Milton Friedman Educates On 100% Inheritance Tax

[Bryan Hancock]

I found the arguments in this video quite educational:

Milton Friedman On Why 100% Inheritance Tax Is a Bad Idea

Vikram and I had this debate a while back and he made many of these same points. I consider myself a rugged individualist that believes one should prosper or fail based on their own efforts and abilities. However, I can't say that I disagree with Friedman on his argument on the video above.

I think most would take it as a given that the initial condition of having more capital does give decided advantages and hence distorts a meritocratic society. Do you see any way to level the playing field without distorting one's incentive to scrimp and save to pass wealth on to the next generation?

[Brian Levredge]

I hate the death tax. To me, it is the single worst tax that we have in this country. The idea that you can work all your life and invest smartly and save only to have the govt come and take a big bite out of it simply because you're dead is asinine, especially when you consider that much of that capital formation has already been taxed multiple times. What it really does is force families to start over and over again. It's like a generational ground hog day.

Friedman's comments aside, I would also add that the wealthy get around much of the estate tax with the right planning. By setting up foundations and trusts, as well as hedging with some good whole life policies, one can almost avoid the tax entirely. That leaves those who either don't have enough foresight or capital to do the proper planning paying the freight.

I also don't think you can ever truly have a level playing field. The opportunities and resources are out there for everyone that wants to take advantage of them. Some people will have to work harder than others and that's never going to change. I would also add that I've seen and known plenty of people that were born on third base to piss away all that their family worked for during their lives. It cuts both ways.