Exactly my opinion. And even though I normally lean towards free market related views when it comes to regulation and government, I think a high inheritance tax would be justified in western countries. With it universities & infrastructure could be funded and possibly enable more people to get a university degree.
My underlying reasoning: Every new generation is a giant possiblity for mankind. Now who do we want to command the most resources? If we had kings, it would be the kings heir, no matter if he is clever or not. Thats bad obviously. If we have capitalism without a high inheritance tax, we might have people like Paris Hilton commanding massive fortunes even though some poor kids might have done a lot better with it if they had a chance of acquiring wealth in the first place.
By having a high inheritance tax one would avoid unbelievable fortunes being handed down to people that are not qualified at all.
Another aspect is obviously that the state needs to motivate people to work better than their peers. If - like in communism - it doesn't matter anymore if I work harder than my peers, so I don't work hard. Assuming that most people work for personal gain, wealth, and so that they children have it better than themselves, you need to leave them their wealth during their lifetime and enable them to hand down some part of their income to their kids, and not give all back to the public. If they would have to give everything to the public, the really bright people might stop working at 35 when they accumulated enough wealth for themselves, knowing their children won't benefit from it anyways.
Though I'm attracted to the idea, inheritance tax was always a concept that I see (probably due to ignorance) as extremely vulnerable to "an extra layer of indirection". You see, I'm not actually transferring the company to my son, I'm transferring it to a trust in Switzerland that is controlled by my daughter-in-law.
Well, true, somebody that wants to game the system will find a way.
However, you could still say that everything up to 20 Million* has a lower tax on it and you can give that to your kids in legal ways. I think Warren Buffett and Bill Gates want to give most of their wealth away with a similar reasoning anyways.
That amount of money is still enough to buy a Ferrari and never work again while taking loads of drugs in Monaco every day.
The extra layer of indirection might be enough to guide people in the right direction. I am not sure many people would bet their fortune on their son/daughter in law being good to their kids indefinitely. That would probably provoke some very annoying lawsuits between your kids and their spouses sooner or later.
*= With some correction for inflation over the years, but lets say 20 Million of todays Dollars for example.
That's certainly a possibility, and it certainly is done by the wealthy all the time. At least in the US it is very difficult to transfer large sums of money out of the country without accounting for it, so these end-arounds of taxation are quite difficult to pull off.
Inheritance taxes are better because they force the rich out of a hording mentality - either leave your family with sustaining businesses, which help the middle class by providing jobs, or lose half and have that reallocated. Right now, without an inheritance tax, there's no appeal to take risks on building anything. Just invest at moderate returns and the family fortune will never run out (except in extreme circumstances).
I certainly feel your sentiment, werner38 (Re: Paris Hilton - right?), but I disagree with your conclusions.
And I agree with you that it is not necessarily a positive outcome that a king's heir would assume the wealth of the king. However, I think the trade-off of using law to essentially plunder property (again, assuming the property was acquired through no act of injustice), undermines the purpose of law - to defend against injustice.
Property (acquired or created justly) is typically an outcome of liberty, and often fate (birth, luck, etc). I don't believe we can alter either of these conditions through tax law (force) without undermining the justice of law itself.
Furthermore, in my view, I don't believe an individual's property is something that anyone else has a claim to dispense with, especially a political organ such as the 'the state' (an entity which bears very little responsibility for the outcome of it's economic and financial actions).
That doesn't mean I necessarily like the idea of people amassing or acquiring resources without work. But the reason I work hard is to benefit the things which I choose to value: my family, my community, the erasing of Star Wars Ep. 1-3 from history, etc.
I want to give my kids a better shot at life than myself. Property may be a component, but is far down the list from things like values, and work ethic. But these are my choices for my life. That to me, is the American Dream - to be free live how I choose - not wealth and things. Whether I am very rich at some point, or not - I don't believe force should be employed to negate or alter my choices, nor do I wish to use force to alter your's or someone else's.
Maybe I'm way out of my gourd, but the fact that Paris Hilton has a huge amount of wealth, and no values is a total failure of her parents - not the inheritance itself.
The idea of property as legitimate is pretty much arbitrary - others have indeed come out on the other side of the fence: Considering the enforcement of property rights to land akin to theft (e.g. Proudhon) or illegitimate use of force, on the simple premise that it deprives others of use of a shared resource.
The libertarian fetish for accepting the use of force to protect one arbitrary artificial construct as somehow critical to liberty, while rejecting the use of force to protect other artificial constructs strikes me at the same time as deeply comical, and ridiculously hypocritical on the other.
Well, I believe that people should be left alone as often as possible and should only be interfered with when urgently needed.
But I also believe that commanding wealth comes with responsibilities, and if some people are not willing to act responsible, they might need someone(the public) to remember them and take some of that wealth to build schools, universities or the like.
I am not saying that Mr. Hiltons wealth should be seized and randomly given to people on the streets. I am certainly not of the opinion that todays western governments are super effective either. But if I have the choice of having Paris spend that massive fortune or the government, I would opt for the government I am afraid.
If Larry Ellison decides to build himself a big pink bouncy castle the size of Oklahoma with his Oracle money he is free to do so and thats fine by me. He earned that money, he is free to do with it what he likes, I don't have to like his choices, but I won't interfere(not that I could anyways).
If someone earns his money by being born and decides to spend it on the big bouncy castle I am not fine with it. If most of what he would have inherited was taken by the public and he still manages to amass a fortune that is enough to build himself that bouncy castle, he is free to do so, and I won't interfere. He made the money,its his choice, not mine.
I was thinking this too, but also the population has risen and so has the average life-span so I think the amount of new people joining the wealthy class is about the same as it always has been if not even less due to the old wealth never dying off.
