[Annotated] A hated tax but a fair one

The case for taxing inherited assets is strong

No tax is popular^[각주:1]. But one attracts^[각주:2] particular venom^[각주:3]. Inheritance tax is routinely^[각주:4] seen as^[각주:5] the least fair by Britons and Americans. This hostility spans^[각주:6] income brackets^[각주:7]. Indeed, surveys suggest that opposition to inheritance^[각주:8] and estate taxes^[각주:9] (one levied on^[각주:10] heirs^[각주:11] and the other on legacies^[각주:12]) is even stronger among the poor than the rich.

Politicians know a vote-winner^[각주:13] when they see one. The estate of a dead adult American is 95% less likely to face tax now than in^[각주:14] the 1960s. And Republicans want to go all the way^[각주:15]: the House of Representatives^[각주:16] has passed a tax-reform plan^[각주:17] that would completely abolish “death taxes” by^[각주:18] 2025. For a time before the second world war, Britons were more likely to pay death duties than income tax^[각주:19]; today less than 5% of estates catch the taxman’s eye^[각주:20]. It is not just Anglo-Saxons. Revenue from these taxes in OECD countries, as a share of^[각주:21] total government revenue^[각주:22], has fallen sharply since the 1960s. Many other countries have gone down the same path. In 2004 even the egalitarian^[각주:23] Swedes decided that their inheritance tax should be abolished.

Yet this trend towards^[각주:24] trifling^[각주:25] or zero estate taxes ought to give pause^[각주:26]. Such levies^[각주:27] pit two vital liberal principles against each other^[각주:28]. One is that governments should leave people to dispose of their wealth^[각주:29] as they see fit^[각주:30]. The other is that a permanent, hereditary elite^[각주:31] makes a society unhealthy and unfair. How to choose between them?

When the heirs loom^[각주:32]

Some people argue for^[각주:33] a punitive inheritance tax^[각주:34]. They start with the negative argument that dead people no longer enjoy the general freedom to disburse^[각주:35] their wealth as they wish—as the dead have no rights. How could they, when they are not affected one way or the other by what happens in the world?

That does not ring true^[각주:36]. The logic would be to abrogate^[각주:37] even the most modest of wills. But inheritances are deeply personal and the biggest single gift^[각주:38] that many give to causes^[각주:39] they believe in and loved ones they may have cherished^[각주:40]. Many (living) people would feel wronged^[각주:41] if they could not provide for^[각주:42] their children. If anything^[각주:43], as the expression of their last wishes, bequests^[각주:44] carry more weight than their passing fancies do^[각주:45].

The positive argument for^[각주:46] steep^[각주:47] inheritance taxes is that they promote fairness and equality. Heirs have rarely done anything to deserve the money that comes their way^[각주:48]. Liberals, from John Stuart Mill to Theodore Roosevelt, thought that needed correcting^[각주:49]. Roosevelt, who warned that letting huge fortunes pass across generations^[각주:50] was “of great and genuine detriment to^[각주:51] the community at large^[각주:52]”, would doubtless be aghast at the situation^[각주:53] today. Annual flows of^[각주:54] inheritance in France have tripled^[각주:55] as a proportion of^[각주:56] GDP since the 1950s. Half of Europe’s billionaires have inherited their wealth, and their number seems to be rising.

However, in 2017, it is not clear exactly how decisive a role inheritance plays in the entrenchment of^[각주:57] the hereditary elite. Data from Britain suggest that people tend not to lose their parents before they reach the age of 50. In rich countries the advantages that wealthy parents pass to their offspring^[각주:58] begin with the sorting mechanism of^[각주:59] marriage, in which elites increasingly pair up with^[각주:60] elites. They continue with the benefits of education, social capital^[각주:61] and lavish gifts^[각주:62], not in the deeds to^[각주:63] the ancestral^[각주:64] pile^[각주:65].

Even if the link between inheritance-tax rates and inequality were clear, wealth can pay for a good tax lawyer^[각주:66]. In the century since Roosevelt, Sweden and other high-taxers^[각주:67] discovered that if governments impose a steep enough duty^[각주:68], the rich will find ways to avoid it. The trusts^[각주:69] they create as a result can last even longer than the three generations it takes for family fortunes to go from clogs to clogs^[각주:70].

