”David Cameron, when Prime Minister of England, made his cuts in welfare saying ‘never again will work be the wrong financial choice.’ Further he said ‘the system has created a benefit culture. It just doesn’t just allow people to act irresponsibly, but often actively encourages them to do so. A working welfare system should drive growth.’ That of course is something like what we are saying, but we say it the whole lot stronger. I have to agree with him though when he said ‘that the collective culture of responsibility has in many ways been lost.’
“Then he really got tough, saying that ‘For those people who refuse to play ball, there will be increasingly severe sanctions.’ And ‘Anyone who repeatedly refuses to take up a job offer face losing their benefits for as long as three years.’”
”I hate to disagree with you Tyler, but I don't see enough equality in our country. It seems to me that the rich people and the corporations have pushed the common people to the bottom. People are getting poorer. A few at the top are getting richer. Our tax codes keep giving the people on top more ways to evade taxes. Lobbyists seem to control Congress.”
“Lee, if ‘pro’ is the opposite of ‘con’, then what is opposite of progress?
“You are certainly right about the lobbyists. When I started following the politics in your country just before the turn of the century, your special interests had spent a half billion dollars on lobbyists. 10 years later it was up to 3 ½ billion. I would guess by now it is over 10 billion. But this is what your American freedom is about."
-"Banks, other financial institutions like insurance, and real estate are the biggest spenders on lobbying--spending almost a half billion dollars a year. Pharmaceuticals and the health industries are next with about a quarter of a billion dollars a year spent on lobbying. Electric utilities spend almost $200 million and business interests about $ as170 million, then comes oil with only about $150 million a year to get its billions in tax breaks and subsidies.(9b)”
-"But the people keep getting screwed by the rich and their corporations. I think of the health care bill that President Obama wanted to get through. There was no comparison to the amount of money spent by consumer groups and the money spent by the healthcare industry and the doctors. As a result what would have forced the private healthcare people to deliver cheaper services was eliminated from the bill and healthcare costs immediately increased. Our country was already paying more for health care than any other country but was getting less in return. Big business won again.”
“On the other hand, when you have recessions more people remain out of work, government aid increases, more people get Medicaid and more go on food stamps. And in spite of your laws that are supposed to deny welfare benefits to single mothers after they have had one child, and to married mothers after they've had two--multiple babies keep being popped out of your young women and society often has to pick up the bill, either by increasing aid to the mother or by paying foster parents to take care of the children. You see this is your ridiculous idea about equality. Every person, no matter how irrational and unconcerned they are about having others pay for their decisions, expects, and seems to get, money from the government.
Lee, I know you are a lawyer so you must be familiar with that early Supreme Court case McCullouch v. Maryland.(9c) You remember that Chief Justice John Marshall, who was among your founding fathers, ruled that the Constitution tells you what the government cannot do but it doesn't say what your government can do. So when your government creates banks, requires health insurance, issues food stamps or creates an income tax--it is within its rights. But the establishment of programs since the days of Franklin Roosevelt had tended to be primarily towards the left and equality. Prior to Roosevelt the government tended to lean far to the right. Since Roosevelt it was primarily Ronald Reagan and the Bushes that pulled it rightward.”
-"As you know, I'm quite happy with the movement to the left, towards equality. But we keep getting these far right people who don't understand the Constitution. The Tea Party movement is the biggest but there are all these fringe militias that are anti-income tax or anti-something that they think interferes with their freedom. They seem to think that the Constitution means only what they think it means. They remind me of the French where the principles of governing are pretty well laid out in their Civil Code. But in America we have a more fluid interpretation of the Constitution and of our laws. The people who wrote the Constitution were among the smartest that ever walked our land. They designed a governing document which could be flexible. Although I would have to admit that some of our court decisions have undone some pretty solid Constitutional principles. I know I have mentioned to the others how they completely eliminated the civil ex post facto constitutional provision.
"You couldn't have a nation today run by the states. Even in the 18th Century the Articles of Confederation were a failure But Tyler, you had mentioned a different type of taxation that you seem to be happy with. What about it?”
"Our big taxing difference is in our 'end of life tax' which you call an estate tax. In this tax all that a person has accumulated in terms of business value and personal property, like a home, is returned to the state when he or she dies. If you are married, this tax does not kick in until your spouse also dies. This is true even if the spouse has remarried, but it doesn't carry over to that new spouse.
"In your country, a number of years ago you got about 6/10 of one percent of your total taxes with an estate tax. Now you get about a quarter of one percent. With a $5 million deductible for a single person or $10 million for a married couple and with your charitable deductions, you lose a lot of potential tax money. Then your highest tax rate on this inheritance tax is about 35%.
