Inheritance Tax

There have been quite a lot of ideas flowing around regarding the reform of the inheritance tax. These ideas range from a simple increase of the inheritance tax to introducing an inheritance tax of 100%. The latter means practically abandoning any idea of inheritance for individuals. The philosophy behind this very radical step condemns any form of wealth that is not accomplished by personal achievement. It says that if someone gains any amount of wealth not through his own work, this is of no value for the society and, therefore, the society should interfere and channel this wealth to the needs of the society by taxing the total amount of an inheritance. It emphasizes the idea that every individual in society should have equal chances, so a career must be built only on personal achievement and not the wealth of one’s forefathers.

At this point I will neglect that an inheritance tax of 100% would erode the entity of a family but rather examine the question: is the principle of personal achievement really so different from the concept of inheritance that any inheritance needs to be abandoned? In others words is wealth achieved by personal achievement only due to the accomplishment of the individual or are other factors playing into it as well? Even if one lives in a society where its citizens don’t have to pay fees for studying at state schools there are still other factors that determine the ability of an individual to perform then just monetary aspects. For example someone who grew up in a more or less healthy parental environment will probably have more self-confidence and develop any kind of skill easier than someone who grew up in a broken home caused by drug abuse or other severe problems. At the end of this line of thought each one of us has to ask himself if we, with all our skills, are only the product of our own hard work, self-determination and achievements or if a lot of what we are is not also determined by things that are totally out of our control. Realizing that one’s accomplishments are not only the result of one’s own efforts but to a great degree also the result of natural talents and of what others – parents, peers, and teachers – have invested into one’s life helps reduce a person’s pride level in his own achievements; furthermore, it also leads back to the idea of inheritance and raises the question what is still so different here. If wealth produced through personal achievement is to a great deal the result of what other people (and last but not least God) invested into this person, it sounds quite similar to wealth produced through the inheritance from previous generations. In both cases, the individual who owns wealth now received some kind of benefit from others and, therefore, should not be treated differently. This leads to the conclusion that the idea of an inheritance tax of 100% does not hold much water.