Armed with^[각주:71] such arguments, some leap to the other extreme, proposing, as the American tax reform does, that there should be no inheritance tax at all. Not only is it right to let people hand their private property to^[각주:72] their children, they say, but also bequests are often the fruits of labour that has already been taxed. And a large inheritance-tax bill is destructive^[각주:73], because it can cause the dismemberment of^[각주:74] family firms and farms, and force the sale of ancestral homes^[각주:75].

Yet every tax is an intrusion by the state^[각주:76]. If avoiding double taxation^[각주:77] were a requirement of^[각주:78] good policy, then governments would need to abolish^[각주:79] sales taxes^[각주:80], which are paid out of taxed income. The risks that heirs will be forced to sell homes and firms can be mitigated by^[각주:81] allowing them to pay the duties gradually^[각주:82], from cashflow^[각주:83] rather than by fire-sales^[각주:84].

In fact, people who are against tax in general^[각주:85] ought to^[각주:86] be less hostile to^[각주:87] inheritance taxes than other sorts^[각주:88]. However disliked they are^[각주:89], they are some of the least distorting^[각주:90]. Unlike income taxes, they do not destroy the incentive to work^[각주:91]—whereas research suggests that a single person who inherits an amount above^[각주:92] $150,000 is four times more likely to leave the labour force than one who inherits less than $25,000. Unlike capital-gains taxes^[각주:93], heavier estate taxes do not seem to dissuade saving^[각주:94] or investment. Unlike sales taxes, they are progressive. To the extent that^[각주:95] a higher inheritance tax can fund^[각주:96] cuts to^[각주:97] all other taxes, the system can be more efficient.

Transfer market

The right approach is to strike a balance between the two extremes^[각주:98]. The precise rate will vary from country to country^[각주:99]. But three design principles^[각주:100] stand out^[각주:101]. First, target the wealthy; that means taxing inheritors rather than estates^[각주:102] and setting a meaningful exemption threshold^[각주:103]. Second, keep it simple. Close loopholes for^[각주:104] those who are caught in the net by setting a flat rate^[각주:105] and by giving people a lifetime allowance^[각주:106] for bequests^[각주:107]; set the rate high enough to raise significant sums^[각주:108], but not so high that it attracts^[각주:109] massive avoidance^[각주:110]. Third, with the fiscal headroom^[각주:111] generated by higher inheritance tax, reduce other taxes, lightening the load for most people.

A sensible discussion^[각주:112] is hard when inheritance taxes prompt^[각주:113] such a visceral reaction^[각주:114]. But their erosion^[각주:115] has attracted too little debate. A fair and efficient tax system would seek to include inheritance taxes, not eliminate them.

