A 100 Percent Inheritance Tax?
A 100 percent Inheritance Tax? Well, that just sounds like stealing all the property of people who die…
There’s much to be said about a 100% Inheritance Tax and wealth redistribution in general, but I mostly want to address some of the arguments made by Abi Wilkinson in this article from The Guardian. A quick glance at Abi’s twitter page and my assumptions from reading Wilkinson’s article were correct: she’s a full blown socialist/communist.
Wilkinson’s opposition to private property and propensity for wealth redistribution by the state is apparent in the article. I want to address certain arguments in the article from a Capitalist point of view to teach about private property rather than totally refuting the 100% Inheritance Tax at this point. Quotes from Wilkinson in bold.
“Yes, the desire to pass on property to your descendants may be natural — but why should we be slaves to our biology? Social progress has frequently depended on our ability to transcend individualistic urges and work together for the common good.”
The desire to pass on property to descendants is not only a biological one. It is quite rational to save wealth. You might save wealth to sustain your standard of living when you no longer have an income. Or you might save wealth to use for a specific purchase in the future. Saving wealth to pass on to your offspring isn’t being “slaves to our biology”, but is a rational way of allocating resources.
I must add that individualistic urges such as profiting through mutually beneficial exchanges are what essentially make up society. In other words, a prosperous society is composed of prosperous individuals. This includes delaying satisfaction by saving, rather than constantly consuming or expending resources “for the common good.”
“In contemporary times, most people agree that tax should facilitate transfer of wealth from those who ‘have’ to those who ‘need.’”
And here I am, thinking taxes are supposed to pay for so-called “public goods and services” provided by the government. Of course, if all it takes to acquire wealth is to ‘need’ it, then we’d all be rich!
“In the UK, official statistics suggest around £77bn is passed on in inheritance each year (tax avoidance means the real amount could be even higher). That’s money that no living being has a moral claim to, according to standard justifications of wealth inequality and private property. Were that money redistributed by the state, it would cover the cost of adult social care several times over.”
I have no idea what Wilkinson means by “standard justifications of wealth inequality and private property,” but I will say that just about anything can be “justified” under the guise of “equality.” For example, most people on earth have 2 working eyes. Some have 1 working eye. Fewer have 0 working eyes. Surely, any radical egalitarian could justify the removal of 1 eye from everyone with 2 working eyes. Give 1 eye to all the blind and there would be equality across the world with regards to number of working eyes each person has.
According to actual private property norms, who does have the rightful claim to the property of the recently deceased? Let’s say a father passes away at an old age. He has saved $100,000 worth of assets. Of course, when the father was alive he was the rightful owner of his property. Property can only be legitimately transferred by voluntary exchange or contractual agreement. We know the father valued saving wealth for some reason, or he would not have saved. He would have spent all his time consuming, rather than saving anything at all.
If the father had no future use intended for the wealth he saved, why would he have saved it? This question is rhetorical. The father’s action of saving indicates he does not want to relinquish his savings to the state upon death. It is safe to assume, in the case of an unexpected death, that the descendants were the intended to have those savings. There is no argument to be made for the state to have any claim of ownership of the property of deceased individuals, even if there is no descendent to transfer property to.
“Cultural norms teach us that the inheritance of private property is the default and any expropriation of this wealth must be justified. It should be the other way round.”
Wilkinson claims state expropriation of private property of deceased individuals should be the default. In other words, the state should confiscate people’s property when they die. Wilkinson claims inheritance should require special justification. This is hard to take seriously, but of course it would create an incentive for the state to murder wealthy individuals and confiscate their property.
A father’s wish to transfer property to his son, for example, must be fulfilled. Not necessarily for any “moral” reason, but as a matter of fact that the father has the sole ownership of his property and as a result is solely designated to command his property. He may give his property away to private charity before his death or request this be done in a will. He can even specify that his property not be transferred to his son and leave his property in a state of nature, free to be homesteaded by another person. Property owners have an exclusive claim to their property, not the state.
“There’s some value in respecting the wishes of the dead, yes, but why is that more important than social housing, healthcare or any number of other possible uses for the money?”
Again, this is an issue of property rights, not “respecting the wishes of the dead.” Socialists will say that individuals must own the products of their labor, and with this I agree. A father who has worked all his life to acquire wealth must be the owner of that wealth. Those savings are a direct result of his labor. Therefore, a property owner must be able to transfer his or her wealth to a descendant. If the property owner can’t do this, then the property owner is no owner at all and would in fact not be in command of the products of his or her labor.
“It’s natural to want to protect and care for your family, but what about people who don’t stand to inherit a penny? Is there any reason their needs should matter less?”
It’s not that their needs “matter less”, it’s that they have no claim to ownership of property of deceased individuals. If everyone in need had a legal claim to the property of the deceased, there would be an incentive created for the poor to murder the rich and assume their property. Interestingly enough, this is essentially how socialists and communists desire coming to power: by seizing the means of production (private property) and/or killing their rightful owners.
Remember: always be wary about redistribution schemes disguised to help those in need.
Originally published at www.lessonsinliberty.net on July 26, 2017.