"A Certain Corrective Against the Development of a Race of Idle Rich"

Last time I posed the problem of justice and fairness. I said that I would at least begin to consider a possible resolution for this today.

There is one kind of tax that does not deprive a person of what he has justly earned: It is an estate tax or inheritance tax. Certainly the children and friends of a deceased person have no claim of justice from having earned the wealth bestowed upon them by the deceased. As such, the great demand of justice that stands in the way of state welfare is answered. But it should be noted that this is not the only Libertarian objection to state welfare.

Four objections may be raised:

The first two are philosophical and ethical, and as such has a certain preeminent claim in my view (for I see fundamental principles as more important than utilitarian issues, though I ought to address this in greater detail in another post, especially as I could see this being taken to an unfortunate extreme). To wit: The deceased ought to have the right and be free to dispose of his goods as he sees fit. Though his friends and relatives may not have the same right to his possessions that he himself had, surely he has the right to bestow his goods as he wishes. To this I pose a question for consideration: Does a dead man own anything? Indeed, can a dead man own property? This, I argue, is the fundamental question. If the answer is, "no," then it's not that he loses his right to dispose of his property as he wills, but that it's silly to even talk about disposing of his property at all. If the answer is, "yes," then an inheritance tax is still depriving the man of that which he has justly earned. My view on the subject is that a dead man cannot own property.

But there is one more matter of principle: the Last Will and Testament. Though the dead man is, well, dead, and cannot actually own property anymore (in my view at least), he does make this statement when he is still alive. In this case, one must declare that the idea of a will is invalid, that all contracts and agreements are of no force when the one entering into them is dead. I will confess some uncertainty on this principle. On this I would be most interested for the reader to attempt to supply arguments either way, but as it stands I have difficulty seeing the question as other than axiomatic, though I feel ill at ease in saying so, for I almost feel that it should not be so fundamental as to be axiomatic. Yet as I cannot supply a priori arguments to justify this view, I am backed into calling it a question of principle. If it is a question of fundamental truth, then it is of the same kind as moral truth, I think, in the sense that it is subject to the is-ought problem: whether or not we hold contracts to be of force after death, that does not establish whether they ought to have the same force after death. And so the only source to which I can appeal, backed as I am into this corner, is God. Here, oddly enough, there is something to be found in scripture: "All covenants, contracts, bonds, obligation, oaths, vows, performances, connections, associations, or expectations" not satisfying particular conditions ordained by God "are of no efficacy, virtue, or force in and after the resurrection from the dead; for all contracts that are not made unto this end have and end when men are dead" (D&C 132:7). From this verse, one may argue that a contract loses force at death. Yet one may read this verse slightly differently, to say that earthly contracts, not applying in spiritual things, do not apply to men who are dead. Then, as I said, on this point I am left uncertain, though I lean toward saying that a Will has a certain validity.

Having addressed these two objections of fundamental principle (but having not resolved, even for myself, the second), I now consider two of a more utilitarian bent. The first is that of incentives. Milton Friedman once pointed out that parents often view the utility of their children as more important than their own, and further that a 100% inheritance tax would be a strong incentive for people to waste money on themselves. As such, a 100% inheritance tax would likely discourage frugality and related virtues in a society. Now, I think Friedman was right in the very specific extreme that this considers, I do think that incentives resulting from a 100% inheritance tax would do damage (though there are those who are quite short-sighted and never think of the future either way, and for them this incentive would not exist), but it should be noted that people don't think so plainly about incentives as economists do: A 50% inheritance tax would not be exactly half the incentive for gluttony that a 100% inheritance tax would be. The fact is that I cannot predict how much of an incentive a partial inheritance tax would be. That, for me, is an open question, and one that can be answered by very large data sets, carefully studied (I await economists' conclusions).

Finally, there is a kind of cultural issue. I believe that there is value in heirlooms. Though I believe that a hereditary aristocracy is bad, that each generation ought to work out its fortune for itself (and this is one thing that favors inheritance taxes in my view), yet there is something of worth greater than the objects themselves in traditions and heirlooms. It is good for a family to maintain a cultural identity, and with it values, and it is good for us to have heirlooms that remind us of our ancestors. In reconciling this with inheritance taxes, there are a variety of issues to consider (for example, the simplest possibility, an exemption, would cause enforcement problems), yet a reconciliation may be possible, so that this issue may not be a real objection. As a side note, related to this are other issues, such as family farms and family businesses, and the case where a disabled child is living in the home his parents leave him, and others of a similar nature; yet these exemptions, I think, are commonly covered in implementations of inheritance taxes, and I think that all agree that such exemptions ought to exist.

My conclusion, then, is that I don't truly know: an inheritance tax is, I think, certainly more just than other taxes for providing welfare, yet whether it is philosophically acceptable (when matched with the right to write a will) and to what extent it is economically advisable (when considering incentives) is, for me unresolved. Certainly the best resolution would be to rely on private charity. As this post is already very long, I think that I should like to leave things here for now, and pick the topic up again at a later date.

Title: Sir Winston Churchill
It should be noted that I am so undecided on the issue that I almost put in two quotes for the title, but the title was already so long that I did not. I chose this title because it alludes to an argument which I did not really cover, and because I feel that I pretty well covered all the arguments against the tax.