1. popular ; 1. ~ (with sb) 인기 있는 [본문으로]
2. attract ; 3. (어떤 반응을) 불러일으키다[끌다] [본문으로]
3. venom ; 2. (격식) 앙심, 원한 [본문으로]
4. routinely ; [부사] 판에 박힌 듯, 관례대로, 일상적으로 [본문으로]
5. be seen as ; ~로 보이다, 간주되다. [본문으로]
6. span ; (-nn-), [vn] ;; 2. (넓은 범위・많은 것에[을]) 걸치다[포괄하다] [본문으로]
7. income bracket ; [명사] 소득계층, 소득층 [본문으로]
8. opposition to ; …에 대한 반대. [본문으로]
9. estate tax ; 상속세, 유산세 ;; 참고 ; death tax ; (미, 영) 상속세( death duty) [본문으로]
10. levy on ; …에 (세금을) 부과하다. [본문으로]
11. heir ; [~ (to sth) | ~ (of sb)], (heir앞에는 a가 아니라 an을 쓴다.) ;; 1. [법] 상속인, 법정 상속인; 후사(後嗣) ((to)) ;; 2. 후계자, 계승자, 전승자 ((of, to)) [본문으로]
12. legacy ; (pl. -ies) 1. (죽은 사람이 남긴) 유산 [본문으로]
13. vote-winner ; A political action or strategy that would be popular with potential voters [본문으로]
14. be less likely to ; ~할 가능성이 더 적다 [본문으로]
15. go all the way ; (~와) 갈 데까지 다 가다 [본문으로]
16. the House of Representative ; (미 의회·주 의회의) 하원 [본문으로]
17. tax-reform plan ; [명사] 세제 개혁안 [본문으로]
18. abolish ; [타동사][VN] (법률・제도・조직을) 폐지하다 [본문으로]
19. income tax ; [명사] 소득세 [본문으로]
20. taxman ; (pl. -men / -men /) 1. [sing.] the taxman (비격식) 세무 당국 ;; 2. [C] 세무 관리, 세무서 직원 [본문으로]
21. a share of ; …의 몫. [본문으로]
22. government revenue ; 정부의 총세입 [본문으로]
23. egalitarian ; [형용사] 평등주의(자)의 [본문으로]
24. trend ; [명사] ~ (towards/in sth) 동향, 추세 [본문으로]
25. trifling ; [형용사] (격식) 하찮은, 사소한 [본문으로]
26. give pause ; (놀람·의심 따위가)[남]을 망설이게 하다, 잠깐 중단시키다 ;; 진지하게 생각하다[(~를) 진지하게 생각하게 하다]; 주저하다[(~를) 주저하게 만들다] [본문으로]
27. levy ; (pl. -ies) ~ (on sth) (특히 세금의) 추가 부담금 [본문으로]
28. pit sb/sth against sth ; ~을 ~와 겨루게 하다 …와 맞붙이다, …에 대항하게 하다. [본문으로]
29. dispose of ; 2. (문제·질문·협박을 성공적으로) 처리[해결]하다 [본문으로]
30. see fit ; …하는 것이 적절하다고 생각하다. [본문으로]
31. hereditary ; 3. (상습권에 따라) 세습된 지위를 지닌 [본문으로]
32. loom ; [v] 1. (특히 무섭게) 어렴풋이[흐릿하게] 보이다[나타나다] ;; 2. (중요하거나 위협적인 일이) 곧 닥칠 것처럼 보이다 [본문으로]
33. argue for ; …에 찬성 의견을 말하다. [본문으로]
34. punitive ; [주로 명사 앞에 씀], (격식) 1. 처벌[징벌]을 위한 ;; 2. (세금 등이 지불하기 힘들 정도로) 가혹한 [본문으로]
35. disburse ; [타동사][VN] (격식) (특정 목적을 위해 모은 돈에서) 지출하다 [본문으로]
36. ring true ; 정말처럼 들리다; 진실처럼 또는 있을 것같은 일처럼 들리거나 생각되거나 하다(금속이나 유리를 두드려서 나는 소리를 듣고 그 품질을 테스트하는 일에서) ;; 참고 ; ring false, hollow [본문으로]
37. abrogate ; [타동사][VN] (전문 용어) (법령・합의 등을) 폐지하다[철폐하다] [본문으로]
38. single ; 2. FOR EMPHASIS | [명사 앞에만 씀] (특정한 사람・사물 단 하나만을 말함을 강조할 때 씀) [본문으로]
39. cause ; 3. [C] (정치・사회적 운동) 조직[대의명분/이상] ;; 참고 ; lost cause [본문으로]
40. cherish ; [vn], (격식) 1. 소중히 여기다, 아끼다 ;; 2. (마음속에) 간직하다 [본문으로]
41. wronged ; [형용사] 부당한 취급을 받은, 학대받은 [본문으로]
42. provide for[to] ; …에게 공급하다[주다]. [본문으로]
43. if anything ; (의견을 나타내어) 어느 편인가 하면; 오히려(부정문 뒤에서 그 반대가 사실임을 나타냄) ;; You use 'if anything' to introduce something which strengthens or changes the meaning of the statement you have just made, but only in a small or unimportant way. ;; You use if anything, especially after a negative statement, to introduce a statement that adds to what you have just said. [본문으로]
