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June 11, 2012

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"1. They would favor low estate, gift and inheritance taxes so they can pass on their wealth to the next generation."

Prominent lefty billionaires are actually in favor of higher estate taxes. A few speculations as to why this is:

1) Lefty billionaires tend to have come into their money more easily, not in grind-it-out fashion (see the luck v. grind-it-out discussion here: http://www.halfsigma.com/2012/06/some-more-evidence-about-whom-the-top-out-of-sight-vote-for.html?cid=6a00d8341bf6ae53ef0176153dd003970c#comment-6a00d8341bf6ae53ef0176153dd003970c )

2) A high estate tax doesn't snag the super-rich so much, since they can use sophisticated estate planning, insurance, and philanthropic trusts to avoid most of it.

3) Philanthropic organizations inexorably drift leftward, so it's more in the interest of rich lefties than rich righties to endow them and have policies such as the estate tax to encourage others to donate to them.

Or simply could be that Republican tax policy is influenced by economic wisdom. Economists favor low or zero taxes on estates and investment income because there taxes are more distortionary than raising ordinary income rates.

Leftism helps these people because it keeps the lower part of society in fear, chaos and degradation, keeping the attention and heat off them.

Non-profit workers are probably much more liberal than college professors. There are some disciplines (engineering, physical sciences, math) in which consistency of thought matters. That is not true for the non-profit sector. There, all that matters is how you feel.

Yeah.

The estate tax repeal is one of the more mystifying things the Republican Party supports. Their normal arguments against high taxes don't really apply to the estate tax because:

1. Dead people have no use for money, so the normal "job creator" arguments don't fly.
2. The people who are actually paying the tax (again, dead people have no use for money) are the dead guy's children. So the only thing that the estate tax prevents is... people living off their parents (even after the parents are dead!)

Disagree.

The top out of sight elite don't just want to pass on their own wealth, they also want to prevent the upper-middle-class from doing so.

Thus they favor higher but more complex (ie: evadable) taxes across the board.

Maybe their analysis of their interests differs from yours. Maybe they're maximizing something you're unaware of or fail to understand. It's even possible that they have access to better and more complete information about their interests than you do.

I think that makes more sense than going off like some brainless goddamn lefty and claiming that somebody's "voting against his own interests" without even stopping to consider the possibility that humility may be an aid to understanding in cases where your predictions don't pan out.

"I don't understand you, therefore you're acting irrationally." Bzzt, nope.

Your analysis of #1 appears to be flawed.

The key to understanding top out-of-sight behavior is to realize that they want to keep other people out of their hot tub. So they don't have a problem with whopping inheritance taxes because they can survive while the would-be rich really can't. This totally explains people like Warren Buffet and Bill Gates the Senile as no other narrative can.

If I have fortune of $10 billion a 50% inheritance tax doesn't bother me much because (a) I can hire lawyers and accountants to get around a lot of it, and (b) it will drive people in the mere million-dollar range back into the middle class (where they belong). This is also why top out-of-sight people don't object to whopping rates of income tax; they're still going to be the Last Rich Standing, and the pestiferous wannabes get pounded back into the suburbs.

I think the fact that OOS's vote nearly completely for Democrats instead of Republican despite 1 and 2 reinforces the fact that the elite are always seeking self satisfaction in their own ideas, and will continue to fund political operations which seek to enforce the elites ideology through laws and government regulations.

I'm unsure what you mean by your conclusion. It's not terribly clear. Is it "republicans are political hypocrites?"

If that's the point, I'd expect a concrete statement.

You also forgot another possibility: Republocarats LIE to pollsters.

"The interesting thing about charitable trusts is that, even when they are founded by rich patriarchs with a conservative bent, they wind up being controlled by their much more liberal descendents or by the professional non-profit workers who are probably as strongly liberal as college professors." -- Half Sigma

You've got that right. The last member of the Ford family quit the Ford Foundation over 20 years ago. He said it had deviated too far from its original purpose for him to be a part of it. In other words, it was hijacked by flaming leftists.

That's why I think tax breaks on charitable donations and organizations should be scrapped.

@Matt Walker,

Maybe your analysis of people's analysis of their own self interest is a bit narrow.

When you have a superfluous amount of money, self interest in retaining all of it may not be your top priority.

Also people vote against economic self interest all the time. People are more complex that simply a wild dog voting for what gets them the biggest piece of raw meat. It's difficult to explain the pro-life vote based on self interest. People vote on many different issues and often times people vote based on an idea of how things aught to be on the whole, how they think society should be structured, what they think the value system should look like. People of all political stripes think and vote this way.

Certainly some people vote on pure economic self interest but there are many who do not.

"Why do Republicans support #1 and #2 so strongly when two-thirds of the top-out-of-sight, maybe even more, probably vote Democratic?

Because the TOOS are so small numerically and the much larger number of $1-5 million folks would like to help their kids buy and (otherwise unaffordable) house away from NAM's?

One thing that has always seemed to completely elude you is the notion that the truly well off know that it is most to their benefit to get in bed with BOTH parties; to use their money to infiltrate the both the liberal and conservative wings of the american political apparatus.

The crusaders among the megarich (eg. george soros, koch brothers) are assumedly the minority. Most spread their money out more or less evenly, perhaps giving slightly more to whatever candidate seems more likely to win (obama in 2008)

Some of this talk edges into the nonsense I see on this blog and in the comments regarding the media: that there's a self-conscious, concerted effort to coordinate one way or another.

Perhaps wealthy Republicans oppose the estate tax because they believe they will one day ascend to the richest .0001% and/or because they resent paying taxes in general.

