Life is unfair. However, life is more unfair for more of us than a small group of people who have less unfair lives. And there’s no good reason why it’s more unfair for some of us than others. Because none of us actually deserve to be here.
There are many reasons life is more unfair for some, such as gender and ethnicity. But I cannot wave a magic wand and make men (and women) treat women better. I cannot wave a magic wand and make us white people recognize that most of us had it better than most of the rest of the world for the last 500 years or so, and that we need to treat people who don’t look like us better as a result. Things are better for women and non white people in my country than they have ever been (for the most part), but changing attitudes towards gender and skin colour takes generations.
There is another form of unfairness that is extremely prevalent and important but not (always) based on physical characteristics: social class. In my country and in many other countries, class isn’t what it used to be; strict hierarchies are gone and there is way more social mobility than there was historically. For most people, the lone determining factor of class is now wealth (as opposed to appearance, behaviour, dress, etc.). And we can do something about wealth in a way we cannot fix the problems of gender and ethnic bias.
Let’s End Inheritance*
(*I’m using hyperbolic language because it’s the internet. I don’t actually want to end all inheritance. Just excessive inheritance.)
Full disclosure: I was born into an upper middle class family in one of the safest major cities in the world. Add to that I am male and white (in a predominantly white country). I have had an extremely privileged life, all the more privileged in some ways because my parents separated when I was very young, so I have had two families for over thirty years, and I have received additional material benefits as a result. (Let’s ignore the accompanying emotional issues. for the sake of keeping things simple.)
Though I didn’t go to private school, didn’t go to an elite university, and I’ve never just been given a job because of my class or who my parents are, I have still received all sorts of material and circumstantial advantages that others less fortunate than me have not received.
And, provided my parents don’t live forever, I will likely receive some degree of inheritance when they die. (If my parents were different people, and if I was a different person, I may have received more financial aid than I have actually received because they could have afforded it. And I have received financial aid, just not as much as many people I know. But my parents aren’t those kinds of people and I’m not one to demand things.)
I bring this up because I assume that what I am about to propose would affect my inheritance, at least a little bit. (I don’t know for sure, though, as I haven’t had that conversation with them.)
Here’s a simple formula for ending excessive inheritance as we know it.
When a person dies they can leave the following to their children:
[GDP of country]*[number of person’s living children]/[population of country]
Anything above that is taxed by the government at 100%.
Full disclosure part 2: I am a philosopher by training, not an economist and so this is less rigorous than it should be. That’s my privilege of being philosophically minded instead of scientifically minded. Philosophers have long left the practical details of the ideas they come up with to other people. 😛
The point of this excessive estate tax is that it prevents the transfer of excessive wealth between generations. That wealth transfer is a major reason why some people have it way better than most people, even though those people did absolutely nothing to deserve it. They were just born lucky.
There are at least two problems with this idea which occur to me.
The first is that, to avoid such a tax, the rich will merely transfer their wealth before they die.
Some of them may not do this because they are greedy or scared, or what have you, but it’s reasonable to assume that, under this type of law, most wealthy people will transfer most of their money to their children before they die. The rich cannot predict when they will die. But they can estimate. And presumably most of them will have good enough relationships with at least one child that they can arrange for some kind of quid pro quo: “I transfer my fortune to you while I’m alive and you pay for anything I need.”
The most obvious solution to this first problem is to make the law apply while people are alive as well. If the total amount transferred from parent to child in the parents’ lifetime exceeds [GDP of country]*[number of living children]/[population of country] then anything else is taxed at 100%.
I don’t know enough about tax enforcement to know how much of a further burden it would be on the CRA to police such a law, but we already have estate taxes in Canada.
That brings us to the second and bigger problem: rich people will do whatever they can to avoid this law, as rich people always do whenever there is a law which taxes them more than others.
They will come up with various schemes to hide the transfer of money to their children.
They will use businesses, art, and other assets to transfer the wealth to their children.
They will hire professionals to figure out creative ways around the law or ways to hide the transfer of wealth to their children.
They will move their wealth to countries where such laws don’t exist.
They may even just leave this country altogether.
In fact, the only way this kind of law really makes sense is if it were global. (And I think I just scared the shit out of every people who would describe themselves as “right wing” in the West.)
I don’t actually want a global government. I actually think a global government makes a certain practical sense – the only major physical boundaries we humans now face are the oceans and the atmosphere – but I worry about a global government’s ability to respond to local concerns and demands. I more bring up the idea because I’m not sure an excessive estate tax like this works without some form of global governance or enforcement agreement.
So maybe ending excessive inheritance is entirely unfeasible. Maybe it’s practically impossible.
But if we want a world in which there really is near equality of opportunity, such as estate tax is one way of getting part of the way there. If excessive wealth cannot be transferred from generation to generation, there will be far fewer people who are rich just because. There will be far fewer people who have money just because their rich parents had sex at the right time.
Okay, so that’s not quite true. Rich kids would still be rich. But they would be rich until they moved out, and then they wouldn’t be rich any more.
More importantly, the grandchildren would no longer be rich, which is the real goal of this idea – to try to limit the transfer of excessive wealth from generation to generation.
Isn’t that worth thinking about?