Paul L. Caron

Tuesday, June 18, 2019

Soled: Reimagining The Estate Tax In The Automation Era

Jay Soled (Rutgers), Reimagining the Estate Tax in the Automation Era, 9 UC Irvine L. Rev. 787 (2019):

In a technological age, labor no longer plays the central role it once did in the nation’s economy. Instead, automation has become more ubiquitous. This economic transformation has important and far-reaching consequences for the nation’s tax system and, in particular, the means by which to fund public expenditures.

Under current law, the central underpinning to automatization, namely, capital, yields income that is either lightly taxed or, in some instances, escapes taxation altogether. This puts tremendous stress on the nation’s coffers and further perpetuates wealth disparities. Yet, levying a heavier capital gains tax burden might (i) dissuade taxpayers from realizing their gains and (ii) in a global arena, result in its flight.

Another possibility exists. Congress should impose a meaningful estate tax. Such a tax is essentially the equivalent of a deferred tax on capital income. A reimagined estate tax can help restore fiscal solvency, promote greater wealth equity, foster capital gain recognition, and minimize capital flight risk.

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Singapore has no estate duty to attract high net worth individuals to set up business operations. However, this has given rise to the unintended consequence of high income inequality.

Posted by: Economics Tuition | Jun 18, 2019 6:49:22 AM

@Economics Tuition,

No estate tax and no investment/cap gains taxes, either. Let's not beat around the bush: it is purposefully structured as a tax haven for post-national plutocrats like Eduardo Saverin, who renounced his US citizenship and moved to Singapore the year Facebook went public because Zuckerberg's ex-college roommate who never really did anything to build the company obviously shouldn't have to pay a penny of taxes on his billions-strong windfall. Anything else would be the most dire Communism or something.

Posted by: Unemployed Northeastern | Jun 18, 2019 11:19:51 AM

Good point, ET. Singapore should adopt policies causing those high net worth individuals to leave so that the poor and middle class could benefit from the return of reduced income inequality.

Posted by: Mike Petrik | Jun 18, 2019 12:13:54 PM

Yes, we must have more income equality. We cannot have some people having more than others. I think that is in the US Constitution somewhere, I just can't find it at the moment.

Posted by: David Ellis | Jun 21, 2019 7:21:35 PM