Inheritance Taxes: A Fair and Necessary Tactic or a Tool for Social Engineering?

When discussing the fairness and necessity of inheritance taxes, opinions often vary widely. In this article, we will explore different perspectives and delve into the effectiveness of inheritance taxes in generating revenue while remaining fair and just.

Supporters of Inheritance Taxes

Perspective A: I strongly support inheritance taxes. Our current tax system, which excludes estates under $5 million, avoids affecting most people significantly. Additionally, exceptions are made for family farms, provided they continue to operate as farms. However, I am against the stepping-up basis for tax purposes. This loophole allows for substantial untaxed profits, such as a significant profit from cryptocurrency investments.

Example: Consider the scenario where Mr. Lee purchased 1,000 bitcoins in 2011 at $1 each. Today, the value is approximately $60,000 per coin. If Mr. Lee were to die tomorrow, his estate would be taxed as though he had purchased the coins yesterday, resulting in untaxed profits of about $22 million. This is a significant loss to the treasury.

Perspective B: On the other hand, I am against the implementation of inheritance taxes. My stance is that additional taxation should be reserved for support of the country's infrastructure and services. I believe that taxing money that has already been taxed creates a loop of taxation, making it economically burdensome.

Those in Favor of Inheritance Taxes

Perspective C: I have no issue with inheritance taxes as a means to generate revenue. However, many support inheritance taxes for social engineering purposes, which should not be within the government's scope. There is a need to recognize that inheriting wealth can be seen as a reward for personal achievements. Furthermore, concentrated funds can be best utilized for projects like art patronage or historical preservation, even if they result in financial losses.

Government's Role and Tax Fairness

Perspective D: Assuming that governments must raise taxes and that certain things are better provided by government than individually, we can consider what the least objectionable tax might be. Mrs. Jones, a wealthy individual with ￡1.5 million, has a compelling case. If she sold all her assets tomorrow, it is entirely her business. However, if she passes on her wealth, the government taxing it becomes a fair approach. The beneficiaries of the inheritance never had the money initially, making this a fair tax system.

Conclusion

Ultimately, the debate over inheritance taxes is complex and multifaceted. From practical considerations to moral and philosophical viewpoints, there is no one-size-fits-all solution. Whether inheritance taxes are a fair and necessary component of the tax system or a tool for social engineering, it is crucial to have an open and informed dialogue. The key lies in striking a balance between fairness and necessity, ensuring that the tax system remains just and effective for all stakeholders involved.