Monthly Proposal No.6: levy taxes on heritage for the sake of meritocracy

It is written in the Universal Declaration of Human Rights that all human beings are born free and equal in dignity and rights. But the subjective value of these rights depends on the possibility to use and appreciate them.

Not only but especially in capitalism the right to own and consume therefor depends on personal income and wealth. Still people seem to prefer a slightly unequal distribution of income and wealth and even seem to accept a very unequal distribution as long as they are able to believe that it is caused just by different effort and merit. However, I claim that people do not accept the status quo. They just temporarily tolerate it because of their systemic dependency. They know that the income distribution is not an outcome of perfect markets. And no one can explain the distribution of wealth by effort and merit.

The most obvious way to gain wealth without any own effort is heritage. It is no merit to be born into a rich family. It is even hard to justify, why a children should be born equal in rights but unequal in the possibilities to use them. So there has to be found a compromise. Even if it is a human instinct to care for ones relatives and even to bequeath them, the extent of heritage should not be allowed to challenge meritocracy.

So not only egalitarian but also whoever wants to plead capitalism as a meritocratic system should care about the decreasing tolerance for unequal distributions. That implies he or she should be interested in re-establishing the at least the credence that a minimum of meritocracy still exists and levy taxes on heritage.


One thought on “Monthly Proposal No.6: levy taxes on heritage for the sake of meritocracy

  1. It’s a good point. I want to make two comments, one on moral philosophy, the other on econ.

    We have to acknowledge that we are born unequal, not just with regard to wealth but also with regard to health, intelligence, talents, beauty. We can redistribute wealth to some extent. But we cannot redistribute the other things. So given that Nature (God?) has created us unequal, meritocracy is not a society I want to live in. I don’t want the sick and handicapped to starve. The ethical question is this: am I entitled to take other people’s money to help the sick and handicapped? Not so sure.

    Moral philosophy is interesting and all, but I believe tax policy should be guided first and foremost by economic science. We should tax those things that are in inelastic supply so as to cause minimum inefficiency. The question is then not an ethical one, but an empirical one: how price-elastic is the supply of bequests? Not really my field, but the study below finds a rather high elasticity of charitable bequests in the US (in the range of -1.6, -2.1).

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