"Here in The United Colonies this is our major tax. A person can deduct 5% of whatever the value of his or her estate is up to $10 million. So the maximum is $500,000 if your estate is worth $10 million. And no person or group can get more than 1%. The one exception is that your estate will pay the education expenses of your children through the university level if you and your wife both die before your children have finished their education. Once their education is completed our 'end of life tax' rules apply.
"The people who have left large estates from their lifelong work are recognized in our Citizen Hero Hall. A person who has contributed over $10 million in this 'end-of-life tax' is awarded the Citizen plaque. For those who have contributed $50 million, they are awarded the Gold Citizen status and a marble bench in our museum is inscribed with their name. If their contribution was $100 million, a Platinum Citizen level, a room is added to our museum in their name. If their end-of-life contribution was $500 million, a Diamond level citizen, a school or university building will being named after them. If their contribution was over $1 billion, they are enshrined as a 'Founder of the Country' and a statue will be erected in the capitol and an important public building will be named after them.”
- "But if the person made the money, why can't he or she pass it on to their children. It doesn't seem fair.”
"Our reason for this is that since our taxes are so low during life, it allows the citizen to earn much more money they can in any other country, then spend and enjoy the money they earned, the taxes need to be paid after death. A second reason is that we expect every person to make his own way. Living the good life on somebody else's earnings doesn't fit into our national philosophy. Every person starts anew with approximately the same equality of opportunity. It is true that some children will have up to a $100,000 inheritance and others will not, but all children should have been able to enjoy as much education as they needed and wanted because the parent had the responsibility to pay for all of a child’s education. And as I said, if the child has not completed his or her education when the parents die, the necessary expenses are taken from the parents’ property when they die. This comes before any other inheritances.”
"In your country last year there were only 56,000 tax returns dealing with the estate tax. Even so it brought in 24.5 billion d
ollars. But that was only about 1% of your total tax income. In our country everyone has some estate tax due. You just can't go through life without acquiring property or money. So in our country our 'end of life' tax provides almost 70% of our total taxes.
"In comparison in America you get about 50% of your national budget from personal income tax and about 15% from your corporate income tax then borrow whatever else you need to fill in your budget. Last I saw you had to borrow $1.3 trillion for the year because your expenses exceeded your income.
ACCUMULATED INCOME
“Let me show you how we go about estimating our tax income.
“The total wealth of the world is estimated to be $125 trillion. The annual gross product of the world is about $30 trillion. If we use these estimates as the basis for determining the eventual tax income from our citizens, we could assume that our accumulated wealth is four times our GDP or about $2 trillion. This should give our average citizen an accumulated wealth of about $250,000. Deducting 5% for the inheritances, we come up with about $240,000. Our population is about the same as Switzerland’s, 8 million people. Assuming that life expectancy is 80 years we will have about 100,000 deaths a year. With an average of $240,000 in 'end-of-life tax' we will have about 24 billion dollars a year in tax revenue from this tax. This is just about two thirds of our total tax needs.
"In your country you seem to believe you can take your estate with you when you die in spite of the common truism that ‘you can’t it with you. Here in The Colonies it is our most popular tax. We have a national philosophy that we should accomplish as much is possible before we die, enjoy the fruits of our labors, pay as little as possible for government services, buy what we think we need for our own lives rather than being forced to pay for other people's needs. We also believe strongly that all people should start life evenly then see how far they can go.
“We emphasize ‘the present’ in our national philosophy. By ‘the present’ we mean the life of the person. It reminds me of a saying I heard from Jiri Kylian, the famous choreographer. He said that ‘Yesterday is history. Tomorrow a mystery. But today is a gift, that’s why they call it ‘the present.’ So for each of us our own life is ‘the present,’ and everyone is responsible for their own ‘present.’
"I know that you people want to keep your money into the grave. I think you are like the old Egyptian pharaohs who wanted to be buried with all their possessions because they thought they got to keep them when they arrived on the other side of the River Styx. But did you know that if you had a tax like our 'end of life' tax on your baby boomers you could just about wipe out your national debt?
“In your country the amount of inheritance that your baby boomer population will inherit is about $11.6 trillion, about $64,000 per person. You can see that if all of those inheritances were applied to your national debt it would just about wipe it out.
“Probably most of your baby boomers will require end-of-life care paid for by Medicare. So you borrow to pay for what they could pay for themselves. In the UK the government now requires that people pay for their elder care until their money runs out then the government will step in and pay.
”Contrary to public opinion, your older people in the US are not necessarily impoverished. (10d) In 1959 your older people had the highest poverty rate of all age groups, with 35% being impoverished. Children were the second-highest group with 27% impoverished. By 2007 10% of older people are impoverished compared to 18% of children. The median net worth of households of married people over 65 was $385,000. For single people over 65 it was $152,000. So you see that the government doesn’t have to pay for all of the end-of-life medical costs. As we have said, our longer lives are creating financial problems for you equalitarian welfare states.
