Wealth, Mobility, Inheritance And The Estate Tax

Studies | Taxes

No. 235
Thursday, June 01, 2000
by Bruce Bartlett


  1. Finis Welch, "In Defense of Inequality," American Economic Review, Vol. 89, May 1999, pp. 1-17, at p. 2.
  2. W. Michael Cox and Richard Alm, Time Well Spent: The Declining Real Cost of Living in America (Dallas: Federal Reserve Bank of Dallas, 1997).
  3. Robert E. Gallman, "Trends in Size Distribution of Wealth in the Nineteenth Century: Some Speculations," in Lee Soltow, ed., Six Papers on the Size Distribution of Wealth and Income (New York: Columbia University Press, 1969), pp. 1-30.
  4. Alexis de Tocqueville, Democracy in America, 1850, George Lawrence, trans., J.P.Mayer, ed. (New York: Harper & Row, reprint 1966), pp. 557, 635.
  5. Edward Pessen, "The Egalitarian Myth and the American Social Reality: Wealth, Mobility and Equality in the 'Era of the Common Man,'" American Historical Review, Vol. 76, October 1971, pp. 989-1034.
  6. Stanley Lebergott, The American Economy: Income, Wealth and Want (Princeton: Princeton University Press, 1976), p. 172.
  7. Bernard Sarachek, "American Entrepreneurs and the Horatio Alger Myth," Journal of Economic History, Vol. 38, June 1978, pp. 439-56.
  8. James L. Huston, Securing the Fruits of Labor: The American Concept of Wealth Distribution, 1765-1900 (Baton Rogue, La.: Louisiana State University Press, 1998).
  9. Harold Lydall and John B. Lansing, "A Comparison of the Distribution of Personal Income and Wealth in the United States and Great Britain," American Economic Review, Vol. 49, March 1959, pp. 43-67.
  10. David M. Hudson, "Tax Policy and the Federal Taxation of the Transfer of Wealth," Willamette Law Review, Vol. 19, Winter 1998, pp. 1-60.
  11. C. D. Harbury, "Inheritance and the Distribution of Personal Wealth in Britain," Economic Journal, Vol. 72, December 1962, pp. 845-68; C. D. Harbury and P. C. McMahon, "Inheritance Characteristics of Top Wealth Leavers in Britain," Economic Journal, Vol. 83, September 1973, pp. 810-33; Henry Phelps Brown, Egalitarianism and the Generation of Inequality (New York: Oxford University Press, 1988), pp. 356-57.
  12. Gemini Consulting, World Wealth Report, 2000 (New York: Merrill Lynch, 2000).
  13. Anthony Shorrocks, "Income Inequality and Income Mobility," Journal of Economic Theory, Vol. 19, December 1978, pp. 376-93; and Young Back Choi, "On the Rich Getting Richer and the Poor Getting Poorer," Kyklos, Vol. 52, No. 2, 1999, pp. 239-58.
  14. Greg J. Duncan, Years of Poverty, Years of Plenty (Ann Arbor, Mich.: Survey Research Center, Institute for Social Research, University of Michigan, 1984); Isabel V. Sawhill and Mark Condon, "Is U.S. Income Inequality Really Growing?" Policy Bites, Urban Institute, June 1992; Thomas L. Hungerford, "U.S. Income Mobility in the Seventies and Eighties," Review of Income and Wealth, Vol. 39, December 1993, pp. 403-17; and W. Michael Cox and Richard Alm, By Our Own Bootstraps: Economic Opportunity and the Dynamics of Income Distribution (Dallas: Federal Reserve Bank of Dallas, 1995).
  15. Richard H. Steckel and Jayanthi Krishnan, Wealth Mobility in America: A View from the National Longitudinal Survey, Working Paper No. 4137 (Cambridge, Mass.: National Bureau of Economic Research, 1992).
  16. Erik Hurst, Ming Ching Luoh and Frank P. Stafford, "The Wealth Dynamics of American Families, 1984-1994," Brookings Papers on Economic Activity, No. 1, 1998, pp. 267-337, at p. 285.
  17. Robin Barlow, Harvey E. Brazer and James N. Morgan, Economic Behavior of the Affluent (Washington: Brookings Institution, 1966), pp. 227, 230.
