Why Tax Wealth Transfers?: A Philosophical Analysis

The one-hundredth anniversary of the estate tax provides an ideal moment to reflect on the role of wealth transfer taxation in the larger scheme of the U.S. tax system. Wealth and income inequality are at historically high levels, and the responses to these issues are often reduced to a simplistic political dichotomy of “right” versus “left.” The multitude of views of the American people cannot be reduced to such simple generalities without losing important nuances. This Article identifies three general categories of political philosophical viewpoints that are commonly endorsed by both politicians and everyday Americans, and then examines the current estate tax from within the perspective of those positions. The Article concludes that maintaining a wealth transfer tax system, perhaps organized as a tax assessed on the heirs, best matches the political views of twenty-first century Americans

Taxing the Ivory Tower: Evaluating the Excise Tax on University Endowments

The Tax Cuts and Jobs Act of 2017 introduced the first-ever excise tax imposed on the investment income of university endowments. While it is a relatively small tax, this new law is a first step towards the exploration of taxing non-profit entities on the vast sums of wealth they hold in their endowments. In this essay I take the new tax as a starting place for investigating the justification for tax exemption for universities and thinking through the consequences of changing our approach, both in the form of the new excise tax and possible alternatives. There remain reasons to be skeptical both about the design of the current tax and its ability to withstand the political efforts of the powerful set of universities who will be subject to it. Nonetheless, this new tax opens the door to a discussion of whether it is time to treat universities’ endowments more like the private equity funds they increasingly resemble

Utilitarianism and Wealth Transfer Taxation

This article is the third in a series examining the continued relevance and philosophical legitimacy of the United States wealth transfer tax system from within a particular philosophical perspective. The article examines the utilitarianism of John Stuart Mill and his philosophical progeny and distinguishes the philosophical approach of utilitarianism from contemporary welfare economics, primarily on the basis of the concept of utility in each approach. After explicating the utilitarian criteria for ethical action, the article goes on to think through what Mill\u27s utilitarianism says about the taxation of wealth and wealth transfers, the United States federal wealth transfer tax system as it stands today, and what structural changes might improve the system under a utilitarian framework

Death, Taxes, and Property (Rights): Nozick, Libertarianism, and the Estate Tax

Over the last twelve years the estate tax has been eviscerated. Evolving from a tax at 55% on all estates over $675,000 to a tax at only 35$5.12 million per person ($10.24 million for a married couple); the estate tax now taxes only about 5,300 estates per year, as opposed to over 58,000 estates in 1999. In an era of language decrying class warfare, why abandon this project of the estate tax? Is it too late to save the tax? Are there reasons to save it? Why have an estate tax in the first place? Libertarian arguments have become standard fare in the United States, in particular with regard to debates around tax policy. In this Article, I will examine the estate tax through a libertarian lens, and explain why a hefty estate tax is consistent with the traditional libertarian position. I will begin by articulating Robert Nozick’s libertarian views on property rights, in particular the account he provides in his seminal work Anarchy, State, and Utopia. I will then defend two lines of argument against the notion that the libertarian view of property rights is violated by an estate tax. Finally, I will explain why a society can, unrestricted by moral constraints regarding the property rights of the deceased, set a default rule for post-death property rights that reflects that society’s values. The primary purpose of this Article is to dispute the moral claims to post-death property rights made by libertarians when they argue against the estate tax. I am merely trying to demonstrate that those who argue that the estate tax is an immoral violation of the private property rights of the deceased are mistaken. It is just to say that we need to determine as a society what rule to set, having no moral absolutes that would determine how we must set the rule

Death, Taxes, and Property (Rights): Nozick, Libertarianism, and the Estate Tax

Over the last twelve years the estate tax has been eviscerated. Evolving from a tax at 55% on all estates over $675,000 to a tax at only 35$5.12 million per person ($10.24 million for a married couple); the estate tax now taxes only about 5,300 estates per year, as opposed to over 58,000 estates in 1999. In an era of language decrying class warfare, why abandon this project of the estate tax? Is it too late to save the tax? Are there reasons to save it? Why have an estate tax in the first place? Libertarian arguments have become standard fare in the United States, in particular with regard to debates around tax policy. In this Article, I will examine the estate tax through a libertarian lens, and explain why a hefty estate tax is consistent with the traditional libertarian position. I will begin by articulating Robert Nozick’s libertarian views on property rights, in particular the account he provides in his seminal work Anarchy, State, and Utopia. I will then defend two lines of argument against the notion that the libertarian view of property rights is violated by an estate tax. Finally, I will explain why a society can, unrestricted by moral constraints regarding the property rights of the deceased, set a default rule for post-death property rights that reflects that society’s values. The primary purpose of this Article is to dispute the moral claims to post-death property rights made by libertarians when they argue against the estate tax. I am merely trying to demonstrate that those who argue that the estate tax is an immoral violation of the private property rights of the deceased are mistaken. It is just to say that we need to determine as a society what rule to set, having no moral absolutes that would determine how we must set the rule

Utilitarianism and Wealth Transfer Taxation

This article is the third in a series examining the continued relevance and philosophical legitimacy of the United States wealth transfer tax system from within a particular philosophical perspective. The article examines the utilitarianism of John Stuart Mill and his philosophical progeny and distinguishes the philosophical approach of utilitarianism from contemporary welfare economics, primarily on the basis of the concept of “utility” in each approach. After explicating the utilitarian criteria for ethical action, the article goes on to think through what Mill’s utilitarianism says about the taxation of wealth and wealth transfers, the United States federal wealth transfer tax system as it stands today, and what structural changes might improve the system under a utilitarian framework

Unseating Privilege: Rawls, Equality of Opportunity, and Wealth Transfer Taxation

This Article is the second in a series that examines the estate tax from a particular philosophical position in order to demonstrate the relevance and importance of the wealth transfer taxes to that position. In this Article, I explore Rawlsian equality of opportunity, a philosophical position that is at the heart of much American thought. Equality of opportunity requires not only ensuring that sufficient opportunities are available to the least well-off members of society but also that opportunities are not available to other members merely because of their wealth or other arbitrary advantages. Therefore, an income tax alone, even one with high rates on the wealthy, would be insufficient to achieve these goals. While revenue raised via the income tax should be used to provide additional opportunities to low-income members of society, wealth transfer taxes provide the additional safeguard of preventing the heirs of wealthy individuals from inheriting wealth that would provide them with additional, unwarranted and unjust, opportunities. Given the importance of the wealth transfer taxes, this Article also examines the question of what form of tax is most consistent with Rawls\u27 position, ultimately determining that an inheritance or accessions tax best fits the role

The Unjustified Subsidy: Sovereign Wealth Funds and the Foreign Sovereign Tax Exemption

The taxation of Sovereign Wealth Funds in the United States is outmoded and due for reconsideration. Offering a tax exemption to the billion dollar investment funds owned by foreign governments is both unfair and ineffective. Founded in the principles of sovereign immunity, the foreign sovereign tax exemption, codified in I.R.C. § 892, fails to satisfy the Congressional goals that motivated its creation. This Article explains the current taxation of foreign sovereigns and, by extension, Sovereign Wealth Funds. It then illustrates that the current exemption is simultaneously too broad, providing a tax exemption for activities that are clearly nongovernmental activities, and therefore outside of the realm of sovereign immunity, and too narrow, failing to provide a tax exemption for activities that clearly are governmental activities. Finally, this Article explains that any exemption provided to foreign sovereigns should be offered only as a treaty matter, reserving the privilege as a negotiation tool, and thereby ensuring that the United States receives similar benefits