With Russia invading Ukraine and the IPCC bringing out its direst warning yet about the existential threat of climate change, the past week has showcased what’s always struck me as the two most likely ways for the complacent ease of life in the wealthy west to end – geopolitical and strategic conflict, or climate catastrophe. Meanwhile, here at Small Farm Future HQ we’ve been worrying about … taxation.
You might think this is something of a first world problem in the present situation. But that, as I hope to show, is precisely the point – how can the disastrous consequences of orthodox economic growth and its associated inequalities and power politics be overturned in a world predicated on that very orthodoxy?
My aim here is to focus on one small policy redress to that bigger question, briefly explaining the case for death or inheritance taxes that I raised in my previous post, since it prompted a few requests for further explanation. I’ve long argued that if the world survives great power warmongering and eco-apocalypse then the future it faces is most likely a small farm future. Heavy death taxes would be one way to expedite that future, especially if they were accompanied by a suite of fossil energy taxes, finance taxes, gift taxes and capital controls.
I’ll try to explain the logic, but let me preface these remarks by saying that I’m not an economist or a policy wonk. Here at SFF HQ we’re visionaries, ideas people and gardeners, and we prefer to keep our politics at a level of airy generality appropriate to the uncertainty of the present world historical moment. What we’re certainly not is tax experts. Unfortunately, the income earned from our visioning and gardening doesn’t stretch to paying a professional economist, so I offer these remarks in the spirit of the amateur dilettante. Every concrete policy has its pros, its cons and its unforeseen consequences, so I’m open to counterarguments.
Recall that my death tax suggestion arose in the context of arguments about rural gentrification, and the tendency of richer incomers to help fuel price inflation that excludes locals from property. Gentrification is a particular case of what we might more broadly term ‘enclosure’. Actually, enclosure is a term I dislike, precisely because it’s a bit too broad a concept, with a bit too narrow an etymology. But all I’m referring to is situations where the ordinary majority is excluded from a resource by the social power of a minority. The only enduring way to avoid enclosure is to disperse social power (or, as I put it in a recent post about Tyson Yunkaporta’s book Sand Talk – to distribute the means to violence widely).
I got the sense from some of the anti-gentrification and anti-‘globalist’ folk who’ve pushed back against my arguments that they’re quite happy with the basic machinery of capitalist society and its vaunting of individual property rights. It’s just that they don’t want rich folks muscling in on their hometowns. I’m afraid that’s not how it works. Capitalist societies accumulate and concentrate immense amounts of money, which in this accumulated and concentrated state is a form of social power and latent violence. And it’s in the nature of social power to go where it wants to go, geographically and in every other sense. Capitalism and enclosure, capitalism and gentrification, go hand in hand.
The essence of the death tax I propose is that when somebody dies, their realizable assets – the money and financial instruments they own, and the land and property they own, can’t be automatically passed on to their offspring or other designated heirs. Instead, it becomes the property of the wider community. The effect of this would be (or at least could be) to prevent monopoly rent, extractive landlordism and, in a nutshell, enclosure. It would prevent the inevitable tendency for some people and some families to accumulate vast fortunes over generations that give them an enormous social power disproportionate to other people and to the ability of the biosphere to furnish their demands, and the consequent tendency for others to get pushed into indigence or destitution. Imagine your life as just one or two circuits of the Monopoly board, before everyone starts afresh again at ‘Go’. How would you play it then? The incentive is to put capital to work to generate personal and community wellbeing, not to generate more capital.
I’ll now try to answer briefly some of the questions that were posed to me about this tax, firstly what becomes of the taxed bounty. The answer is that it would (1) be transferred from the dead to the living via a process of political decision-making controlled by the community of the living rather than in accordance with the individual wishes of the dead, and (2) be used to support whatever services and goods the community of the living decides to prioritize. Critical among these is access to farm and forestry land and its products. I’ll say more about this in a moment.
Next question: ‘How long will such taxes exist (once generational wealth is destroyed, what then)? Ideally, the tax would be levied indefinitely down the generations. It’s not a matter of destroying generational wealth, but of handing it on from the dead to the living and distributing it among the living.
Question No.3: ‘Will migration occur towards tax havens?’ Undoubtedly some people will try to evade or game the system. The questions are how many, and can it be prevented? Capital controls could prevent it. In the present world, there are few barriers to the flow of money but many barriers to the flow of people, despite much de facto human movement and many myths about the extent and ease of migration. In the kind of world I’m describing, there would be strong barriers to the flow of money, and this would disincentivize the flow of people – probably without the need for such draconian policies about the actual flow of people as we have today.
