Great moments in disinterested punditry
January 30, 2014, 9:40 am
Filed under: Uncategorized

As he has before, Barry Ritholtz is still defending the estate tax on the grounds that no one pays it except ‘idiots’. I guess he just feels really really strongly about this issue for some reason.

To me this raises the question, why even have such a tax? If your sincere position is that it should really never be collected, and all. A tax which should never be collected I guess is therefore supposed to generate no revenue. But theoretically, the purpose of taxes is revenue. Ritholtz seems to have lost sight of that. I wonder why?

Is it good government policy to set up a tax that (a) apparently won’t be collected from people who aren’t ‘idiots’, but (b) will be collected from those who are? Is that what we want the government to do, go and grab wealth from ‘idiots’ but leave it in the hands of the savvy? Where ‘savvy’ means ‘jumped through a bunch of government-prescribed hoops’? Are we comfortable with a government that sets up a bunch of rules forcing you to be ‘savvy’ in various aspects of your life? How many aspects? Is there a limit? Wouldn’t it be better for all concerned if the government just, like, left us alone unless there were a really good reason?

Do we like hoops? Do we want more of them? Ritholtz seems to.

To get to the heart of the matter, the main effect of the tax, defended on these grounds, seems to be to incentivize the money-management industry. Sure, ‘idiots’ won’t use their services (and so, will get hit with the tax), but apparently everyone at slightly-above-idiot level is supposed to go use a fancy-pants money manager, paying him a bunch of fees to do a bunch of paperwork, ‘arrange’ their estate, set up ‘foundations’ or ‘trusts’ or some bullcrap (seriously, that shit is TOTAL BULLCRAP, why do we want to incentivize it?), and thereby shield their estate from this tax. So here’s the million-dollar question (literally): why on earth would Barry Ritholtz keep defending a tax whose main effect is to artificially-incentivize, to the point of practically making it mandatory, the pervasive use of money mana….by everyone with a lot of mon….

Oh. Oh. Oh, wait. Oh. Never mind.

UPDATE: See, Ritholtz explains, you can shield yourself from this tax with

Nothing cutting edge or daring, just put a few well-paid lawyers, accountants, and financial planners…

And of course, incentivizing the use of ‘well-paid lawyers, accountants, and financial planners’ is the very purpose of the tax code. So stop complaining, everyone! Your government has a job to do, and that job is, to make sure that lawyers, accountants, and financial planners are well-paid.

Er, for the people, of course.

14 Comments so far
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Well, you have to admit that there is a fine logic to taxing stupid people. Generally, the strong tax the weak. In our proggy post-democracy, actual strength is not tested. Instead, people try get ahead by “manipulating procedural outcomes”; that is, we test intelligence. Thus, the smart tax the stupid.

Comment by Leonard

And tell themselves they’re doing it in the interest of egalitarianism.

Comment by Crimsonic

It’s a lot worse than smart taxing the stupid. It’s those who feel no compunction about gaming systems taxing those who do. Over time this reduces trust levels in the population, which is a seriously bad thing on balance.

Comment by Jehu


I think this is why it bothers me so much. “I game the system to the max and you’re an idiot if you don’t. Anyone who’s anyone games the system to the max. So, I’ll do it and get mine, and if you don’t, tough luck on you ha ha.”

Ok, but don’t expect me to have any respect for such a system.

But worse, is when this is used *as an argument against fixing problems in the system*. Then it becomes:

Me: That’s a bad law & should be changed
Him: Oh, but everyone who’s smart routes around that law by paying lawyers/accountants, so it doesn’t matter.

How is that an argument *against changing the law*? It’s not. The fact that Ritholtz thinks it is is telling. He is not disinterested here. Read that second link. He sure seems to know an awful lot about “second-to-die life insurance” and other such things….

Comment by Crimsonic

People love jumping through hoops. Observe anybody playing a stupid mobile phone/tablet game.

Comment by Candide III

There’s a certain sort of person who does indeed love that bullcrap, and many people in finance are like that, and so they feel no compunction about setting up a society of rulesets that disadvantage folks who don’t. Yes.

Comment by Crimsonic

Barry Ritzholz is a horrid little weasel.

Comment by The Unreal Woman

As an engineer by temperament and training, I find unnecessary complexity to be an abomination. Previous eras had a higher engineer/inventor to lawyer ratio in our elites and were less dysfunctional, especially adjusting for the resources and technology available to them. Even as late as the 1950s, we managed to de-malaria the continental US. Try doing that now.

Comment by Jehu

“Sure our malaria policy is dumb, but only idiots don’t know how to route around it” –Ritholtz in some alternate universe

Comment by Crimsonic

We test not intelligence, but a lively interest in engaging with arbitrary bureaucratic idiocy.

Once you’ve got the kind of idiot who enjoys that sort if thing, any shreds of intelligence — or low animal cunning, at least — he can scrape together are a big help, certainly.

But our host is correct. What is intended to be incentivized is what IS incentivized: People who make a good living either propagating or mitigating the harm done by the sacred All-Mother, Government. Engaging in, or working around, idiotic and arbitrary laws is our culture’s equivalent if the Haredim protecting Israel’s borders by studying Torah all day and living on welfare. When you are holy, good things happen! Everybody knows that! And the more flagrantly useless your holiness is, the more holy it is, thus the more valuable.

Productive work is rarely considered holy.

I feel like Mencius Moldbug today.

Comment by Steve Baker

“We test not intelligence, but a lively interest in engaging with arbitrary bureaucratic idiocy.”

Indeed. It is definitely not intelligence that is being tested (Ritholtz being Exhibit A)

Comment by Crimsonic

This kind of thing is frustrating because he seems to concede that it is a bad policy, then says no we shouldn’t fix it because it is a nonfactor in practice. I see the same thing with immigration.

“we should do something about illegal immigration”
“no we shouldn’t, because see here, illegal immigration has decreased all on its own!”
“….so…you’re agreeing that illegal immigration is a bad thing and that it should be curtailed??”

What is the driving force here? Maybe a fear that if state power is used to do something that the other guys like, who knows where that will lead?

Another odd thing is about taxes that don’t intend to be for revenue but for punishing people for doing something. Actually, there is a supreme court case that blessed this, but it seems no less odd to me. Case in point: cigarette taxes. We need to raise cigarette taxes, so that people will smoke less. If we want people to smoke less, why not outlaw it? Is the confusion here about a tax vs a fine, as seen in Obamacare? Ritholtz seems like he wants to fine the unconnected and non-savvy for not being as savvy and connected as they ought to be. But talking about fines seems too mean, so we’ll talk about tax instead?

Politics is hard.

Comment by Matt

It’s just so digusting and petty and greasy. And Ritholz can’t even see the problem with his disgusting grossness.

Comment by The Unreal Woman

what a way with words.

Comment by AdGuy

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