  18. James P. Smith, "Inheritance and Bequests," in James P. Smith and Robert J. Willis, eds., Wealth, Work and Health (Ann Arbor: University of Michigan Press, 1999), pp. 121-49, at p. 137.
  19. Thomas J. Stanley and William D. Danko, The Millionaire Next Door (Marietta, Ga.: Longstreet Press, 1997), p. 3.
  20. U. S. Trust Corporation, A Portrait of the Affluent in America Today (New York: U. S. Trust Corporation, 1998).
  21. Rudolph C. Blitz and John J. Siegfried, "How Did the Wealthiest Americans Get So Rich?" Quarterly Review of Economics and Finance, Vol. 32, Spring 1992, pp. 5-26, at p. 9.
  22. "The Forbes 400 By The Numbers," Forbes, October 11, 1999, p.10.
  23. Vincenzo Quadrini, "Entrepreneurship, Saving, and Social Mobility," Review of Economic Dynamics, Vol. 3, January 2000, pp. 1-40.
  24. W. Michael Cox and Richard Alm, "The Churn Among Firms: Recycling America's Corporate Elite," Southwest Economy, Federal Reserve Bank of Dallas, January/February 1999, pp. 6-9.
  25. Tom Lowry, "From GM to Cisco in Just Four Decades," Business Week, February 7, 2000, p. 40.
  26. Lebergott, The American Economy: Income, Wealth and Want, pp. 190-97.
  27. Richard D. Hylton, "Rockefeller Family Tries to Keep Fortune from Dissipating," New York Times, February 16, 1992.
  28. Proverbs 13:22.
  29. F. A. Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), p. 91.
  30. Nigel Tomes, "The Family, Inheritance, and the Intergenerational Transmission of Inequality," Journal of Political Economy, Vol. 89, October 1981, pp. 928-58; Jere R. Behrman, Robert A. Pollak and Paul Taubman, "Parental Preferences and Provision for Progeny," Journal of Political Economy, Vol. 90, February 1982, pp. 52-73; Kathleen McGarry and Robert F. Schoeni, Transfer Behavior Within the Family: Results from the Asset and Health Dynamics Survey, Working Paper No. 5099 (Cambridge, Mass: National Bureau of Economic Research, 1995).
  31. D. L. Bevan and J. E. Stiglitz, "Intergenerational Transfers and Inequality," Greek Economic Review, Vol. 1, August 1979, pp. 8-26.
  32. Thad W. Mirer, "The Wealth-Age Relation Among the Aged," American Economic Review, Vol. 69, June 1979, pp. 435-43; Paul L. Menchik and Martin David, "Income Distributions, Lifetime Savings, and Bequests," American Economic Review, Vol. 73, September 1983, pp. 672-90; B. Douglas Bernheim, Andrei Shleifer and Lawrence H. Summers, "The Strategic Bequest Motive," Journal of Political Economy, Vol. 93, December 1985, pp. 1045-76.
  33. Barbara R. Hauser, "Death Duties and Immortality: Why Civilization Needs Inheritances," Real Property, Probate and Trust Journal, Vol. 34, Summer 1999, pp. 363-402.
  34. John Stuart Mill, Principles of Political Economy, William Ashley, ed. (London: Longmans, Green, 1909), p. 221.
  35. Daniel J. Kornstein, "Inheritance: A Constitutional Right?" Rutgers Law Review, Vol. 36, Summer 1984, pp. 741-91, at p. 787.
  36. David Cay Johnston, "IRS Sees Increase in Evasion of Taxes on Gifts to Heirs," New York Times, April 2, 2000.
  37. James D. Adams, "Personal Wealth Transfers," Quarterly Journal of Economics, Vol. 95, August 1980, pp. 159-79.
  38. W. Leslie Peat and Stephanie J. Willbanks, Federal Estate and Gift Taxation (St. Paul, Minn.: West Publishing Co., 1995), p. 47.
  39. John H. Langbein, "The Twentieth Century Revolution in Family Wealth Transmission," Michigan Law Review, Vol. 86, February 1988, pp. 722-51.