44. bequest ; [명사] (격식) 유증 (재산), 유산 [본문으로]
45. passing fancy ; a liking that lasts only a short time [본문으로]
46. an argument for ; …에 찬성하는 주장. [본문으로]
47. steep ; 2. [주로 명사 앞에 씀] (양의 증감이) 급격한 ;; 3. (비격식) (가격・요구가) 너무 비싼[높은], 터무니없는 [본문으로]
48. come[fall] one's way ; 2. …의 수중에 떨어지다 [본문으로]
49. correcting ; 2. 고치기 [본문으로]
50. pass across ; make a passage or journey from one place to another ;; 흐름상 "inherit" 정도의 의미 [본문으로]
51. detriment ; [U , C] (주로 단수로 격식) 손상(을 초래하는 것) ;; 참고 ; a detriment to ; …을 손상함. [본문으로]
52. at large ; 1. (명사 뒤에 쓰여) 전체적인; 대체적인 ;; 일반적으로 [본문으로]
53. aghast ; [형용사] (명사 앞에는 안 씀) ~ (at sth) 경악한, 겁에 질린 ;; 미국식 [ə|gӕst] 영국식 [ə|gɑ:st] [본문으로]
54. flow ; [C , U], [주로 단수로], (참고: ebb n.) 1. CONTINUOUS MOVEMENT | ~ (of sth/sb) 흐름 [본문으로]
55. triple ; [동사] 3배가 되다; 3배로 만들다 [본문으로]
56. proportion ; 1. PART OF WHOLE | [C+sing./pl. v.] (전체의) 부분, (전체에서 차지하는) 비율 [본문으로]
57. entrenchment ; 1. [U] ~ (of sth) (태도・신념 등이) 단단히 자리 잡음[확고함] [본문으로]
58. offspring ; (pl. off・spring), (격식 또는 유머) 1. 자식 [본문으로]
59. sorting ; [명사] 구분, 분류; [지질] 분급, 분급 과정[작용] [본문으로]
60. pair up (with sb) ; (일·게임 등을 하기 위해) (~와) 짝을 이루다; ~를 (~와) 짝을 지어 주다 ;; 동의어 ; pair somebody up (with somebody) [본문으로]
61. social capital ; (시사경제용어) 사회적 자본 보충설명 사회적 자본은 그 개념을 어떤 맥락에서 사용하느냐에 따라 정의가 달라진다. ;; Social capital is an economic idea that refers to the connections between individuals and entities that can be economically valuable. Social networks that include people who trust and assist each other can be a powerful asset. These relationships between individuals and companies can lead to a state in which each thinks of the other when something needs to be done. [본문으로]
62. lavish ; 1. 풍성한; 호화로운 ;; 2. ~ (with/in sth) 아주 후한 [본문으로]
63. deed ; 1. (격식 문예체) (보통 아주 좋거나 아주 나쁜) 행위[행동] [본문으로]
64. ancestral ; 1. 조상의, 조상 전래의 ;; 2. 원형[선구(先驅)]을 이루는 [본문으로]
65. pile ; [NOUN] 3. a great amount of money : fortune [본문으로]
66. tax lawyer ; 세금 전문 변호사 [본문으로]
67. taxer ; [명사] 과세하는 사람; 무거운 짐을 지우는 사람. [본문으로]
68. duty ; 4. [C , U] ~ (on sth) (특히 국내로 들여오는 물품에 대한) 세금 [본문으로]
69. trust ; 2. [C , U] (법률) 신탁; 신탁 재산, 신탁금 ;; 참고 ; unit trust [본문으로]
70. clogs to clogs in three generations ; the clog, a shoe with a thick wooden sole, was worn by manual workers in the north of England. The implication is that the energy and ability required to raise a person's material status from poverty is often not continued to the third generation, and that the success is therefore not sustained [본문으로]
71. armed with ; ~로 무장한 [본문으로]
72. hand ;[동사] ~ sth to sb | ~ sb sth 건네주다, 넘겨주다 [본문으로]
73. destructive ; [형용사] 파괴적인 ;; 참고 ; constructive [본문으로]