The kind of world I’m describing. So now we need to go a little deeper into what kind of world, or at least what kind of society, might opt for heavy death taxes. Thinking first of all specifically about farm succession, suppose you’ve homesteaded an acre or two and raised your kids on your holding. When you die, your holding returns to the patrimony of the wider community. But if one or more of your children and their partners want to keep homesteading it, maybe they get first refusal on the property (I believe Malcolm Ramsay, who used to comment on this site, laid out this idea here a couple of years back. Marty Strange’s writings on family farming in the USA develop similar themes). But your children will need to pay an entry fee or take out a mortgage on the property. Likewise, if someone wants to take on a larger farm to produce for the market. The mortgage would obviously have to be one they could realistically pay off in a homesteading or farming career, meaning that land and housing prices would have to be lower and food prices higher than at present. Generally, this would be no bad thing.
If your children don’t want to take on your homestead, then fine. Somebody else will, and your children can opt for another career. They won’t be stepping into the workplace with a wad of inherited cash, but neither will they face a mountain of student debt and a lifetime of cash transfer to extractive landlords. My guess is that many of the present generation of young adults might prefer the former option. The larger point is that surplus capital pools in rising land values and monopoly property ownership. Small farm societies need to find ways to stop that happening if they’re going to stay small farm societies.
Which brings us indirectly to the final question posed to me about death taxes: who administers the tax and decides how it’s allocated? The easy answer is same as any other tax – the government. Which probably rules it out as a realistic policy proposal any time soon, certainly in Anglophone countries like the UK and the USA. Would you willingly sign away your accumulated assets to Joe Biden or Donald Trump, to Keir Starmer or Boris Johnson? I wouldn’t.
But consider the oligarchic nature of the status quo. You can imagine the op-eds in the papers if a strong death tax were mooted – “the government is trying to steal your kids’ future!” Whereas for most ordinary people the truth is that the government is already stealing their kids’ future, and a well administered death tax would help make that future brighter. Instead, the government offers weak and increasingly unrealizable promises of economic growth in the vain hope of generating more jobs and higher salaries. It offers new forms of technology and entertainment to dazzles us. It offers bread and circuses. Meanwhile the big money accumulates elsewhere, in increasingly few hands.
So for a heavy death tax regimen to work, people would have to have a high level of trust in the government of a kind that’s signally lacking in our present world. For such trust to exist, government would probably have to be relatively small-scale and localized, and to be manifestly a government ruling for and through the consent of the governed, without falling prey excessively to the special or hidden interests of powerful people or schismatic interests. This would probably involve a citizenship-based, democratic republican political and banking/financial system. In such a scenario, not much money would bleed out to tax havens, mostly because not many people would want to engage in such low behaviour and compromise the polity. And people would trust the wider citizenry to look after their children and their descendants, rather than assuming it was their job alone.
Most countries today are a long way from any such scenario and the levels of trust they demand. There’s a kind of Catch 22 situation where it seems necessary to implement heavy death taxes and associated measures to develop strong and sustainable small farm republics, yet these measures are politically unlikely with the absence of precisely such republics. Probably the most likely way small farm republics will emerge in the future is in the same way civic republican government emerged in the past, through the chaotic fracturing of a larger political field.
If that happens, the case for death taxes may lose its force because there may not be much wealth available for accumulation. The situation then could be more akin to communities of ‘subsistence’ cultivators who organize local land access along kinship/clanship lines with no need for the clunky quantifications of money and taxes. But there are latent possibilities for developing landed social control in all human societies, so even in this situation people may see a case for de facto death taxes of some kind. All the more so if people are self-consciously constructing new agrarian republics out of the literal or figurative ashes of the contemporary capitalist world system, carrying with them a sense of political identity forged within that system, but also a knowledge of how the system ultimately failed.
No doubt there are many possible counter-arguments to the kind of death tax I’ve outlined above, and an awful lot of finer-grained questions of detail that I’ll be able to answer just as soon as I have an economist working for me. To close, I’ll just briefly pre-empt two potential objections that some may wish to make. The first is that my death tax proposals are a form of socialism – to which the answer is, no they’re not. The second is that they’re vulnerable to failures of politics – to which the answer is yes they are, just like every other tax and every other concrete policy suggestion.
