[amh]

That argument happens to be full of shit. Even if you win $36 million in the lottery (surely the stereotypical "windfall"), the feds won't tax you 55%. The highest marginal tax rate is 35%.

Estate taxes are morally repugnant. If the idea of people passing along large fortunes to bratty kids is so bothersome, take comfort in the fact that money tends to "find its level". Spendthrift fools will eventually lose it all to mismanagement anyway. It might take more than one generation, but it'll happen.

[jacobolus]

Estate taxes are only morally repugnant if you believe that the children of the elite have a unique right to the accumulated wealth of the society (which tends to build up in those who own property and capital). Why should all of us whose ancestors for generations actually built this society with their hands end up with nothing while the man whose ancestor was a robber baron, land speculator, or plantation owner receives a handout of a giant pile of cash? Especially when such dramatic wealth inequalities severely distort people’s economic behavior, depressing the overall growth of the whole economy and wealth of the whole society?

[cjy]

Because most of the inheritances in the U.S are leftovers from robber barons, land speculators, and plantation owners? Wealth, at least in the U.S. simply doesn’t persist from generation to generation. The wealthiest people today were not the wealthiest people 50 years ago.

[sliverstorm]

It's not that the children are entitled to it, but the deceased wanted to give it to them. It's their assets, shouldn't they be allowed to decide what to do with them?

[pavel_lishin]

I believe that you are limited in that, too - you can only give away so much money to relatives before it starts being taxed as well. I can't really cite anything, though, so feel free to disregard this.

[jacobolus]

Why? By common cultural and legal convention (and in my firm opinion), the accumulated wealth of most countries partly belongs to all who are citizens. You’re suggesting that the rest of us cede complete social and economic control to those who own property. Such is the typical libertarian utopian ideal, but in practice the result is a sort of quasi-aristocratic society with sharply limited opportunities for those at the bottom.

If you change your perspective, recognize that every fortune depends just as much on the context and the society it was built in as it does on the individual who built it, that our definitions of wealth and property are essentially arbitrary human constructions, defined to be whatever we can mostly agree on (through our institutions of government), and decide that the accumulated wealth created by all our ancestors should "rightfully" (another human construction) belong somewhat to all of us, then suddenly inheritance in general becomes a way for some people (the rich) to take our property (that is, your property and mine and everyone's) and give it to a few people that they personally selected.

Now, in practice, there's some kind of balance between these positions (full inheritance or no inheritance), because again, our culture and laws in a republican society are based on what we can agree on. In America, there's more of a cultural and legal emphasis on inheritance and personal wealth than in any of the Scandinavian countries, for example.

But for someone to say that the very concept of broader societal input into inheritance is "morally repugnant" is in my opinion a pretty narrow and socially destructive morality, and I’m glad I don’t live in a country where a small elite has enough power and influence to impose such cultural definitions through force.

[TGJ]

As with all these funny little arguments I'd like to ask a simple question.

Do you mind sending me some money that you have since it somewhat belongs to all of us? I mean really, like cut me a check and mail it? Or instead are you going to be like every other person sane person out there that says, I earned it, I keep it?

Your argument is invalid because during the accumulation of wealth by people, there are taxes at each stage where society claims it's cut. In essence, a death tax is double taxation.

[jacobolus]

I send "you" a check every time I do any work, in the form of an income tax, paid to the government. I can both believe that you have a partial stake in the portion I send to the government, and also not see the social benefit in sending you personally a check.

What's your point?

> every other person sane person out there that says, I earned it, I keep it?

These naive and self-important “sane” people have not thought very hard about the problems of running a society, or at least don’t have much experience with its practical constraints (and I would guess also have little close experience with non-functional governments/societies such as those in most of the developing world).

> Your argument is invalid because [inheritance tax] is double taxation.

There is no "law of the universe" which prevents our duly elected representative government from deciding to tax both income and inheritance. My "argument" is that we make these essentially arbitrary decisions about how to organize ourselves (our economies, our property systems, our governments) via a process which involves agreement and compromise (and a fair amount of disagreement and controversy too, of course; no one ever said governing ourselves would be easy).

Since you haven't addressed "my argument" at all (as far as I can tell from your response you didn’t even read/comprehend it), I do not understand the basis by which you have decided that it is invalid.

[TGJ]

people have not thought very hard about the problems of running a society

It depends on what type of society you are trying to run. Are you trying to run a society full of social benefits (handouts) or a society of individual accomplishments?

My "argument" is

What is your argument? The following sentence is simply a description of how we arrive at where we are and not why.

[kiba]

But for someone to say that the very concept of broader societal input into inheritance is "morally repugnant" is in my opinion a pretty narrow and socially destructive morality, and I’m glad I don’t live in a country where a small elite has enough power and influence to impose such cultural definitions through force.

Do you really believe that your country don't have snotty brat elite politicians who thrive on greed and corruption?

You make me laugh.

Never mind the fact that libertarians are just a bunch of weak ideologues who have no power anywhere on the planet, let along being capable of enforcing some kind of so-called elitist classist ideas about wealth allocation.

[jacobolus]

Yes, my country has a complex system of government which does not allow individual people to rule by whim.

Sure, there are elites with disproportionate influence.

The government cannot remotely be compared however to the roman empire, a feudal society, a fascist dictatorship, etc.

In other words, there are immense social and governmental problems, but it remains fundamentally a republic nonetheless.

[cjy]

It seems there are two issues here: a moral one and a pragmatic one. [edit grammar]

1. Moral Issue: Does society have some claim to the wealth that is created by the most successful members of that society? This is a complicated issue. When we are talking about natural monopolies due to network externalities I might agree with this. Mark Zuckerberg hasn't created billions of dollars of value. Facebook is valuable because everyone uses it. Zuckerberg just created a marginally better website marginally quicker than the next guy.

However, it is inane to say that "every fortune depends as much on society as it does on the individual." That's selling creators short. There is a scarcity of people who create things; people with vision who can make that vision a reality. People who create great things should have a right to the fruits of their labor. They should have a right to share those fruits with their loved ones.

2. Practical Issue: We want to put the incentives in place to encourage people to create wealth and produce things. You argue that wealth inequalities distort economic incentives, but I think the arguments for that are pretty questionable. See my post on guard labor. http://aspiringeconomist.com/index.php/2010/02/04/guard-labo...

Taxes are bad because they distort people’s behavior. We want to raise revenue for society by taxing people who won't change their behavior in response to taxes. See Ramsey Optimal taxes. So the question is: are estate taxes a good way to tax people without discouraging them from working as much? It's an empirical question I don't know the answer to. I do know that the estate tax encourages people to spend lot of time and resources trying to get out of paying taxes (trusts, offshore accounts, consulting lawyers). That is definitely a waste.

[yoden]

Could you provide some research supporting the "find its level" claim? I always believed the opposite -- without an estate tax, it's too easy to end up with an autocratic elite.

[pavel_lishin]

Oh, so it's only a matter of degree?

[amh]

I think a 1% estate tax is too much.

The point of the comparison is that if we're basing how much someone deserves their windfall by the tax rates, then the message being sent is that eating Fritos and playing the lottery is a more acceptable way to earn a fortune than generations of savings and investment.