While Republicans are generally staunch defenders of inheritance, a consistent and principled conservative would want to reform the legal aspects of inheritance—perhaps even radically. While this might seem an absurd claim, bear with me as I advance the arguments. These arguments are based on professed conservative principles regarding what I will broadly call welfare—support provided by the state in the form of such things as unemployment, food stamps and so on. The use of the term “welfare” is something of a sloppy, but necessary shorthand. There is no official government program called “welfare.” Rather, it is a vague term used to collect a wide range of programs and policies. However, they do all have in common that people are provided with resources from the public. Now on to the conservative arguments against inheritance.
In April, 2020 Senator Lindsey Graham argued that public financial relief for the coronavirus would incentivize workers to leave their jobs. While making this sort of argument during a pandemic was a new twist, it is a stock argument advanced against welfare. Rod Blum, a Republican representative from Iowa, said “Sometimes we need to force people to go to work. There will be no excuses for anyone who can work to sit at home and not work.” Donald Trump, whose fortune was built on inheritance, has said that “The person who is not working at all and has no intention of working at all is making more money and doing better than the person that’s working his and her ass off.” While this might sound like description of Trump, it is apparently his criticism of welfare. In general terms, the conservative argument is that if a person receives welfare, then they would not have an incentive to work. Since this is bad, welfare should be restricted or perhaps even eliminated.
Conservatives also advance similar utilitarian arguments against welfare, arguing that it is bad because of the harms. In addition to allegedly destroying the incentive to work, it is also supposed to harm the moral character of the recipient and, on a larger scale, create a culture of dependency and a culture of entitlement. If we take these arguments seriously, then it would also tell against inheritance. In fact, philosophers have long made this argument.
Mary Wollstonecraft contends that hereditary wealth is morally wrong because it produces idleness and impedes people from developing their virtues. This exactly mirrors the conservative arguments against welfare and they should, if they are consistent, agree with Wollstonecraft.
Conservatives also profess to favor the free market, meritocracy and earning one’s way. They speak often of how people should pull themselves up by their bootstraps. In accord with these professed values, they tend to oppose programs like affirmative action that aid. The usual arguments tend to focus on two factors. The first is that such programs provide people with unearned resources and this is wrong. The second is that such programs provide people with an unfair advantage over others, which is also wrong. It is blindingly obvious that the same reasoning would apply to inheritance.
Inheritance is unearned. So, if receiving unearned resources is wrong, then inheritance would be wrong. It could be countered that people can earn an inheritance, that it might be granted because of their hard work or some other relevant factor. While such cases would be worth considering, earning by hard work is not the usual way one qualifies for an inheritance. However, an earned inheritance would certainly not be subject to this argument.
Disparities in inheritance also confer advantages. For example, suppose that both of us want to operate a business in our small hometown. Assume that we are roughly equal in abilities and character, so with a fair start there is about a 50% chance either of us would win the competition to succeed with that business in our town. But suppose that I inherit $1,00,000 from a relative and you start out with just a $1,000 loan from your parents. This provides me with a huge advantage. I can purchase more and better equipment. I can buy a better location. I can out-advertise you. I can bleed you out by taking a loss you cannot sustain. I will not say it is impossible for you to beat me—I can imagine scenarios in which I fail. For example, the townsfolk might rally to support you and boycott me because of my huge unfair advantage. But barring such made-for-tv miracles, I will almost certainly win.
Even if we were not in direct competition, I would still have a huge unearned advantage over you. If you decided to go to the next town over and I wished you well, I would still be more likely to succeed than you—my inheritance advantage would be considerable. If receiving unmerited advantages is wrong, then significant inheritances would be wrong as well.
Since conservatives generally loath welfare and love inheritance, they would need a principled way to break the analogy between the two. There are ways to do this.
One argument can be built on the fact that inheritance is passed on voluntarily from the possessor of the wealth to the recipient, while welfare involves taking tax money from people who do not want it to be used for welfare. The obvious reply is that if we decide to have welfare by voting for it directly or indirectly, then it is voluntary. This, of course, leads into the much broader area of democratic decision making –but if we accept democracy and our democracy accepts welfare, then we are agreeing to it in the same way we agree to any law or policy we might not like.
