Ending the Estate Tax
October 22, 2003
Many studies have shown that estate taxes drain capital from small businesses, force them to pay heavily out of current earnings for life insurance to pay the tax, encourage the sale of family businesses to larger competitors, and other actions that may not be justified economically. That is why economists have long held that the estate tax is especially pernicious, says Bruce Bartlett. For example:
- Adam Smith: "All taxes upon the transference of property of every kind, so far as they diminish the capital value of that property, tend to diminish the funds destined for the maintenance of productive labor."
- C.F. Bastable: "Succession duties first of all possess the grave economic fault of tending to fall on capital or accumulated wealth rather than on income; they therefore may retard progress."
- Joseph Schumpeter: "As long as an inheritance tax remains a true inheritance tax it always involves a conversion of capital into income, hence an act of economic waste which is damaging to all."
The most emphatic repudiation of wealth redistribution, however, appears in Luke 12:13, in which Jesus acknowledges the value of wealthy people to society as a whole: "The land of a rich man brought forth plentifully." Echoing Ezekiel, he said, "Man, who made me a judge or divider over you?" In other words, it is up to each individual to decide how to distribute his wealth--in life or at death--not the state. Taking the wealth of rich men by force is neither moral nor efficient, says Bartlett.
Source: Bruce Bartlett, "Ending the Estate Tax," National Center for Policy Analysis, October 22, 2003.
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