  40. Kenneth V. Greene, "Inheritance Unjustified?" Journal of Law and Economics, Vol. 16, October 1973, pp. 417-19; Michael B. Levy, "Liberal Equality and Inherited Wealth," Political Theory, Vol. 11, November 1983, pp. 545-64; D. W. Haslett, "Is Inheritance Justified?" Philosophy and Public Affairs, Vol. 15, Spring 1986, pp. 122-55; D. W. Haslett, "Distributive Justice and Inheritance," in Guido Erreygers and Toon Vandevelde, eds., Is Inheritance Legitimate? (New York: Springer-Verlag, 1997), pp. 133-55.
  41. Plato, The Collected Dialogues, Edith Hamilton and Huntington Cairnes, eds. (Princeton, N.J.: Princeton University Press, 1961), p. 1316.
  42. Andrew Carnegie, "The Advantages of Poverty," 1891, in Edward C. Kirkland, ed., The Gospel of Wealth (Cambridge: Harvard University Press, reprint, 1962), pp. 50-77, at p. 56.
  43. Douglas Holtz-Eakin, David Joulfaian and Harvey S. Rosen, "The Carnegie Conjecture: Some Empirical Evidence," Quarterly Journal of Economics, Vol. 108, May 1993, pp. 413-35; David Joulfaian and Mark O. Wilhelm, "Inheritance and Labor Supply," Journal of Human Resources, Vol. 29, Fall 1994, pp. 1205-34.
  44. Mark L. Ascher, "Curtailing Inherited Wealth," Michigan Law Review, Vol. 89, October 1990, pp. 69-151.
  45. Barry W. Johnson and Martha Britton Eller, "Federal Taxation of Inheritance and Wealth Transfers," in Robert K. Miller and Stephen J. McNamee, eds., Inheritance and Wealth in America (New York: Plenum Press, 1998), pp. 61-90.
  46. Arthur M. Schlesinger Jr., The Politics of Upheaval (Boston: Houghton Mifflin, 1960), pp. 325-26.
  47. Roy G. Blakey and Gladys C. Blakey, "The Revenue Act of 1935," American Economic Review, Vol. 25, December 1935, pp. 673-90; Harley L. Lutz, "The Federal Reserve Act of 1935," American Economic Review, Vol. 26, March 1936, pp. 161-73; Truman C. Bigham, "Economic Effects of the New Deal Tax Policy," Southern Economic Journal, Vol. 3, January 1937, pp. 270-80; Joseph A. Schumpeter, Business Cycles, 2 vols. (New York: McGraw-Hill, 1939), p. 1039.
  48. American Council for Capital Formation, An International Comparison of Death Tax Rates (Washington: American Council for Capital Formation, 1999).
  49. Emily Thornton, "Inheritance Taxes Are Draining Japan's Lifeblood," Business Week, January 24, 2000, p. 160F.
  50. Joint Committee on Taxation, Present Law and Background on Federal Tax Provisions Relating to Retirement Savings Incentives, Health and Long-Term Care, and Estate and Gift Taxes, JCX-29-99, June 15, 1999, p. 115.
  51. Geoffrey Brennan, "Death and Taxes: An Attack on the Orthodoxy," Public Finance, Vol. 33, No. 3, 1978, pp. 201-23.
  52. Ryan J. Donmoyer, "Estimating Estate Tax Burden Is Troubling Issue for JCT," Tax Notes, Vol. 84, August 2, 1999, pp. 651-52.
  53. Barry W. Johnson and Jacob M. Mikow, "Federal Estate Tax Returns, 1995-1997," Statistics of Income Bulletin, Vol. 19, Summer 1999, pp. 69-129, at p. 107.
  54. Martin A. Sullivan, "For Richest Americans, Two-Thirds of Wealth Escapes Estate Tax," Tax Notes, Vol. 87, April 17, 2000, pp. 328-33.
  55. John A. Miller and Jeffrey A. Maine, "Fundamentals of Estate Tax Planning," Idaho Law Review, Vol. 32, No. 2, 1996, pp. 197-252; Christopher Drew and David Cay Johnston, "For Wealthy Americans, Death Is More Certain Than Taxes," New York Times, December 22, 1996.