74. dismemberment ; [명사] 절단; 축소; 분할. [본문으로]
75. an ancestral home ; 조상 때부터 살아온 집. [본문으로]
76. intrusion ; 1. (의견 따위의) 강요. ;; 2. 침입, 밀고 들어감, 훼방(opp. extrusion). [본문으로]
77. double taxation ; 이중 과세 [본문으로]
78. requirement ; [U, C] 요구, 필요; [C] 요구물, 필요물, 필수품; 필요조건, 요건 [본문으로]
79. abolish ; [타동사][VN] (법률・제도・조직을) 폐지하다 [본문으로]
80. sale tax ; 판매세 [본문으로]
81. mitigate ; [타동사][VN] (격식) 완화[경감]시키다 [본문으로]
82. gradually ; [부사] 서서히 [본문으로]
83. cash flow ; [C , U] 현금 유동성(한 사업체의 수입과 지출의 흐름) [본문으로]
84. fire-sale ; 급매 처분, 급매. ;; 불난 뒤 남은 물건들을 처분한다는 식의 표현 [본문으로]
85. in general ; 1. 보통; 대개 ;; 2. 전반적으로 [본문으로]
86. ought to ; [조동사] (부정(否定)형 ought not to , 축약형 특히 英 oughtn’t to), (참고: modal) 1. (그렇게 하는 것이 옳으므로) …해야 하다 [본문으로]
87. hostile ; 2. ~ (to sth) (~을) 강력히 반대[거부]하는 [본문으로]
88. sort ; 1. [C] 종류, 부류, 유형 [본문으로]
89. be disliked ; 환영받지 못하다 [본문으로]
90. distort ; 2. (사실・생각 등을) 왜곡하다 [본문으로]
91. incentive ; [C , U] ~ (for/to sb/sth) (to do sth) (어떤 행동을 장려하기 위한) 장려[우대]책 [본문으로]
92. inherit ; [~ (sth) (from sb)] 1. 상속받다, 물려받다 ;; 참고 ; disinherit [본문으로]
93. capital gains tax ; (증권) 양도소득세 [본문으로]
94. dissuade ; [타동사][VN] ~ sb (from sth/from doing sth) (~을 하지 않도록) ~를 설득[만류]하다 ;; 미국∙영국 [dɪ|sweɪd] [본문으로]
95. to the extent that ; 1. …할 정도까지; …한 결과로 ;; 2. …인 한(限), …의 범위에서 ;; 3. …일 경우에, …이면 ;; 4. …이므로 [본문으로]
96. fund ; [타동사][VN] 자금[기금]을 대다 [본문으로]
97. cut ; 3. REDUCTION | ~ (in sth) (양・크기・공급 등의) 삭감, 감축, 인하 ;; 참고 ; power cut, short cut [본문으로]
98. strike a balance between ; …사이에서 절충을 하다, (A와 B 사이에서) 균형을 유지하다[조화를 이루다] [본문으로]
99. vary from country to country ; 나라마다 다르다 [본문으로]
100. design principle ; 설계 원칙, 설계 원리 [본문으로]
101. stand out ; [동사] 튀어나오다; 눈에 띄다, 빼어나다; 견디다; 주장하다. ;; 동의어 ; project; be conspicuous; show oppo­sition; persist in. [본문으로]
102. estate ; 1. (英) (보통 크거나 넓은) 땅, 부동산(landed property) [본문으로]
103. exemption threshold ; The cut-off point below which respondents are not required to report the data required. [본문으로]
104. loophole ; [명사] ~ (in sth) (법률・계약서 등의 허술한) 구멍 ;; (증권·금융) (법률, 조세상의) 빠져나갈 구멍. [본문으로]
105. flat rate ; [명사] 고정[정액] 요금 [본문으로]
106. allowance ; 2. 허용량 ;; 3. (英) (세금) 공제액 [본문으로]
107. bequest ; [명사] (격식) 유증 (재산), 유산 [본문으로]
108. sum ; [명사] (격식) 유증 (재산), 유산 [본문으로]
109. attract ; 3. (어떤 반응을) 불러일으키다[끌다] [본문으로]
110. avoidance ; [U] ~ (of sth) 회피; 방지 ;; 참고 ; tax avoidance [본문으로]
111. headroom ; [U] 1. (교량 등 차량이 그 아래로 지나가는) 시설물과 차량 지붕 사이의 공간 ;; 2. (자동차의) 지붕과 머리 사이의 공간 [본문으로]
112. sensible ; 1. (사람이나 그의 행동이) 분별[양식] 있는, 합리적인 [본문으로]
113. prompt ; 1. (사람에게 어떤 결정을 내리도록・어떤 일이 일어나도록) 하다[촉발하다] ;; 2. (질문・힌트 등을 주어 말을 하도록) 유도하다 [본문으로]
114. visceral ; 1. (문예체) (깊은 사고가 아니라) 강한 감정에 따른, 본능적인 [본문으로]
115. erosion ; [U, C] 1. 부식, (병 따위의) 좀먹음. ;; 2. (바람·비·파도 따위에 의한 땅의) 침식 (작용). ;; 3. (힘·권력 따위의) 쇠퇴. [본문으로]