Estate Tax? Death Tax? Or A New Kind of Will?
Is there a better response to this debate than those offered currently by liberals or conservatives?
Conservatives speak of ending the 'death tax' because it amounts to an additional tax on wealth already taxed during the decedent’s lifetime. They argue that if you can't pass on wealth to your children, you are perhaps disincentivized to create wealth in the first place. And they believe that as a result society as a whole becomes less prosperous.
Liberals like the estate tax because of an egalitarian impulse: they believe it somewhat levels the economic playing field for the next generation, and narrows the gap between rich and poor.
A threefold outlook seeks to see what is, and to make that more visible and transparent, and would seem to point in this particular case to a solution that, in some respects, agrees with both liberals and conservatives. Conservatives are right that those who create wealth – not the IRS or state bureaucrats -- are in the best position to judge how that wealth can be applied most productively. Yet liberals are right who would argue that such judgment loses its objectivity when it comes to one’s own children.
So, what if anti-nepotism laws were applied to wills bequeathing more than some particular amount? With regard to such surpluses, instead of taking them as estate taxes, the law could permit one to designate as one’s heirs any charities, enterprises, artists or scientists, provided the legacy did not directly benefit immediate and extended family. Anti-nepotistic inheritance laws would thus constitute a sort of middle way approach, bringing together the egalitarian impulse of liberals with the anti-big-government impulse professed by conservatives. This solution, by comparison with estate taxes, would also help keep economic and state power relatively distinct, one of the goals of social threefolding – the check and balance of separated powers.
Isn’t passing along wealth to one’s own children, at least beyond some moderate amount or other, a vestige of the divine right of kings? Isn’t it a vestige of noble privilege and aristocracy? Doesn’t the well-known decadence of aristocracies tend to show up in our own society among those children guaranteed luxury from birth? Don’t current inheritance laws allow some children, through no virtue, work or accomplishment of their own, to command the work of others in society? Wouldn’t it be more in accord with our meritocratic, individualistic and egalitarian ideals as a nation to change that situation? Shouldn’t everyone in society be required to stand on his or her own feet to the extent possible?
In a society with anti-nepotistic inheritance laws, people would know that wealth possessed meant wealth earned – at least this would presumably be truer than it is currently. And such a society would have greater solidarity among its members yet be more individualistic.
Anti-nepotistic inheritance laws would also bring wealth creation in line with the law around expiration of patents and copyrights. Part of the idea behind the expiration of a patent or copyright is that the inventor of the new machine or product or idea was partly enabled to create that new something through the support and education provided by society or by portions of society. At some point then, it makes sense that the exclusive right to the profits from inventions should revert to society, and that patents should expire – as indeed they do. Some kind of time limitation on exclusive rights to material wealth would seem sensible for the same reasons. Anti-nepotistic laws applied to some portion of what is bequeathed in wills could accomplish that very effect.