  56. George Cooper, A Voluntary Tax? New Perspectives on Sophisticated Estate Tax Avoidance (Washington: Brookings Institution, 1979), p. 4.
  57. Henry J. Aaron and Alicia H. Munnell, "Reassessing the Role for Wealth Transfer Taxes," National Tax Journal, Vol. 45, June 1992, pp. 119-43, at p. 138.
  58. Kenneth Chapman, Govind Hariharan and Lawrence Southwick Jr., "Estate Taxes and Asset Accumulation," Family Business Review, Vol. 9, Fall 1996, pp. 253-68.
  59. Christopher E. Erblich, "To Bury Federal Transfer Taxes Without Further Adieu," Seton Hall Law Review, Vol. 24, No. 4, 1994, pp. 1931-68, at pp. 1953-56.
  60. Travis Research Associates, Federal Estate Tax Impact Survey (Costa Mesa, Calif.: Center for the Study of Taxation, 1995).
  61. Douglas Holtz-Eakin, David Joulfaian and Harvey S. Rosen, "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, Vol. 102, February 1994, pp. 53-75; Patrick Fleenor and J. D. Foster, "An Analysis of the Disincentive Effects of the Estate Tax on Entrepreneurship," Tax Foundation, Background Paper No. 9 (Washington, D.C.: Tax Foundation, 1994).
  62. Harold Somers, "Estate Taxes and Business Mergers: The Effects of Estate Taxes on Business Structure and Practices in the United States," Journal of Finance, Vol. 13, May 1958, pp. 201-10; Chelcie C. Bosland, "Has Estate Taxation Induced Recent Mergers?" National Tax Journal, Vol. 16, June 1963, pp. 159-68.
  63. Travis Research Associates, Survey of the Impact of the Federal Estate Tax on Family Business Employment Levels in Upstate New York (Albany: Public Policy Institute of New York State, 1999).
  64. Douglas Holtz-Eakin, "The Death Tax: Investments, Employment, and Entrepreneurs," Tax Notes, Vol. 84, August 2, 1999, pp. 782-91.
  65. B. Douglas Bernheim, "Does the Estate Tax Raise Revenue?" in Lawrence H. Summers, ed., Tax Policy and the Economy, Vol. 1 (Cambridge, Mass: MIT Press, 1987), pp. 113-38.
  66. Laurence J. Kotlikoff and Lawrence H. Summers, "The Role of Intergenerational Transfers in Aggregate Capital Accumulation," Journal of Political Economy, Vol. 89, August 1981, pp. 706-32.
  67. James Poterba, "The Estate Tax and After-Tax Investment Returns," National Bureau of Economic Research, Working Paper No. 6337 (Cambridge, Mass.: National Bureau of Economic Research, 1997).
  68. Laurence J. Kotlikoff, "Intergenerational Transfers and Savings," Journal of Economic Perspectives, Vol. 2, Spring 1988, pp. 41-58; B. Douglas Bernheim, "How Strong Are Bequest Motives? Evidence Based on Demand for Life Insurance and Annuities," Journal of Political Economy, Vol. 99, October 1991, pp. 899-927.
  69. Simon Kuznets, "Shares of Upper Income Groups in Income and Savings," (New York: National Bureau of Economic Research, 1953).
  70. Adam Smith, An Inquiry Into the Nature and Causes of the Wealth of Nations, 1776, Edwin Cannan, ed. (New York: Modern Library, reprint 1937), p. 814.
  71. David Ricardo, On the Principles of Political Economy and Taxation, 1821, Piero Sraffa, ed. (New York: Cambridge University Press, reprint 1951), p. 153.
  72. C. F. Bastable, Public Finance, 3rd Ed., (London: Macmillan, 1903), p. 591.
  73. Joseph E. Stiglitz, "Notes on Estate Taxes, Redistribution, and the Concept of Balanced Growth Path Incidence," Journal of Political Economy, Vol. 86, April 1978, pp. S137-S150.
  74. Alan S. Blinder, "Inequality and Mobility in the Distribution of Wealth," Kyklos, Vol. 29, No. 4, 1976, pp. 607-38, at pp. 618-19.
