The unmerited inheritance tax

By John Burke
web posted February 26, 2001

An article published in the New York Times (Wednesday, February 14, 2001) reported that billionaire investor Warren Buffett refused to sign a petition being circulated by a group of wealthy and prominent Americans urging Congress not to repeal taxes on estates and gifts. But not for the reasons you might think.

Warren BuffettBuffett agrees fully with the aim of the petition, summarized in its title, A Call to Preserve the Estate Tax. His reason for not signing was the document's failure to address what he takes to be the estate tax's most important function: Encouraging meritocracy, a society where success is based on demonstrated ability, not inheritance. He fears that "without the estate tax, you in effect will have an aristocracy of wealth, which means you pass down the ability to command the resources of the nation based on heredity rather than merit.'"

Buffett's point is plain: Inheritors are unworthy. They have received their wealth merely because someone -- usually one or more parents -- choose to give it to them. They have not labored for it. They have exhibited no skill that shows them deserving of it. They have not earned it. Since unmerited advantage is truly perverse -- an affront to meritocratic principle -- and inherited wealth is the primary manifestation of this aberration, then inheritance taxes are justified as a means of combating this affliction. Buffett's use of this widely-held, moralistic interpretation of merit as a rationale for this redistributive requisition on estates is most interesting but, when carefully considered, rather confused.

For unearned advantage is not nearly so unusual as Buffett would have us believe. Consider the literal absurdity of the phrase "self-made man": No one "makes" himself - all must rely upon characteristics or circumstances conferred by luck, and, so, are unmerited. These gifts may come from nature, a heredity that provides marketable attributes such as intellect and beauty, or highly prized talents like athletic prowess or entrepreneurial skill. Nurture may advantage the fortunate: Loving and competent parents can impart self-confidence, teach valuable life-skills, or serve as role models for their children's success. Then there is the simple good fortune of being in the right place at the right time.

All success - even "self-made" success - relies upon that which is undeserved. To construe the unearned as pathological, when in fact it is both ubiquitous and unavoidable, is itself perverse. So why prejudice inherited wealth, when it is but one manifestation of unearned advantage?

The rationale often given in the self-made success mythos championed by Buffett is that hard work should be the measure of merit. While the importance of work to success is not to be denied or ignored, the mere fact that wealth is obtained by toil does not provide an unerring guide to its moral worth. For one thing, how "hard" someone works is often a matter of conjecture: For example, is someone who enjoys their work so much as to regard it as "play for pay" to be deemed less worthy than someone who views their vocation as drudgery? Also, strenuous manual labor is often poorly remunerated, while physically undemanding, yet psychologically and cognitively challenging intellectual work is usually more highly compensated. Which is "harder"? Which is more "deserving"? Finally, not all who labor do so for legitimate ends: Are we to think better of a burglar's crimes if he pursues them with the grit, tenacity, and dedication worthy of a Horatio Alger hero?

If fictive and questionable notions of self-made wealth, arduously obtained, are inadequate guidelines for determining the worthiness of wealth, what precept would serve as a better substitute? Try this: entitlement to wealth from any source - work or inheritance - so long as it is obtained without coercion (i.e., force or fraud). This focuses on seeking to curtail real injustice - gain by plunder or deceit - and avoids the complications implicit in trying to impose dubious notions of merit.

Buffett's use of the middle-class mythos of merit to argue for inheritance taxes serves to illustrate how principle can be inflated into fetish: When social and economic reality fails to correspond to a perversely stringent interpretation of merit, this is taken as an excuse for using the tax code as a Procrustean device to impose upon the supposedly unworthy inheritor a mutilating conformity.

But the reality of how wealth is obtained is too complex, perhaps even too mysterious, to be so constrained and maimed (dependent, as it is, upon factors within the domain of luck -- or, it you're more metaphysically inclined -- of fate). Buffett, and his many ideological cohorts, seem never to have considered the possibility that it is their model of how the world should work, and not reality itself, which is in error. Perhaps they all should.

This is John Burke's first contribution to Enter Stage Right.

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