“In 1930 the average life expectancy was 59.2 years at birth. If you lived to be 65 you should have had a life expectancy of 12.2 years more. Today, because of the increased lifespan, your life expectancy is 78 years at birth and if you live to be 65 you should expect another 18.5 years.
“I just don't think your country is acting in a financially prudent way. But I have seen when somebody suggests a raise in estate taxes, that the gargoyles appear on your capitol's terraces ready to fight the government ghouls who attempt to prey on the dead.”
-"Don't you find that many rich people will hide their money in offshore accounts? It seems that the selfishness you preach, would allow such practices. Another thing, can your university graduates go to other countries after college or must they stay for a while and pay off their debts?”
“Everyone who wants to work in our country signs a contract with the government relative to our taxation system, it spells out what is expected, and what is not allowed. Hiding money abroad is definitely not allowed. It is actually quite easy to see if this is happened. In fact most of the previous tax havens have been forced to open their books to all. But we have a national pride in our ideas of freedom and responsibility along with the necessity of having equality of opportunity. We do have laws to protect us from such fraudulent practices and we have international banking agreements that would make it difficult to hide money. You might also remember the rewards of prestige given to those who have contributed their society after their death. These people will always be remembered. They are essential to our history.
“To answer your other question. When a person finishes education here there is always the option to go to another country to do business and to pay their taxes. But most people would like to enjoy the fruits of their labors while they are living, so our approach is much more appetizing to most people. Most of our citizens realize that they have a responsibility to the state that accompanies the freedom and the equality of opportunity that they have been given."
"We had talked about the power drive in people. Here they are challenged. They start even, then they run the race. You don't start 50 yards ahead because your daddy was Henry Ford or John Rockefeller. A real competitor wants this kind of life. There is a prevailing pride, both individually and nationally, in seeing our people achieve.”
-“What if a person had been paying your low taxes for 25 years, had become a billionaire, and wanted to take his business to another country so that she could pass on to her children a rich inheritance.”
"She can certainly leave the country but her business would have to be returned to the state. Consequently not many people want to leave. I think you Americans are so intent on trying to take it with you after you die that you can't understand our approach to individual freedom. And you know you can't have everything."
-" If you had everything, would your house be big enough to store it?
-"But what happens to the companies that are taken by your government when a person dies?”
"All businesses are required to be valued as stocks. If you have your own business you might have just one share of stock and you own it all. Or perhaps there are five owners and each one owns a different percent of the hundred shares in the company. When one owner dies the stocks go into the government's portfolio. They can then be sold within the country or to interests outside the country. Our government, as the stock owner, decides what price it will get for the stock and whether it will be sold within or without the country. It is a tradition that if possible the company is sold to the owner’s children. But that only works if they seem to be competent to handle the business.
-"How do you prevent people from spending all their money abroad and having nothing left when they die for you to tax?
"Good question Con. We encourage people to travel and to use their money. If you like to ski you probably have skied the Alps--Chamonix and St. Anton and you have probably skied Vail and Whistler. You have probably lain on the beach in Tahiti and Malibu. But it is just as likely that you've vacationed here, like so many of the world's rich. You haven't seen our domed resorts where the weather is always perfect. Our winter resort is more than 20 times the size of Dubai's indoor ski facility, whose longest run is 400 meters. Our lo
ngest run is over a mile and we have five black diamond runs as well as a number of less difficult slopes. So you can ski all year in varied terrain. And when you want to eat you can choose French, Italian or Austrian chalets and have your fondue, pizza or schnitzel in authentic environs.
“If you like golf you can play Pebble Beach, with its surf and sea lions; St. Andrews, with its pot bunkers; or you can play Rancho Mirage with its winter desert heat and its long fairways. Because they are under domes the weather is always exactly what you want, perfect weather for that course.
“If you want the beach we have our domed island with 10 foot surf on one side and calm lagoons on the other. So you see Con, there is little need to travel if you want luxury. Our domed resorts bring people from all over. We are one of the top vacation destinations of the world. So it's almost a ‘wash’ with our people going out and vacationers coming in.
“But while we cater to those who want relaxing vacations we can't do much for those who want historical vacations. And we encourage our students to travel to see the wonders that we cannot reproduce. The temples at Angkor, the pyramids of Giza, the forum of Rome, the Buddhist shrines of Japan and Thailand, the Taj Mahal and the Lake Palace at Udaipur, the ruins of Troy and Machu Picchu are but a few of the gems of our civilization that must be seen and understood if we are to be educated citizens of the world.”
-"What about our natural world. I think the wonders of God are even greater than the wonders of man.”