The argument for this is that you're getting a large windfall (and in most cases you haven't done anything to earn it) so you must be taxed on it.
Estate taxes are morally repugnant. If the idea of people passing along large fortunes to bratty kids is so bothersome, take comfort in the fact that money tends to "find its level". Spendthrift fools will eventually lose it all to mismanagement anyway. It might take more than one generation, but it'll happen.
If you change your perspective, recognize that every fortune depends just as much on the context and the society it was built in as it does on the individual who built it, that our definitions of wealth and property are essentially arbitrary human constructions, defined to be whatever we can mostly agree on (through our institutions of government), and decide that the accumulated wealth created by all our ancestors should "rightfully" (another human construction) belong somewhat to all of us, then suddenly inheritance in general becomes a way for some people (the rich) to take our property (that is, your property and mine and everyone's) and give it to a few people that they personally selected.
Now, in practice, there's some kind of balance between these positions (full inheritance or no inheritance), because again, our culture and laws in a republican society are based on what we can agree on. In America, there's more of a cultural and legal emphasis on inheritance and personal wealth than in any of the Scandinavian countries, for example.
But for someone to say that the very concept of broader societal input into inheritance is "morally repugnant" is in my opinion a pretty narrow and socially destructive morality, and I’m glad I don’t live in a country where a small elite has enough power and influence to impose such cultural definitions through force.
Do you mind sending me some money that you have since it somewhat belongs to all of us? I mean really, like cut me a check and mail it? Or instead are you going to be like every other person sane person out there that says, I earned it, I keep it?
Your argument is invalid because during the accumulation of wealth by people, there are taxes at each stage where society claims it's cut. In essence, a death tax is double taxation.
What's your point?
> every other person sane person out there that says, I earned it, I keep it?
These naive and self-important “sane” people have not thought very hard about the problems of running a society, or at least don’t have much experience with its practical constraints (and I would guess also have little close experience with non-functional governments/societies such as those in most of the developing world).
> Your argument is invalid because [inheritance tax] is double taxation.
There is no "law of the universe" which prevents our duly elected representative government from deciding to tax both income and inheritance. My "argument" is that we make these essentially arbitrary decisions about how to organize ourselves (our economies, our property systems, our governments) via a process which involves agreement and compromise (and a fair amount of disagreement and controversy too, of course; no one ever said governing ourselves would be easy).
Since you haven't addressed "my argument" at all (as far as I can tell from your response you didn’t even read/comprehend it), I do not understand the basis by which you have decided that it is invalid.
It depends on what type of society you are trying to run. Are you trying to run a society full of social benefits (handouts) or a society of individual accomplishments?
My "argument" is
What is your argument? The following sentence is simply a description of how we arrive at where we are and not why.
Neither is a good characterization (both are shrill bullshit buzzwords intended in this context to limit discussion).
Trying to run a society with reasonable physical infrastructure (transportation, public utilities, public health, etc.), a functioning economy, a low unemployment rate, a decent standard of living, a lack of structural violence, a support for individual freedoms, protections against fraud and abuse of information asymmetries, a legal framework under which to peacefully resolve disputes, an ability to respond to disasters and foreign invasions, a government which is responsive to the changing needs and circumstances of its citizens and responsive at a local level to local differences, etc.
* * *
The why is in my opinion best described in Machiavelli’s Discourses on Livy, Montesquieu’s Spirit of the Laws, Tocqueville’s Democracy in America, and Madison/Hamilton/Jefferson’s Federalist Papers (and you might look at Locke, Rousseau, Hobbes, etc. too if you’re feeling extra ambitious). The complexities are somewhat longer and more involved than is appropriate for this venue.
If you haven’t read it, Tocqueville’s book is truly fantastic, highly recommended to anyone interested in democracy or American government, and just about as relevant today as anything written since.
You keep repeating that like a mantra (which would be unsurprising for a Republican political candidate given that it is part of the official party platform and talking points for the last couple decades, and is pushed endlessly by the Heritage Foundation, Club for Growth, and similar organizations), but you haven’t (and they never do either) actually explained the logical connection between the two parts of that statement (and you keep dodging every other question and ignoring every other answer).
I believe in individual accomplishment, and I believe that estate taxes are quite reasonable and well justified by essentially all of the commonly accepted moral principles of mainstream philosophical liberalism on which the society and legal system of this country (i.e. the US) are based.
Basically, you are attempting to establish your logical claim with no logic, and no explanation of any kind, simply through inane repetition. That's not a discussion. That's a religious crusade.
By the way, “abhorrent” is usually reserved for things like torture and mass killing. Its use in relation to changes in the marginal tax rate are absurd.
Do you really believe that your country don't have snotty brat elite politicians who thrive on greed and corruption?
You make me laugh.
Never mind the fact that libertarians are just a bunch of weak ideologues who have no power anywhere on the planet, let along being capable of enforcing some kind of so-called elitist classist ideas about wealth allocation.
Sure, there are elites with disproportionate influence.
The government cannot remotely be compared however to the roman empire, a feudal society, a fascist dictatorship, etc.
In other words, there are immense social and governmental problems, but it remains fundamentally a republic nonetheless.
1. Moral Issue: Does society have some claim to the wealth that is created by the most successful members of that society? This is a complicated issue. When we are talking about natural monopolies due to network externalities I might agree with this. Mark Zuckerberg hasn't created billions of dollars of value. Facebook is valuable because everyone uses it. Zuckerberg just created a marginally better website marginally quicker than the next guy.
However, it is inane to say that "every fortune depends as much on society as it does on the individual." That's selling creators short. There is a scarcity of people who create things; people with vision who can make that vision a reality. People who create great things should have a right to the fruits of their labor. They should have a right to share those fruits with their loved ones.
2. Practical Issue: We want to put the incentives in place to encourage people to create wealth and produce things. You argue that wealth inequalities distort economic incentives, but I think the arguments for that are pretty questionable. See my post on guard labor. http://aspiringeconomist.com/index.php/2010/02/04/guard-labo...
Taxes are bad because they distort people’s behavior. We want to raise revenue for society by taxing people who won't change their behavior in response to taxes. See Ramsey Optimal taxes. So the question is: are estate taxes a good way to tax people without discouraging them from working as much? It's an empirical question I don't know the answer to. I do know that the estate tax encourages people to spend lot of time and resources trying to get out of paying taxes (trusts, offshore accounts, consulting lawyers). That is definitely a waste.
The point of the comparison is that if we're basing how much someone deserves their windfall by the tax rates, then the message being sent is that eating Fritos and playing the lottery is a more acceptable way to earn a fortune than generations of savings and investment.
EX1: you can give your wife unlimited assets without tax implications.
EX2: Let's say you and your wife have a 7 million$ 50% of which is appreciated assets, and 2 million in life insurgence and 3 children. Each of you can give 1 million to each child, so 6 million is exempt, as is all life insurgence thus only the last million is taxed at 45%. Resulting in a 0.450 / ( 7 + 2) = 5% effective tax rate.
Note: If they actually sold their appreciated assets they would pay more in taxes.
EX3: 1 billion in assets. Set's up a blind trust = zero direct taxes on death. Money can compound tax free in the trust and is only taxed on disbursement.
EX4: 1 billion donation to the red cross = zero tax.
PS: If you do nothing and leave 5million to 1 person the effective tax rate is still only 36%. You really have to have huge amount in assets and stupid tax advice for this to be a major issue.