Minimising inheritance moves advantage into channels that cannot be reached

The argument

The second argument against minimising inheritance is practical. Proponents of this position argue that wealth is only one of the things parents transmit, and not the one that does most of the work. A family passes on the expectation that university is normal, the vocabulary that makes an interview easy, the contacts that produce a first opportunity, the knowledge of how institutions are navigated, and the attention and stability that make schooling effective. None of these is taxable, and all of them operate before anyone inherits anything. If the taxable part of the advantage is reduced, proponents argue, families who wish to help their children will use the parts that are not. Support will be given earlier and in forms that are harder to see: fees paid directly, property bought in a child's name, an allowance during an unpaid position, a business handed over as employment rather than as an asset, or wealth held in structures built for the purpose. The transfer continues while becoming less visible and less evenly distributed, since the families best able to restructure are the wealthiest and the best advised. What follows, on this account, is not that nothing can be done about unequal starts but that minimising inheritance is the wrong instrument. Proponents argue that advantages which show up as differences in schooling, health, housing and early opportunity are better addressed where they appear, through what is provided to everyone, and that a policy aimed at the bequest will mostly reach the families with the least room to plan around it while leaving the largest advantages where they are.

Premises

Counter-arguments

Critics answer that avoidance is an argument for designing the policy properly rather than for abandoning the aim. Early gifts, trusts and offshore structures are all addressable by rules that treat lifetime transfers and bequests alike, and the fact that a tax can be planned around has never been accepted as a reason not to levy it. They add that the premise concedes the main point: if the wealthiest families would restructure in order to keep transferring, then the transfers matter, and a system that lets the largest ones pass untouched entrenches the inequality the position says cannot be reached. Funding schools and health services is, critics argue, compatible with taxing estates rather than an alternative to it.

Rejecting the premises

[Rejecting P1] That untaxable advantages matter does not show the taxable ones do not, and wealth is the advantage which compounds and can be held indefinitely. [Rejecting P2] Avoidance through early gifts and trusts is a design problem with known remedies, and the possibility of planning around a tax has never been treated as a reason not to levy it. [Rejecting P3] Funding universal provision and charging transfers are compatible rather than alternatives, so the premise does not reach the conclusion it is offered for. [Rejecting C] At most it follows that minimising inheritance alone would not equalise starting positions, not that it should not be done.