The March 6, 1909 NYT reports on an inheritance tax proposed by a New York State Assemblyman. The graduated tax kicks in for estates valued at $500 or more. A proposed 1% tax on estates from $500-$10,000 with the highest rate being 25% on estates of more than $20,000,000 [$488,215,419.50 in 2008 dollars]. In justifying the tax, the Assemblyman, one Mr. Oliver, had this to say, as reported in the story:

Speaking of his bill Mr. Oliver said today that a little more than fifty years ago there were very few millionaires in the country...

"We were a prosperous, happy, and contented people then," said Mr. Oliver, "because the wealth of the country was so much more evenly divided. Now many persons count their millions by the score and some even their hundreds of millions - to the constant impoverishment of our people. This condition brings about a feeling of unrest and discontent, and it is but a step to a state of anarchy and mob violence when these great masses of the population rise up in their strength and help themselves to that of which they believe a small number have with so much greed deprived them."

Mr. Oliver believes his bill will tend to lighten the rent burdens and go a long way toward solving a great problem.

Sound familiar?

I understand there is an economics literature that claims to show that "wealth envy" is a real issue and that in some "games" people are willing to take less if that means someone else also has less (more here). However, I wonder about that finding.

In a mano-a-mano interaction the findings might play out. However, day to day, my bet is that most people do not think about the wealth or income of those that are far removed from themselves. This would play into Smith's Theory of Moral Sentiments. For example, I do not know Alex Rodgriguez, although I saw him play for three years in Arlington, Texas, and therefore do not think about him on a daily basis. More importantly, I do not think about his accumulated millions and I certainly do not keep myself up at night worried about how his millions have somehow deprived me of the ability to earn a dollar. If I was the first baseman of the New York Yankees, perhaps my sentiments would be different.

However, I have never understood how the government taking dollars away from someone else is supposed to make me FEEL better about myself. I might get some benefit from the theft in the form of government services, or in the case of Mr. Oliver's reckoning, a reduction in my rent bill. However, it would seem immaterial whether that subsidy is funded by import taxes, excise taxes, or an estate tax. In one sense, it is more "efficient" on the part of the government to take 25% of a $40,000,000 estate than it is to tax a dollar on 10,000,000 different transactions, but efficient theft is not a justification for theft.

Whether income concentration leads to social unrest seems to be an untested hypothesis. It is easy enough to create ex post narratives about how income concentration led to revolutions in the past. However, it is also plausible that egregious political behavior of those with the concentration of wealth led to social unrest.

I have no direct experience, but I wonder how many robbers, pick pockets, and muggers justify their theft with the "good old days" argument. Indeed, it seems that this argument is most often employed by politicians, many of whom might have been "more content" in that distant past than the average person (at least as measured by material goods).

Just another example of how our problems aren't new, they are just ours.