Inheritance and the State

“Inheritance and the State: Tax Principles for a Free and Prosperous Commonwealth” by Richard E. Wagner examines the function of inheritance in our social order and the impact of the taxation of transfers of wealth on this order. The taxation of wealth transfers, the partial socialization of inheritance, is advocated primarily as a means of promoting equality. Yet, as Wagner argues, by harnessing the natural partiality of parents for their own offspring, inheritance plays an important role in raising material standards of living from generation to generation, a role that is weakened as the taxation of inheritance is strengthened. As he examines the social function of inheritance in maintaining and increasing the total wealth of society, Wagner exposes the destructive tendencies of the egalitarian imperative that is so commonly articulated today. He also studies more specific topics, such as the taxation of capital gains, the impact of transfer taxation upon total tax revenues, the liquidity problems of closely held businesses, charitable deductions, and the taxation of wealth transferred through trusts, discussing, where appropriate, the changes introduced by the Tax Reform Act of 1976.