No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices.
How you feel about that depends upon how you feel about in increase in unearned income flowing to the wealthy I guess.
The income was taxed when it was earned. What reason is there to tax it twice?
> how you feel about in increase in unearned income flowing to the wealthy I guess.
Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's arguably better than expropriating citizen's wealth to fund expaditionary warfare.
We tax transactions, not specific euros. Income tax when an employer pays their employee. Inheritance tax once the money goes from the deceased to the heirs.
These are separate things! And no different than, say, VAT on that iPhone. Sure it's between family members , but in the vast majority of cases all parties are independent adults.
The land you inherit is not "justly yours". It was the previous owner's thing. You are getting it but it is not your divine right, except that you won the birth lottery by being born into this family.
Of course a lot of families also have smaller domains, and it makes since to have some lower limit... But let's not forget people affected by inheritance tax are overwhelmingly very rich. Most of the population ends up with nothing.
Of course those arguments apply to governments as well, since they don't derive their law-making authority by claim to divinity - at least in modern times. Why should a government be specially privileged over a citizens wishes to provide for their family and/or community after death?
You could use that statement to argue about anything a government does. Why does the inheritance tax need a special justification?
Well, the alternative is wonderful stuff like civil forfeiture law. Whereby a policeman without evidence or proof of criminal wrongdoing can take that $2000 in your glovebox in the name of a defacto beneficiary (the state), because on a balance of probabilities he thinks he has a better claim than you do.
What moral authority does a private citizen have to own land in Manhattan created 3 billion years ago and made valuable by the infrastructure he didn't build and community he charges rent to?
Government confiscation of private wealth in the name of perceived inequality, should be examined very carefully when modern economies are structurally indebted, and budget for foreign policy objectives over domestic improvement.
Would you rather all the wealthy people in the world just blow all their money on yachts or something?
Because that is the alternative. Why bother saving money if it is all just going to be confiscated when you die. Instead you should just blow it all on ridiculous things that help nobody but yourself in the immediate time frame.
Working people spend their money.
You know what happens to the money when the government taxes an estate?
That money gets put back into the economy in the next calendar year. While it might be good for individuals to have savings, it's better for the economy when money gets spent. The reason that Gary Cohn got so many shrugs when he asked CEOs how many of them would expand businesses with the money from the tax cuts is simple: they hire more people when they have more demand. Making rich people richer or giving rich kids more of their parents' wealth does jack shit for the economy.
Taxing wealth is basically paying a rent to the society that allows that wealth to exist. Your land in manhattan is only worth $10m because society hasn't gone all Syrian. Your copyright holding over your film is only worth anything because we don't let people freely copy it.
When the wealth is owned by the people who aren't productive, you have a problem. It may be that those that are productive Leave and move elsewhere - who runs your hospital/golf course/power station then.
It may be that the productive say "enough is enough" and decide to invent the guileteen.
Either way when people have less to lose than you, it's a dangerous place to be.
That would massively discourage saving. I'm not sure that's great in the long run. In the short run I'll probably lead to massive growth as every goes to burn their dollars on something :)
(Arguably it might be a low tax, might even limited to people with a lot of wealth)
Since the numbers would be going down instead of the increasing money supply devaluing savings, I guess people wouldn't like it, because losing wealth would actually feel like losing wealth.
Also I'm not sure discouraging invests is a good side effect..
But it's an interesting thought nonetheless.
However under your assertion, you are already massively discouraging productivity, by taxing it so high.
However rather than taxing monetary wealth via inflation (which targets those who can't hide their wealth in other assets), you tax the assets that are impossible to avoid, namely copyright protection (charge an exponential fee to keep the work in copyright) and land (if you own $10m of land, and your neighbour owes $100k, you should be paying 100 times more for the upkeep of that land, and you can't hide that off shore).
This means tax on dividends goes to zero, tax on productivity goes to zero, and it encourages people to invest and work, not sit there collecting money from just being rich.
Big purchases, sure. But also as a safety net. As a retirement fund. To help send their kids to college.
The bit extreme extension to this is that if society had strong enough safety nets for everyone, nobody would need savings at all.
There’s no double taxation any more than it’s double taxation to tax my income then to tax the entrepreneurs who I do business with.
And while I agree that money staying with a family and creating economic inefficiencies and pointless disparities is better than war, that’s an absurd false dichotomy.
Let’s see how richer the trump family will become after the presidency...
I paid tax on my income, so when I buy milk at the store, the store shouldn't pay tax because the income was already taxed and the employees there shouldn't pay tax when they get paid, because the income was already taxed.