Now is a good time to die. Congress’s failure to take action on the extension of the estate tax caused it to “expire” on December 31, 2009. This repeal is scheduled to last for only one year, and Congress likely will enact some form of estate tax before then. So only those who die soon will be able to transmit wealth entirely tax-free. In the meantime, questions about the economics, fairness, morality of inheritance taxation–broadly defined–will figure prominently in political and social debates. Anne Alstott’s essay, Family Values, Inheritance Law, and Inheritance Taxation, forthcoming in the Tax Law Review, will help ground these discussions.
Alstott’s argument is that taxing inheritance can be consistent with valuing families; it all depends on what view of the “family” one takes. Alstott begins by locating her work in the academic debate about inheritance tax (the umbrella term she uses to refer to wealth transfer taxation generally, acknowledging that there is no federal inheritance tax per se). She launches her analysis on the springboard of Tom Nagel’s argument that “the right to use one’s resources to benefit one’s family”  is at odds with inheritance taxation. Alstott evaluates this claim using three perspectives on the family – she calls them the liberal, conventional, and functional views. She synthesizes these from a careful reading of Jens Beckert’s historical study, Inherited Wealth (2008). Roughly characterized, the liberal view approaches the family as a private sphere within which individuals should have freedom to choose their beneficiaries. The conventional view construes the family as a privileged unit of economic and social organization that transmits identity and values from generation to generation. A functional view emphasizes the family’s socio-economic welfare role–i.e., providing needed financial and other assistance to its members. Continue reading "A Good Time to Die: Family-Based Objections to Inheritance Taxation"