Perhaps liberal-minded elites recognize they've been lucky to be born into power and privilege, and think taxing large estates is only fair.

There also seems to be this assumption that those born into wealth obsess over their riches, seeking to preserve as many pennies as they can. Well, maybe -- just maybe -- they have so much money they don't give a shit, especially if they've lucked into it through rich parents or casino stock options.

Some people can boost their social status by earning more money, especially the poor/middle class. However, one of the best ways for the ultra-wealthy to gain a boost in prestige is by giving their money away.

In other words, I do not think the psychology of liberal minded individuals born into wealthiest households differs that much from those born to urban professionals bringing in mid six-figures.

"When you have a superfluous amount of money, self interest in retaining all of it may not be your top priority."

I think this is a key point for understanding TOOS. For people with fortunes up in the nine figures or above, they can afford to pay high taxes and not really suffer any loss in living standards. This isn't the case for people with net worths in the $1 to $10 million range, where their fortune is less secure.

It's probably correct that the TOOS favors relatively high marginal tax rates, but also a relatively low cutoff point for the highest tax bracket. This has the tendency to stave off competition from people with fortunes in the seven or low eight figures, who are more vulnerable to high taxes, and so they're not necessarily clamoring for lower taxes.

Apex: Show me where I spoke of "economic self interest". I didn't. I said "interests". "Their interests". I did not attempt to characterize those interests, because I am not one of them and I do not know what they may think their interests are. You and HS don't know either. Tossing out non-falsifiable wild guesses doesn't count.

Also, all of you: Everything I've read in this thread about estate taxes misses the point by miles. It's not a moral issue. Here's the point: Large concentrations of investable capital in private hands are necessary for the proper functioning of private enterprise. The purpose of estate taxes is to break the back of private capital accumulation and put it all in the hands of vote-buyers and influence-peddlers, whose criteria for a successful investment are catastrophically different.

If you don't get that, you don't understand very much about how our economy works. If you trust your loving masters in the Cabinet to do a better job of allocating capital than private investors do -- or if you think capital allocation can't be done wrong -- you're not as clever as you think you are. On the clever scale, that stuff ranks just about one notch above Afrocentric black nationalist theories about how European civilization was stolen from the Nubian empire.

So, by analogy, why don't you run outside and rip the alternator out of your car, because somebody told you alternators are immoral. Because you're so damn smart, you don't need to know how cars work. All you need to know is who you hate. Right? Go show that alternator who the boss is, tough guy. Then when your car won't run, you can just hit it with a golf club until the engine starts up. Or if not, you can move on to contemplating deep thoughts about whether it's MORALLY FAIR for the transmission not to be located in the driver's seat. After all, isn't it doing all the real work?

Good luck!

There's absolutely no reason for the top-out-of-sight (TOOS?) to want tax breaks for private school tuition, as that is chicken feed compared to their wealth.

"The key to understanding top out-of-sight behavior is to realize that they want to keep other people out of their hot tub."

I like that. The visual that it conjures is so...Marin County.

"So they don't have a problem with whopping inheritance taxes because they can survive while the would-be rich really can't."

For some reason, this makes me think of the old joke about camping. You don't have to be faster than the bear, just faster than the slowest member of your campsite.

Maybe you should address this question. Would you rather be the richest man or the most powerful man in the world? In this senerio you are one of the richest men in the world. So whats left? What is left is to also have the most power/influence. Given that power is not innate and can be granted to others, to acquire power you must possess or control a form of power currency.

In other words, they are self-seeking just like the destitute on the other end (counting only the few who do vote). The "charities" they give to also typically benefits themselves.

I think that Top-Out-of-Sight is no longer relevant as a class designation given how famous the Koch Brothers and similar people are. Even Center Island (and Oyster Bay in general) NY, Isleboro ME, Lenox MA, Block Island, RI, etc., are famous. In other words, they (or at least a good deal of them) are more visible than they were in the past.

Such people also typically don't spend themselves poor and are careful not to invade principal or capital. One of the most painful stories is the one where the lottery winners spent themselves poor and now work at a low-end job. A pity no one informed them of wealth camp.

"There also seems to be this assumption that those born into wealth obsess over their riches, seeking to preserve as many pennies as they can."

That is a new money trait as those born to have trustees to take care of their money (and are themselves sent to wealth camp in addition to having parents who know how to keep money) and are thus more secure that their wealth will remain with them. In short, those born with it take it for granted, don't discuss it in public, and aren't excited to receive it.

At least some of that private philanthropist capital goes to Planned Parenthood and the Red Cross, so not all of it is self-interested.

However, innocence must never be presumed, or else said innocence will be abused and leveraged like laws that allow for unchecked outsourcing and money being taken out of the economy. Americans' overall net worth has greatly decreased while major corporations are enjoying record profits while the stock market's value is much higher, and there's a glaringly obvious problem with this picture. Laws should be considered with potential abuses in mind, and this of course includes birthright citizenship and various welfare laws.

In the past people would create goods and services that society wanted and needed and the focus was on those products. Today, it is simply a pretext for making profits, and it shows in product and customer service quality.

Those who arrived, arrived a long time ago (implying an inevitable technical feudalism), and the hypothetical business frontier has long since been closed. Even the Internet, which is the last frontier, is closing near the speed of light.

H.S.: "The tax code isn’t quite as generous with tuition for private school."

The rich give a tax-deductible "donation" to the private school to get their little angel admitted in the first place, so the tax-code effectively subsidizes private-school tuition.

H.S.: "The Democratic Party realize that these gifts mostly benefit liberal-controlled institutions."

My understanding is that a huge amount of charitable giving goes to ultra-conservative Christian and Mormon churches and colleges.

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