Well I have finished Joseph Stiglitz’s book, “The Price of Inequality.”  Three hundred pages of glib sophistries, half truths and outright lies, Stiglitz knows no bounds in his full bore attack on the “1%.”  To bolster his accusations he has 100 pages of footnotes mostly referring to his earlier works.  But no amount of  “footnotes” can correct the verbal crimes committed in pushing his agenda. 

In spite of the jaundice dross I do agree with Stiglitz on one main understanding, the economy will not pull out of the economic doldrums until demand increases.  We do, however, differ sharply in how we propose pumping up demand.  Stiglitz argues for taxing the rich more and having government use these additional funds to invest in activities that will boost demand in the economy.  I argue to return to the huge credit market we had that effectively channeled money from the rich to the “99%” to hype demand.  Why, because I believe it is much easier and quicker to revive the credit markets under our new legislation to better regulate these than it will be to up taxes. 

I have used Stiglitz to write three blogs so far, now a fourth, “Taxes.”  Stiglitz bases his call for higher taxes on the rich on the rich getting away with taking most of the income while paying little in tax.  But the top 1% who receive 20% of all income pay 40% of all Federal Income Taxes.  The top 10% get 46% of the income and pay 70% of the taxes.  The top 50% get 87% and pay 100% of the taxes, since the bottom 50% pay no Federal Income Taxes.   Hard to make a case that the top income earners are not paying their “fair” share.

Stiglitz writes prolifically about the tax loopholes and favorite tax treatment the rich get from the politicians they control.  To get an idea of where he comes from let’s look at one tax he finds to be particularly harmful, the estate or inheritance or “death” tax.  Stiglitz would raise this to almost confiscatory levels since he does not want to perpetuate wealthy families. 

There are two powerful arguments against Stiglitz’s appeal and against the “death” tax itself.  First, taking a page from Stiglitz I would offer the social objection to the tax.  Most parents want to do the best they can for their children and this includes passing along to them as much wealth as they can.  This desire has generated a whole industry devoted to doing this called “estate planning.”   The second objection is rooted in tax law and policy, we do not tax transfers of wealth.  If we did we would have to tax loans (money transferred from the lender to the borrower), gifts, donations, scholarships, and more.  The third objection is also based on tax policy, we do not impose double taxation on income except for allowing states to tax your pre-federal tax income.   Money in an estate has already paid the taxes due when earned and accumulated.  Taxing the money again is double taxation on the same income.

I will do some more blogs based on Stiglitz’s book since it is the Democratic Party’s economic platform in the coming election.