Surprise: Looting Hurts the Economy

Although he does not challenge the moral premise behind his state confiscating his wealth, David DeLucia of Connecticut provides an instructive blow-by-blow account of how Connecticut's gift tax is driving away its "super-wealthy" retirees:

Wealthy people have options, especially mobility. If I sell my Connecticut home, move to any other state and then make gifts of my wealth to my heirs, I save them millions of dollars. My super wealthy friends call this the "free move." You can move out of Connecticut and the gift tax savings more than offsets the cost of the move and the new home purchase. Why wouldn't anyone do this?

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When very wealthy people move, their spending moves with them. Wealthy people are great for the local economy. They shop a lot, buy expensive cars, big homes, expensive jewelry, eat at fancy restaurants and hire many local workers like landscapers, plumbers, electricians, etc.

I can't help but wonder how many of these very workers keep voting for soak-the-rich politicians. The ones who do are getting what they deserve. The ones who don't are fellow victims, along with those being looted.

Along with the fact that DeLucia regards taxation (even at confiscatory rates) as "fair" up to a point, another criticism I have of this piece is that the author focuses on how Connecticut's tax makes it unattractive in comparison to other states. ("I can understand the state estate tax more than the state gift tax. Why? Because states around Connecticut also have an estate tax ...") Would the tax that bothers DeLucia so much be fine if all the surrounding states adopted it? (Hints: (1) The rich lose money whether they are robbed or having to react to the threat of robbery; and (2) jobs disappear whether money goes elsewhere due to its owner fleeing or being plundered.) And why not go further, and argue that Connecticut repeal the state income tax it passed way back, when I lived there?

The fact that taxes continually increase despite the well-known maxim that "the power to tax is the power to destroy," may have something to do with the fact that even those most victimized by this form of legalized theft wrongly think it is okay, or even necessary. Ayn Rand identified this phenomenon long ago as "sanction of the victim".

This is why we have a man who calculates that he will have been stripped of three quarters of his wealth over his lifetime quibbling about how it is harming his robbers, rather than calling attention to the barbarity of taxation.

-- CAV