Recently, I asked free-market libertarians why they opposed the inheritance tax. My reasoning went like this:

Libertarians don’t like people who don’t work and live off of government handouts, contributing nothing to society. So why don’t they not like people who don’t work and live off of what they inherited, contributing nothing to society.

I received an overwhelming response, so I’ve put together a summary of people’s comments below.

First, I have to apologize. A filter glitch caused my Bayesian spam filter to think that nearly all the responses to this post were spam. Sorry for the bounce emails claiming your messages were spam. I think a bug in one of my scripts caused this, since before this the filter only had one false positive. (When I investigated, the filter thought that “freemarket” was highly indicative of spam for some reason.) Again, my apologies.

David Rouse made an interesting distinction things being fairness in action and effect: “To a libertarian, fair means everyone is treated the same — not that everyone is provided equal opportunities.” This would certainly explain a lot: Poor man shouldn’t get handouts because Rich man doesn’t. But this doesn’t explain the opposition to an inheritance tax: what if everyone was taxed at 100% and the money was distributed evenly to everyone (or at least everyone had an equal opportunity to receive it)? Wouldn’t that be fair?

Seth Finkelsten goes further (and has a very funny Libertarianism Makes You Stupid article), arguing that while libertarians only believe fairness-as-its-applied, they claim that fairness-is-its-effect (against the evidence) to convert people.

And Kevin Marks had a clever quote about how capitalism manages to acheive much of the effects of socialism: “All I had to do was to tell Society (here represented by a railway booking-clerk) where I wanted to go, and to step into a carriage[]. Books and papers had been written and printed[]. [T]houghtful Society had taken care to be ready for me with all kinds of refreshment[]. When I am tired of travelling and want to rest, I find Society waiting for me with dinner and a comfortable bed[]. Wherever I go, whatever I need, Society, like the enslaved genii of some Eastern tale, is ready and anxious to help me, to serve me, to do my bidding, to give me enjoyment and pleasure. […] All that she asks in return is, that I shall do the work she has given me to do.”

But there were some strong arguments against my proposal:

Personal freedom: Several, especially Mando Escamilla, argued that being able to give money after you died was a matter of personal freedom. jjens suggested there was an evolutionary necessity for this. But the fact is that the man is dead; he’s not distributing his money, he’s asking the state to do so (or allow his estate to do so, or whatever). I don’t see how his freedom has any moral authority here.

Karl Davis extends this, asking “why [not] support a system where wealth is distributed at the end of each day, as to allow every man a clean slate with each sunrise.” This is an interesting argument, but I think the distinction between living and dead people is much more clear.

Lost incentives: Jeff Bone best argued that not permitting inheritance would reduce incentives to work and would lower productivity overall: “limiting the material wealth that a man or woman can pass on to their children at death necessarily undermines a key motivation for economic success and thus reduces the likelihood that society as a whole will maximize its gross productivity and thus average quality of life.”

Practical problems: And while I meant it mainly as a thought experiment, several people pointed out practical problems. Especially Stephen Waters, who noted that an inheritance tax would punish the dependants of those who incorrectly guessed when they would die. And Nikita Borisov quoted Milton Friedman’s “Free to Choose” which argued (as did many writers) that people would find ways to get around estate taxes. Gordon Mohr thought that enforcing it would require taking away our freedoms.

Also, a couple people wanted to know what I meant by “[capitalism] assumes people are intrinsically bad and need to be corrected”. I was referring to the theory that people wouldn’t work if they didn’t have to, so we should require them to work to get the benefits of society. But this may not actually be part of capitalist/libertarian philosophy.

posted October 20, 2003 12:23 PM () #


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Aaron Swartz (