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Inheritance tax as a litmus test to distinguish socialists from liberals

I’ve written on inheritance tax earlier, but the topic came up again. My comments:

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The only justification for any inheritance tax is based on the concept of equality. Only socialists worry about equality. Liberals worry only about poverty. It doesn’t matter how unequal a society is so long as there is absence of poverty and there is equal opportunity.

I won’t go into too much details regarding this ultra-socialist idea of appropriation, but note:

a) Inheritance tax is a tax on already taxed income. Except in the rarest of cases, such a tax is fundamentally untenable.

b) We live through our children, and while we may not work only for their sake, we have in mind the continuity of life that our children represent. Our children are us. Why would anyone labour if they can’t pass on the fruits of their labour to their children? This amounts to the destruction of the entire system of nature, and imposing values that are totally inconsistent with the way nature has progressed to date. If parents can’t look after their children and therefore ensure that their genes are passed on successfully into the future, then we are essentially saying that we disagree with life itself.

c) This idea is inequitous, because different people consume/save differently, and the incidence of this tax will fall on those the more prudent; and families that tend to die at an average age of 50 would be taxed more heavily than those that die at age 90.

Inheritance tax is a very good test of liberalism. I’d now classify your worldview as social liberal, willing to let people produce through the market but thereafter keen to confiscate their wealth at the earliest opportunity. This is actually a form of socialism, not liberalism.The liberal doesn’t ever talk about equality for that is none of his business. He also talks about tax only to the extent that it is required to fund government; not as a means to “equalise”/ “redistribute”. Any redistribution is anathema to the liberal.

I guess the general principle of the liberal is that he works with human nature, not against it (for that’s guaranteed to fail – and cause some severely perverse consequences). What is the most prominent thing we observe throughout history? That republics have repeatedly degenerated into kingdoms (based on the principle of inheritance), that a non-heritable varna system degenerated into a heritable caste system (with rationalisations of the sort given in the Upanishads), that there is vast and disproportionate effect of family on the prospects of someone in politics (one such family has continued unbroken since independence – 70 years! in an alleged “democracy”).

Any attempt to violate the laws of nature will be met with failure. This raw truth is something socialists dislike and will often (like Piketty) cook up bogus “facts” to excite us to support their continued attempts to violate our biology. As a species, we are very easy to excite, and particularly susceptible to envy. But envy can’t be the driving force for any mature public policy.

And once again I remind people about this short video in which Milton Friedman raises some serious issues with inheritance tax. It will, as Friedman says, destroy society itself.

Sanjeev Sabhlok

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