If anything I think we should encourage rich people to give their money away (even if only to their children) since wealth consumed by a broader number of people leads to more happiness than if it's all consumed by one person. It's better for a $10 million fortune to be spent by 10 consecutive generations than for it to all be spent by the original owner.
Why should inheritance be any different?
I don't understand how you reach this conclusion. If the original owner spends all of it it enters a whole lot of more peoples pockets than his kids.
For 100% (or otherwise significant) inheritance tax, the issue is how to implement it. If you know it's happening, you'll just gift what you own to the preferred recipients before you die. If gifts are also 100% taxed, you sell your property to them (and then spring up a company and hire them to do "work", so they get the money back). If sale of property and work are 100% taxed, well, it's a very different kind of economy.
100% inheritance tax only hurts when someone dies unexpectedly. Others will be prepared with workarounds.
Where I live, both inheritance and gifts are taxed with very similar rates. Also, selling things under their market value is considered gifting (which sometimes gets interesting, for obvious reasons).
What about taking inheritance and gifts as ordinary income to the recipient? Ideally this would be coupled with a reform on capital gains tax, but even as is, should target high taxes only on large amounts or amounts given to people that are already rich.
There would certainly need to be some tweaks, but it should diminish the inherent injustice of inheritance.
You can treat all gifts a year or less before the date of death as inheritance. Many wealthy parents will be hesitant to give large amounts of money to children while in good health, as they're scared children won't care about them any more once they get their money.
Because we do not want to isolate children from their parents. A 100% inheritance tax is impossible from a practical standpoint.
>One person gets something for free,
Do you abandon your child as soon as it is born? Do you think your newborn should work and pay the bills? No, you support it for 18 years and let it grow as much as possible instead of considering your child something to be exploited for money.
> the other works and has to pay tax?
If you inherit something from someone, that person had to work and pay tax.
I can come up with good reasons for wealth taxes, I can come up with good reasons for abolishment of land ownership (replaced by a permanent lease model) or heavy taxation of land but I honestly cannot come up with any reason for inheritance taxes beyond jealousy, jealousy that other people had more fortunate parents than you and your selfish desire to drag them down. If everyone started off on an empty earth it would be fair, but it also would be equally bad for everyone, instead of bad for an unlucky minority. Being poor in the US is a blessing, being poor in India is not.
Especially when there is a fair solution to the wealth inequality problem. Simply split the wealth instead of giving it all to the first born son. If people are obscenely wealthy, let them have many children and let each of those children be less wealthy than their parents. If you must implement this with a tax, then set a maximum amount that a single person can receive through inheritance in a lifetime, say $1 billion and tax anything after that. Yes, that means Jeff Bezos will have to find 200 heirs or lose the money to the state. It would be in his best interest to reduce wealth inequality at the end of his life.
Untaxed inheritance perpetuates inequality. Inequalities are unfair and arguably damage our societies. Functioning societies aim to repair the damage by rebalancing structural inequalities. Hence inheritance tax. The children of the very wealthy aren’t being “abandoned”, they already have surpassing advantages while their parents are alive.
Centuries from now they'll probably consider what we're doing now to be absolutely barbaric and adjacent to plain old slavery.
You can argue that there are ways of taxation that are compatible with this idea and there are ways of taxation that are counterproductive but you cannot argue that the taxes shouldn't exist because that would mean no government which would mean no rule of law and no political environment in which an advanced economy can exist. Of course, the big problem is that many governments fail to live up to their responsibility. The US and EU countries' government may be failing their citizens, but not as much as many Asian, African or Latin American governments.
This ties up a lot of wealth in ways which slow down economic growth immensely.
