Wednesday, June 6, 2012
I am presenting Occupy the Tax Code: Using the Estate Tax to Reduce Inequality and Spur Economic Growth at Cincinnati today as part of our 16th Annual Summer Faculty Workshop Series:
Tax policy is ossified in Washington, D.C. Democrats, responding in part to the Occupy Movement, insist that any tax reform begin by increasing taxes on the 1% (through the "Buffett Rule" or otherwise). Republicans, responding in part to Grover Norquist and the Tea Party, reject *any* increase in taxes as inimical to job creation. As a result, tax policymakers fiddle while virtually every economist agrees that current tax law both exacerbates income inequality and retards economic growth. This Article proposes a path out of the current gridlock by re-framing the debate and focusing on the adverse consequences of income inequality on economic growth. Viewed in this light, increasing taxes on the 1% should not be seen as class warfare but instead as a tool for revitalizing the economy. Revitalizing the estate tax offers the ideal vehicle for doing so, because the tax was designed specifically to curb concentrations of wealth and in its heyday affected only 1-2% of decedents who died each year. The estate tax also is more efficient than the income tax and has less impact on savings, economic growth, and job creation.