions to talking? As far as I can remember they usually weigh in fast and furious on political economy. If only Reagan had only talked about Trickle Down economics! His pen must have been overheating and almost on the verge of exploding given how fast and furiously he was striking-through decades-old laws and regulations that had ensured the greatest period of widespread prosperity in US history, and rewriting them and writing new ones to turn the US economy into a globalized/delocalized financialized speculative ever-less-productive shell of its former self.
The “trickle down” revolution was set to the sound of the 0.1% pissing themselves with laughter.
I’m not a big fan of the hypothesized “wealth tax”, either. It has nothing to do with either boogeyman Marxism or Socialism, though. The extremes of those two (and we always talk of extremes, don’t we) would not be passing wealth taxes, they’d just show up at your door and seize stuff, wouldn’t they? But speaking of the “means of production”. And returning to Reagan-oiled financial globalization, capital flight, overseas speculation, and the general return to 19th-century cut-throat robber baron ways of thinking, what happened to America’s vaunted and long-envied and highly prosperous and US economy-boosting and public-boat-rising production? The envy of the entire post-war world, including Communist Russia and, in particular, Communist China? To the man in the street (often literally, e.g. in and around Detroit), was he happier that his capitalist democratic government did NOT seize the means of production at GM plants, but only did everything humanly possible to pave the way for those American means of production to get to Mexico and South America and Southeast Asia and eventually China?
Re. the wealth tax, you also write: “Therefore, every year your corporate earnings (that could have been reinvested in the company and its employees)”. Indeed, one of the greatest problems of the post-Trickle Down revolution is the lack of significant reinvestment in American production. The most important question is Why? Not because of a hypothetical wealth tax, obviously. So, why? I mean, obviously in a financialized global economy with low capital gains taxes and incredible investment opportunities in places with extreme levels of deregulation and corruption and run by scary people (and I don’t mean Texas), right-thinking capitalists would send their money overseas.
It isn’t a “wealth tax” that worried and scared away the super rich and caused capital flight. Capitalists did what they always do. They maximized the return on their capital, wherever and however best they could. And, frankly, they said “To hell with America”. I think it was a MORAL change, too. The old conservative Rotary Club type of American company owner and investor, who put country first and was “satisfied” with the good profits he made from his work, suddenly became dissatisfied with making merely “good” profits and now wanted nothing less than “astronomical” profits. And tax free, if possible.
So anyway, there weren’t enough incentives to reinvest. I don’t want to “punish” capitalists and corporations, which is the criticism usually put to the Old Left; but neither do I want to get to a point where political economy for the uber rich becomes “anything goes”. I agree that the state can often profitably keep its mitts off the economy, but there must be a system of incentives and deincentives in place.
At its simplest, it’s offering tax (and credit) incentives to reinvest profits in plant, machinery and labor (I’d also specify unionized labor), TO THE POINT where corporate taxes COULD HIT ZERO. And why not? The company would have done everything a good old American company should, and used to, do. As to the deincentives, aka penalties, I think it’s obvious. You pay more in taxes. And you pay a LOT MORE in taxes if you delocalize. Or cut jobs. Or outsource jobs. Or pay managers humungous bonuses and stock options. Or offshore profits. Or hide profits in tax havens. And so on.
We’re both harping on the FOREIGN angle, too. Capital flight, offshoring profits and assets, hiding them abroad, hiding profits in tax havens, investing in places and activities that would’ve made our grandparents sick to their stomachs. I’m disgusted, too.
Getting back to the incentives and deincentives business, I’ve always liked the idea of extending them to American companies operating abroad, too. Americans should pay American taxes. All of them. At American tax rates. Wherever they are. There are lots of advantages in being American, and one can “pay for the privilege”, so to speak. The same incentives mentioned above. And the same deincentives. You make more, maybe a lot more, by operating your American company in countries without the laws and regulations we live by in America, while I’m sorry for the people who get exploited there (they’ll have to take that up with their governors themselves), you STILL PAY American taxes to the American treasury.
I’d go a step further for non-American companies operating outside America. You want the advantages of selling in the American market, then move your operations to America. With all the same incentives that American companies get in America. Attract that investment fairly and transparently.
I don’t think we’re all that far apart on capitalism. As I said, I’m Old Left. By that I mean I grew up around organized labor, was part of organized labor, worked in union jobs to pay for college, where I graduated in Business and went on to get a graduate degree in Industrial Relations. To see where I’m coming from, I can say that I used to tick off my European cohorts (soft Left dabblers in Socialism and Marxism, but only theoretically) by saying that Socialism’s promised land was in America, in the industrialized Northeast and Midwest. Where unions were strong, organized, defended by law AND by tradition, and more or less equal partners in the free and fair collective bargaining that was the democratic (socialist?) lifeblood of the mixed capitalist US economy.
Income inequality in the US today is unsurprising, given how, starting in the 80s, the Right and Capital took aim at organized labor, which they always do when labor becomes, in their eyes, too “strong”, and when they become dissatisfied with their profits levels; in this case, dissatisfied with “good” profits, now expecting astronomical profits. Together the Right and Capital cancelled decades-old laws (and customs) and regulations, and rewrote them or simply wrote new ones, a revolution, in short, which transformed the American economy and society. I think a capitalist economy must have strong and legally protected organized labor that has exclusive representation for all workers in a given sector and which is legally bound to carry out free and fair negotiations with the representatives of business/corporate/capital. I think that’s so obvious it’s sad it has to be said and repeated today. It’s the democratic compromise that makes extremes like Robber Baron or Master-of-the-Universe Capitalism, on one side, and Means-of-production-seizing Socialism on the other, both unnecessary and unwanted.