A recent opinion piece in The New York Times, “Tax the Rich and Their Heirs … more fairly,” was both reassuring and refreshing. It was reassuring to know that policy debates about relatively prosaic public policy issues continue to be debated, even though the country is convulsed with violent unrest and pandemic-related stresses. It is refreshing that the tone of the writer, New York University law professor Lily Batchelder, was measured and civil at a time when so much writing is shrill and strident.
Calls to raise inheritance taxes stem from two common failings, one moral, one intellectual. The moral error is simple: “Thou shalt not covet.” The intellectual error (often blended with the moral flaws of arrogance and pride) is the self-delusional belief of the social engineer, the top-down planner, that he or she can competently, wisely, and fairly redistribute others’ wealth and build a better society.
The spirit of social engineering pervades Batchelder’s article. Her main rationalizations for wanting to raise taxes on inheritances are:
- The typical progressive goal of reducing economic inequality. And yet, such inequality is inevitable in a state of freedom. Economic inequality becomes evil when a corrupt political system keeps the masses poor. As many disadvantaged minority entrepreneurs have proved, there is no “Keep out!” sign preventing poor Americans from becoming rich. By all means, let’s abolish and punish political cronyism, but let’s also realize that most fortunes are built by providing large amounts of economic value for others (making them less poor), and not because the rich have somehow extracted wealth from the poor.
- Antipathy to the element of luck by which some people are born to rich parents and others are not. And yet, attempts to eliminate luck via legislation amounts to tilting at windmills. Do we need a law that children of doctors shouldn’t be richer than children of English teachers? Look, if luck is bad, then being born in the USA is like winning the lottery which is so grossly unfair that we should give most of our wealth to people with the bad luck to be born into poor countries.
- Racial disparities. Professor Batchelder wants to “fix” the current imbalance of wealth between whites and blacks. However, the cure for past racism isn’t to continue to define people according to race; rather, we owe it to all Americans to remove any artificial obstacles to any American honestly getting rich.
- Progressive do-goodism. Batchelder wants to use inheritance taxes to “invest in children.” Government bureaucrats “investing” in children? Are they endowed with special wisdom and expertise? On what track record does Professor Batchelder base such lofty confidence in government bureaucracies?
- Fear of power. Unfortunately, Batchelder doesn’t see where the true threat of power lies. She invokes FDR’s statement that “inherited economic power” is as objectionable as “inherited political power.” Theoretically, maybe, but in reality, what private fortune wields power even a fraction of that wielded by our massive federal government? Who but Uncle Sam can spend several trillion dollars per year of money that isn’t earned but forcibly collected? Yes, cronyism is a huge problem, but government is often its cause and facilitator. Inheritance taxes would repose even more power in government.
Inheritance taxes are wrong in principle and in practice. Like so many of our country’s founders, I believe that it is none of the government’s business how a person spends his wealth. It isn’t illegal for the rich to assemble the world’s most expensive art or classic automobile collection, buy up the most land, or make a Bloomberg-like run for the presidency. And the law allows the super-rich to leave fortunes tax-free to spouses, churches, museums, foundations, etc., so why not to their children (or anyone else)? You say that rich heirs don’t need all that wealth and others in society do? That is often true, but who are we to decide what someone else should have? It’s not our property, but theirs. (See Luke 12:13,14)
Article I of the U.S. Constitution enumerates the powers of the federal government. That list does not include the power to decide how wealth should be distributed among citizens. Property rights were reinforced by the Fifth Amendment, which was designed to protect personal property from being plundered by a democratic majority, and by the Tenth Amendment, which reiterated the principle that federal power (and therefore spending) should be confined to those few purposes explicitly enumerated in Article I.
Here is an old-fashioned but forward-looking idea: Instead of devising ways for the government to take more wealth from citizens, “we the people” should strive to shrink government and its expenditures. In the long run, our solvency, our prosperity, and our liberty will require this.
- Jimmy Lai, The Billionaire Freedom Fighter - August 21, 2020
- The Problem with Inheritance Taxes - August 12, 2020
- Why Has Three Percent Economic Growth Been So Elusive? - June 24, 2020
- Gasoline Prices in the Era of COVID-19 - April 17, 2020
- Clarifying the Record: Carter Economy Not Better Than Trump Economy - February 11, 2020
- AOC’s Ravings Against Billionaires - January 24, 2020
- Budget Deficit Capitulation: Our Spending Problem - January 23, 2020
- The Real Christmas - December 24, 2019
- What’s Wrong with a Tax on Billionaires? - December 20, 2019
- Minor Legislation with Massive Implications - November 13, 2019