Yeah, that was the argument against the estate tax most commonly heard. That is, that the very rich engage elite squadrons of tax lawyers to engage in avoidance strategies. Also, that the estate tax encourages consumption inequality, which presumably is the correct measure.
I'm also puzzled at the supposed relationship between the estate tax (and other such policies) and forex markets. For one thing, currency values have at best a tenuous relationship with such policies, and for another, most macroeconomists currently believe the dollar is overvalued, or above its long-run equilibrium. And this is because the U.S. is busily engaged in selling dollars (mainly to Asian central banks) to avoid the spike in interest rates that would actually involve doing something about the deficit, while large Asian banks (mainly the People's Bank of China) are busy buying up dollars so that they can keep their currencies (mainly the RMB) low so that their exports are cheaper for U.S. consumers. A gradual fall in the value of the dollar would actually be welcome; more worrying is a sudden decline, which would lead to an increase in the price level and cause the Fed to raise interest rates to maintain its inflation-fighting cred.
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Date: 2006-12-05 07:21 pm (UTC)I'm also puzzled at the supposed relationship between the estate tax (and other such policies) and forex markets. For one thing, currency values have at best a tenuous relationship with such policies, and for another, most macroeconomists currently believe the dollar is overvalued, or above its long-run equilibrium. And this is because the U.S. is busily engaged in selling dollars (mainly to Asian central banks) to avoid the spike in interest rates that would actually involve doing something about the deficit, while large Asian banks (mainly the People's Bank of China) are busy buying up dollars so that they can keep their currencies (mainly the RMB) low so that their exports are cheaper for U.S. consumers. A gradual fall in the value of the dollar would actually be welcome; more worrying is a sudden decline, which would lead to an increase in the price level and cause the Fed to raise interest rates to maintain its inflation-fighting cred.