Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Inherited wealth and complacency
Published on May 13, 2005 By Draginol In Politics

My wife and I are looking for lake front property up near Higgins Lake Michigan. There's not much lake front property now.  Not surprising given the law of supply and demand.  But the realtor told me something telling -- the reason there's not much land available is due to multi-generational inheritence.  That is, 150 years ago people bought land up there and simply hand it down from generation to generation.  Family land. How can that be bad?

At first glance, such generational property ownership might sound like a good thing.  And I think it is good -- to a point.  But on the other hand, as a society, how fair is this? When talking about limited resources, such as water front property, how "fair" is it that one family gets to live on the beech simply because their great great grandfather bought the property a century or more ago?

Or more often, ancestors who squatted on the land.  I am a strong believer in things being kept in the family. But I am also an opponent to concentrated unearned wealth.  Sometimes the contradiction becomes an issue.  At some point, a society has to make some tough decisions.  If we want an upwardly mobile system, then there has to be a mechanism in which generations can't simply inherit wealth and sit back and do nothing generation after generation. 

The lake front example is just that -- an example of such stagnation.  Without inheritence taxes, the natural resources of society really comes back to being a "whose ancestors got there first"?  I tend to think that our society should give everyone an equal shot. 

I don't think the government should be confiscating land from people.  However, I do think that inherited wealth should be treated as any other type of income.  Like most people, the money that puts food on the table comes from my labor.  The income from that labor is then taxed.

When someone inherits money from a friend or relative, it's still income. In fact, it's more than income, it's unearned income.  I don't see why it shouldn't be taxed at the same levels as regular income.  This has all kinds of benefits for society and if we're going to tax people's hard work, why not tax income that came from simply being born?  The benefits include ensuring that we don't stagnate society.

In an egalitarian society such as the United States, much of the American dream is premised on the concept of hard work leading to great reward. Anyone can make it.  But if the children of successful people can simply inherit immense wealth wholesale without having earned it that strikes me as not being good for society.  This is especially true when it is property -- land holdings -- that are being inherited.

That said, I am not in favor of massive taxation of inherited income.  I don't agree with the whole "that money has already been taxed" argument at all, however.  After all, money gets taxed as it passes hands all the time.  Why would inherited income be treated differently?  It's still income.  What I would like to see is a healthy balance between what is good for society as a whole and what is good for individual families in particular. 

I'm all for people at Higgins Lake being able to have cottages that pass on to their next generation. But that next generation should have to put something up too to get it so that there is at least the hope that other citizens may have a shot at buying that property to pass on to their children too.

Post Notes:
Some people are reading this article as "Oh greedy Brad just wants cheap land."  Sigh. I was using thiis example to illustrate a general point.  I have no problem with inheritence, I am simply saying that inheritence should be taxed as any other income at the same rates as other income.  So technically speaking, I'm in favor of LOWERING the inheritence tax but I still support there being an inheritence tax.


Comments (Page 4)
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on May 15, 2005
A wonderful commentary about this issue is included in this new article: From Jay Ambrose: Mr. Death Tax meets a victim
on May 15, 2005

And if the kids worked for their parent unpaid until the age of majority and the parents wish to reward them with an inheritance it should be the parents right to decide the "merit" of this income. Once you start handing the Government the reigns in determining what constitutes quality of work for pay you have a whole new system of government.

I think this is nonsense. That's such a HUGE if.  So some former slave plantation in the south should just automatically "Stay" in the family because 200 years ago some settlers squatted on the land and claimed it on their own because the latest generation may have done some unspecified "unpaid" work?

If great great great grandson X inherits 50 acres of land that is worth $5 million, then that grandson should pay income taxes on that.  If I work my ass off and EARN $5 million, I sure have to pay income taxes on it.  It just baffles me that someone woudl argue that someone sitting on their ass should be able to just get $5 million simply because of shared genetic material.  If the grandson isn't has been a reasonable success, he should be able to come up with a way to pay the income taxes on it.  If not, he sells the land and pockets the money that he inherited that wasn't owed in taxes (i.e. ~$3.5 million of it).

The inheritor gets first shot at keeping the land in the family. And in fact, assuming "the family" is more than one person at this point, they could go in together to make up the difference.  And if not, then it opens the land for a new generation of people.

on May 15, 2005
The inheritor gets first shot at keeping the land in the family. And in fact, assuming "the family" is more than one person at this point, they could go in together to make up the difference. And if not, then it opens the land for a new generation of people.


No! That's assuming that the inheritor can "scrape" the money together to pay the damn tax in the first place! If not then the family farm goes bye-bye! So what your saying then is that if the inheritor is an "only" child/inheritor and can't get the money together to pay the tax....tough shit, you lose bud! Either that or sub-divide the family land to pay the tax. That's just a large load of crap! You can't equate slaves/slavery to what we're talking about. That's apples ands oranges.
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