I think the question is not so much whether the children had a right to the money at the time it was first taxed (although if that were the issue then the answer is simple: they did not). Rather, the question is whether the person who earned the money should have the effective right to use that money without having it taxed again at a very high rate. It is true that if the person who earned it then used it to pay a lawyer for services, the lawyer would pay income taxes -- but only on the lawyer's net income, not on the gross amount of the payment. The result is that the legal services sought by the taxpayer are more expensive, but the effect is not confiscatory. It is also true that if the taxpayer spent the money on tangible personal property, there would often be a sales tax, but again the amount of the sales tax is likely to be fairly small. As I understand it, at rates seen in the recent past and perhaps still in effect for some estates, estate taxes penalize the earner of the income much more where the earner chooses to use the money to benefit his or her children than where the earner of the income chooses to benefit him or herself (such as by taking an expensive vacation or buying a Ferrari). I think it is reasonable to see this as a double tax on the earner, for whom the benefiting of children may be the most important use of the money that has been earned.
Another way of putting this is that possession of money is worth nothing if the state confiscates the money when the possessor tries to use it. Thus high estate taxes burden not just the children who seek to inherit, but also the parent who seeks to benefit the children by transferring money to them. Mark S. Scarberry Pepperdine University School of Law [EMAIL PROTECTED] -----Original Message----- From: Kermit Roosevelt [mailto:[EMAIL PROTECTED] Sent: Thursday, May 29, 2003 11:20 AM To: [EMAIL PROTECTED] Subject: Re: Statistics Just on the multiple taxation issue: all the money in circulation has been taxed many times. That doesn't mean future transfers shouldn't be taxed. The argument about multiple taxation has force when the ultimate recipient of the money seems to have had a claim on it at the time the first tax was imposed. Shareholders own a corporation; they own the money it earns, on which it pays taxes. Should they have to pay a tax again when that money is distributed to them? This is plausibly described as double taxation. When I earn money and pay tax on it, then use my after tax earnings to pay a lawyer (for example), it doesn't look like double taxation to require her to pay tax. So the question of whether the inheritance tax is an instance of double taxation comes down to the question of whether children have this sort of pre-existing claim on a parent's wealth. You can take this as a question directed either to your philosophical intuitions, or to our current legal system, but in either case I don't think it's preposterous to say the answer is no. Eastman, John wrote: >Cornell Clayton's position below really is preposterous. Talk about >double taxation -- the money left via a will has already been taxed, of >course (often several times!). I'm curious, though, how far he would go >with it. If I give my kids $100,000 over 4 years for college tuition, >would he tax that as "income" to my kids? How about room and board for >the 18 years before that? > >But to bring this back to constitutional law. Are there any >constitutional limits on the taxing power at all? Anything to prevent a >90 or 100% confiscatory estate tax? In the Federalist 10, James Madison >counted it "the first object of government" to protect the diversity in >the faculties of men, from which the rights of property originate. Is >there anything in the Constitution that is designed to further this >purpose? > >John C. Eastman >Professor of Law, Chapman University School of Law >Director, The Claremont Institute Center for Constitutional >Jurisprudence > > >-----Original Message----- >From: Cornell Clayton [mailto:[EMAIL PROTECTED] >Sent: Friday, May 23, 2003 12:58 PM >To: [EMAIL PROTECTED] >Subject: Re: Statistics > > >Glenn Reynolds wrote: > >>2. It would be ironic, if people's right to pass their property on to >>their descendants were generally regarded as unfair and illegitimate. >> > > >I, for one, do think that laws allowing inheritance of massive amounts >of property or wealth (or economic advantage) are unfair and >illegitimate. Following a Rawlsian conception of equality -- which I >believe is the best interpretation of our constitutional commitment to >equality -- I can see no difference theoretically between one inheriting >arbitrary advantages (or >disadvantages) on the basis of birth-family as opposed to color of skin. >One does nothing to merit either one, so one has no more just >expectation to inherit privilege on the basis of the family you are born >into than to inherent privilege on the basis of the skin color you >happen to be born with. This is one of the reasons I think the >Republican attack on the >estate tax is so egregious. It is not a "death tax", but a tax on >income >that is not deserved or merited! Not only should we not eliminate the >estate tax, we should tax inheritance at a much higher level than earned >income. > >Of course, I readily concede Glen's other point, that as a matter of >history (as opposed to theory) the US experience with race >discrimination is quite different than thinking about problems created >by economic inheritance. > >Cheers, >Cornell Clayton > -- Kermit Roosevelt Assistant Professor University of Pennsylvania Law School 3400 Chestnut Street Philadelphia PA 19104 215.898.5185