Another argument can be made by pointing out that inheritance usually goes to relatives while welfare does not. But this does not seem to be relevant to the argument that welfare is bad because of its harms—after all, it is getting money that one has not earned that is the problem, not whether it was giving willingly or not or who it comes from. One could try to argue that resources given by relatives is special and will not make people lazy while state resources will, but that seems absurd. Some will be tempted to argue that those who inherit wealth tend to be a better sort of people, but this seems likely to lead into racism and I will not pursue that sort of reasoning.
Another argument can be made arguing that inherited wealth is earned in some manner while welfare is not. While this does have some appeal, it falls apart quickly. First, some people do earn some of their welfare (broadly construed) by paying for it when they are working. For example, if Sally works for ten years paying taxes and gets fired when her company moves overseas, then she is getting back money from a system that she contributed to. Second, if a person did work for their inheritance, it is not actually an inheritance, but something earned. If, for example, someone worked in the family business for pay or shares in the company, then they have earned their pay or shares. But merely working there does not, obviously, entitle a person to own the business after the death of the current owner—otherwise the workers should all share in the inheritance. So, this sort of argument fails.
It might be pointed out that if someone opposes inheritance, then they must oppose welfare. One reply is to accept this—if welfare does make people idle and inflicts moral harm, then it would be as bad as inheritance and should be limited or eliminated. A second reply is to argue that welfare helps people in need and is analogous to family helping family in times of trouble rather than being analogous to inheritance, in which one simply receives regardless of need or merit.
I suspect that many straw people are being created to attack “my” arguments. To pre-empt some of them, my view is not that inheritance should be eliminated. It would be rather absurd to argue that Sally cannot inherit her grandmother’s Hummel and assault rifle collection. It would be foolish to argue that Sam cannot inherit his mom’s cabin where he learned to hunt deer. Rather, my view is consistent with the conservative arguments: inheritance should be reduced to a level that does not cause harm to those inheriting it and does not confer an unfair advantage. While a full theory of inheritance would require a book to develop, the core of my view is that inheritance should be taxed in a progressive manner and the tax income should be used to increase fair competition. A good place to start would be funding public schools. Funding low-interest loans for people creating businesses for the first time would also be a good option. This has the appeal that it takes nothing away from anyone who is still alive—people would merely get less unearned wealth. To use an analogy, it is like a tax on lottery winnings—you are just getting less of a win, not losing anything earned. In this way, a tax on inheritance would seem morally better than most income tax. As with debating welfare, there can obviously be debate about inheritance.
It could be argued, as the Republicans often do, that taxing inheritance would be a double tax: the money or property is taxed, then taxed again when it is inherited. While this seems to be a clever argument, there are two obvious problems. The first is that the person inheriting the money or property is just taxed once—they do not pay a tax when the person dies and then pay another tax when they inherit it. Second, this alleged “double tax” is not unique to inheritance. When I make money, tax is taken out. When I order a book by a friend on Amazon, I pay a sales tax. When my friend gets their royalty, they pay a tax on that. If they turn around and buy a book of mine with the money they got from me buying their book, the money is taxed again when they pay the sales tax. Then I am taxed again when I pay my tax on my income. This is not to say that all this taxing is good, just that the notion that inheritances are subject to an unusual tax is absurd.
There is also the fact that inheritance currently gets what seems to be a special exemption. If I get a paycheck to work for a business owned by my family, I do not get a special exemption from taxes on my pay. That would clearly be unfair to those who do not work for their families. One could make the argument that death is relevant difference. But that seems odd. As example, imagine Sally works for mother’s company and thus (probably) pays normal taxes on her income from that paycheck. When Sally’s mother dies, Sally would not get a tax break on her paycheck—that would be unfair to workers who do not have that advantage.
In the next two essays I will use games to argue why taxing inheritance and using it to increase competition and opportunities is good.