I saw this the other day on Maggie’s Farm. I can’t recall how many times I have had debates with people over death taxes. Everyone is always shocked by my position on the issue. I guess it is just assumed that Progressives like inheritance taxes so anti-Progressives must be against them. That’s generally the assumption on all taxes and tax policy. Once again, we see how the Left’s hive mindedness shapes public discussion.
Taxes are necessary if you wish to have a government. Government is necessary if you wish to have a state. Even libertarians get this. The question is, what do you tax in order to fund government? The amount of taxing should always track the amount of spending. The great disaster of late 20th century American conservatism is the uncoupling of taxes from spending. The modern Right is just a different brand of liberal, offering a free lunch in exchange for a vote.
It seems to me that taxing the dead is a great way to fund the state. After all, the dead have few spending needs. They have no rights and no claims on the living. Taking the property of the dead is well within the traditions of western people so it’s not like we are breaking new ground. Throughout history, failure to properly name an heir meant your property was awarded to the state upon your death. To date, the dead have never petitioned their government for redress of death taxes.
The only snag is when it comes to property held in association with others, like a business or jointly held lands. If your business partner dies and the state takes ownership of his shares in the business, you now find yourself in partnership with the government against your will. Worse yet, the state could auction off that ownership stake and you end up out of business entirely. But, key-man polices have been around a long time so there’s a remedy.
A key-man policy is a type of insurance policy. If one partner dies, the policy pays off so that the other partner can acquire the shares of his partner from his estate. Putting that into law so that the state gets the insurance money rather than the company stock is not terribly difficult. It would protect the rights of the living without giving rights to the dead.
The thornier problem is property or a business sort of owned by a family. The patriarch builds up a company and has his kids join in the business. Before they are ready to gain a share of the business, the old man gets hit by a bus. There’s no insurance policy to cover the business so the tax obligations would wipe out the family business. Again, this could be addressed with minor changes in the law such that life insurance could cover this sort of calamity.
The only sensible objection, it seems to me is one of equity. The guy who works hard, saves his money and builds up a fortune ends up paying a greater tax than the bum who never bothered to save. Bill Gates, according to some, should have the right to give his great fortune to his children if he chooses. It should not be confiscated by the state.
There’s nothing to prevent Bill Gates from giving his fortune away. He would just have to do it while he is alive. If he wants to set his kid up with a billion dollar gift, that’s his choice. That option exists now. Whatever is left upon his death will go to the government. People have been doing this sort of planning for generations.
The counter to this is the modest, middle-class family cannot take advantage of these laws. The folks who have their wealth in their primary home, maybe a vacation spot and the family business cannot be expected to liquidate before death and give away their money. As a practical matter, it must be done at the time of death. At the risk of sounding callous, life is unfair like that sometimes. No tax is without its unfairness.
That’s the thing I come back to when it comes to the death tax. No one likes paying taxes. There is no tax scheme that makes everyone happy or everyone equally miserable. Every tax irks someone more than others. The dead have bigger problems than the disposition of their property so taxing them strikes me as the least harmful of the possible taxes.
Unlike most other taxes, death taxes have the benefit of breaking up large fortunes. Concentration of wealth is the number one enemy of civilization. There’s nothing wrong with someone getting fabulously rich through his own initiative. There’s an assumed link between the fortune and the talent. Inheriting a fortune and the power that comes with it is hitting the lottery. Worse yet, it subjects the rest of us to sortition, thus pegging the fate of society to the mating choices of the long since dead.
In conclusion, taxes are about paying for the current operations of government. The best taxes are those that retard the normal functioning of society the least. No one escapes death so taxing it will not get less of it. It’s not perfect, but no tax is perfect. It is the only tax that has any plausible social benefit.