Joseph Schumpeter: "As long as an inheritance tax remains a true inheritance tax, it always involves a conversion of capital into income, hence an act of economic waste which is damaging to all."
Gates, on the other hand, seems mainly concerned about the impact of eliminating the estate tax on charitable giving. Although much charitable giving is made through estates, this is only because people want to make sure they have enough to retire on before giving their assets away, and because estate tax rates are higher than income tax rates, thus increasing the value of charitable deductions.
In any case, studies have shown that charitable giving is more a function of income than taxes. When incomes go up, so does charitable giving. The estate tax mainly affects the timing of giving, not the amount.
Lately, Gates has invoked the Bible to argue for the estate tax. "This notion that there's a God-given right to pass everything on to your kids, that's not in the commandments I've read," he recently said.
Actually, it is in the Bible. Proverbs 13:22 says, "A good man leaves an inheritance to his children's children." Numbers 36:8 says, "Every one of the people of Israel may possess the inheritance of his fathers." Ezekiel 46:18 says that the state has no right to interfere: "The prince shall not take any of the inheritance of the people, thrusting them out of their property."
However, the most emphatic repudiation of wealth redistribution appears in Luke 12:13, in which Jesus acknowledges the value of wealthy people to society as a whole: "The land of a rich man brought forth plentifully." Echoing Ezekiel, he said, "Man, who made me a judge or divider over you?" In other words, it is up to each individual to decide how to distribute his wealth -- in life or at death -- not the state. Taking the wealth of rich men by force is neither moral nor efficient.
Of course, Soros and Gates are entitled to their opinions and to do what they wish to do with their own wealth. But their views about estate taxation are without merit.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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