Comparing Inheritance Tax to Other Taxes: A Matter of Fairness

The debate over the fairness of inheritance tax has been a long-standing issue, with arguments both for and against its implementation. Some see it as a necessary mechanism to prevent the concentration of wealth and ensure a more equitable distribution. Others, however, view it as both an unfair and redundant imposition on individuals who have already been taxed on their earnings. In this article, we delve into the nuances of inheritance tax compared to other forms of taxation, examining the arguments from various perspectives.

Understanding Inheritance Tax and Its Critics

One of the arguments against inheritance tax is that it lacks fairness. Critics often cite the concept of double taxation, where the same money may be taxed multiple times. For example, an individual may pay income tax on their earnings throughout their lifetime, only to have their inheritance taxed again upon death. This perspective is often encapsulated in the statement: "'The money has already been taxed often more than once.' " It raises questions about the efficiency and equity of the tax system, suggesting that the government is extracting wealth from individuals unnecessarily.

Tax Laws and the Golden Rule

A notable argument in favor of maintaining current tax laws, including inheritance tax, is rooted in the principle of the Golden Rule: "'Tax laws have nothing to do with fairness. Tax laws are based on the Golden Rule. Whoever has the gold makes the rules.' " This perspective emphasizes the idea that the wealthy and influential have a disproportionate say in how tax laws are formulated and enforced, leading to a system where the existing power structures are perpetuated and reinforced through taxation.

Impact on Farmers and Small Businesses

The effects of inheritance tax on farmers and small business owners are particularly pronounced. Small farmers, like those facing the loss of their farms due to inheritance tax, often argue that such taxes can be catastrophic. These farmers frequently find themselves in a precarious position where they must sell valuable assets or even lose their entire livelihood to pay off taxes. This aspect of inheritance tax is a critical point of contention, as it directly affects the economic sustainability of these sectors.

Aligning Inheritance Tax with Liberal and Conservative Goals

Interestingly, some see the inheritance tax as a tax that aligns well with the principles of both liberalism and conservatism. This tax encourages wealth growth and provides incentives for entrepreneurship and commerce. The author suggests that the idea of taxing wealth when it is no longer in active use after the death of the owner is reasonable and fair: "'It’s one of the most oppressive taxes dropped on people that farm for a living. Many times after the mother dies after the father and the children who now own the farm are hit with an enormous tax bill where often they actually lose the farm entirely or are forced to sell off a lot of tillable acreage to pay the tax due.'" This perspective argues that such taxes should be used to incentivize wealth creation and employment, rather than being an oppressive burden.

A Personal Perspective on Inheritance Tax

To provide a more relatable example, the author draws on personal experience from a parent’s lifetime of hard work and high tax contributions. The example outlines a father who served in the Navy during WWII and established a successful family business, paying significant income taxes, sometimes at the highest brackets. When he passed away, the government claimed a substantial portion of his estate, highlighting the issue of whether it is fair to tax wealth that has already been taxed multiple times: "'So when he dies the government comes back in for about 50% of his Estate. How fair is that.'" This personal story underscores the complex emotional and financial strain that such taxes can place on families.

Abolishing Inheritance Tax: A Call for Sovereignty

Finally, some advocate for the complete abolition of inheritance tax, arguing that the government has an overreaching influence: "'Inheritance tax is crap and should be abolished. What right has a Parliament to tax what it has already been taxed by them.'" This viewpoint posits that the people should have more control over their own wealth and assets, challenging the notion of parliamentary sovereignty and suggesting that the people are sovereign, not the government.

In conclusion, the debate over inheritance tax is multifaceted and reflects a wide range of perspectives on fairness and economic justice. While some see it as a necessary mechanism to prevent wealth concentration, others view it as an unfair and redundant tax, liable to cause undue financial distress. The ongoing discussion on this topic will continue to shape the future of wealth taxation policies.