  75. Aaron and Munnell, "Reassessing the Role for Wealth Transfer Taxes," p. 138.
  76. Gerald P. Moran, "Estate and Gift Taxation: The Case for Repeal," Tax Notes, Vol. 13, August 17, 1981, pp. 339-43, at p. 341.
  77. Edward J. McCaffery, "The Uneasy Case for Wealth Transfer Taxation," Yale Law Journal, Vol. 104, November 1994, pp. 283-365, at pp. 319-21.
  78. Richard F. Fullenbaum and Mariana A. McNeill, The Effects of the Federal Estate and Gift Tax on the Aggregate Economy, Working Paper No. 98-01 (Washington: Research Institute for Small and Emerging Business, 1998).
  79. For example, see Moran, "Estate and Gift Taxation: The Case for Repeal;" Joel C. Dobris, "A Brief For the Abolition of All Transfer Taxes," Syracuse Law Review, Vol. 35, No. 4, 1984, pp. 1215-34; Charles O. Galvin, "To Bury the Estate Tax, Not to Praise It," Tax Notes, Vol. 52, September 16, 1991, pp. 1413-19; Erblich, "To Bury Federal Transfer Taxes Without Further Adieu;" McCaffery, "The Uneasy Case for Wealth Transfer Taxation;" Gary S. Becker, "Estate Taxes: An Idea Whose Time Has Gone," Business Week, September 13, 1999, p. 24; N. Gregory Mankiw, "Why Shouldn't We Die Tax-Free?" Fortune, September 6, 1999, pp. 54, 56.
  80. See Jay A. Soled and Charles Davenport, "Cremating Transfer Taxes: Is There Hope for a Resurrection?" Wake Forest Law Review, Vol. 34 No. 2, 1999, pp. 229-55; James R. Repetti, "The Case for the Estate and Gift Tax," Tax Notes, Vol. 86, March 13, 2000, pp. 1493-1510.
  81. Hudson, "Tax Policy and the Federal Taxation of the Transfer of Wealth;" John E. Donaldson, "The Future of Transfer Taxation: Repeal, Restructuring and Refinement, or Replacement," Washington and Lee Law Review, Vol. 50, Spring 1993, pp. 539-64.
  82. Henry C. Simons, Personal Income Taxation (Chicago: University of Chicago Press, 1938).
  83. Marjorie E. Kornhauser, "The Constitutional Meaning of Income and the Income Taxation of Gifts," Connecticut Law Review, Vol. 25, Fall 1992, pp. 1-55.
  84. Joint Committee on Taxation, "Present Law and Background on Federal Tax Provisions Relating to Retirement Savings Incentive, Health and Long-Term Care, and Estate and Gift Taxes," (Washington, D.C.: Joint Committee on Taxation, 1999) pp. C1-C17.
  85. Sidney L. Carroll, "American Family Fortunes as Economic Deadweight," Challenge, Vol. 34, May-June 1991, pp. 11-18.
  86. Dan Subotnik, "On Constructively Realizing Constructive Realization: Building the Case for Death and Taxes," University of Kansas Law Review, Vol. 38, Fall 1989, pp. 1-38; Robert B. Smith, "Burying the Estate Tax Without Resurrecting Its Problems," Tax Notes, Vol. 55, June 29, 1992, pp. 1799-1811.
  87. Wolfe D. Goodman, "The End of Canadian Estate Tax - A Lesson for the U.S." Tax Notes, Vol. 84, September 13, 1999, pp. 1469-72.
  88. Lawrence Zelenak, "Taxing Gains at Death," Vanderbilt Law Review, Vol. 46, March 1993, pp. 361-441; Joseph M. Dodge, "Further Thoughts on Realizing Gains and Losses at Death," Vanderbilt Law Review, Vol. 47, November 1994, pp. 1827-61.
  89. Edward N. Wolff, Top Heavy (New York: New Press, 1996).
  90. Bruce Ackerman and Anne Alstott, The Stakeholder Society (New Haven: Yale University Press, 1999).
  91. Donald Trump, The America We Deserve (Los Angeles: Renaissance Books, 2000), pp. 169-74.
  92. Helmut Schoeck, Envy: A Theory of Social Behavior (New York: Harcourt, Brace & World, 1970).

Read Article as PDF