Bill Gates gives sound reasons for maintaining the estate tax, and I agree with the general proposition of having something like a consumption tax. But, I have a different take on the social utility of capital transfers.
Yes, what you invest in you tend to get more of. But, each capital transfer does not destroy the capital. So, if you are buying a yacht, that capital goes to the designer, the builders, the welders, the suppliers, etc. Now, the point is that these people now have their own choices to do something with the capital received. Some of it will go for food, some of it will go for BBQ grills, some of it will go for big screen TV's. And, then the people receiving that capital will make their choices ad infinitum.
(Perhaps a performance artist alighting a million dollars in cash would actually destroy capital. They are undoubtedly more examples of waste)
I guess I can still see the incentives that would be built into a tax system (as they are built into ANY tax system) to alleviate what may otherwise be burdens on government into encouraging more social utility. But, I just wanted to emphasize that it is not that luxury spending has NO social utility, it just diffuses the social utility into multiple second order spending decisions.
Yes, what you invest in you tend to get more of. But, each capital transfer does not destroy the capital. So, if you are buying a yacht, that capital goes to the designer, the builders, the welders, the suppliers, etc. Now, the point is that these people now have their own choices to do something with the capital received. Some of it will go for food, some of it will go for BBQ grills, some of it will go for big screen TV's. And, then the people receiving that capital will make their choices ad infinitum.
(Perhaps a performance artist alighting a million dollars in cash would actually destroy capital. They are undoubtedly more examples of waste)
I guess I can still see the incentives that would be built into a tax system (as they are built into ANY tax system) to alleviate what may otherwise be burdens on government into encouraging more social utility. But, I just wanted to emphasize that it is not that luxury spending has NO social utility, it just diffuses the social utility into multiple second order spending decisions.