Money for Nothing

Readers of my work will know that the core of my studies is number-based values.  A key attribute of these values is the absence of any inherent concept of sufficiency - by definition, more is always worth more, so More is Always Better.  Money is the most obvious example of a number-based value, and in the case of our society, money is structured such that the more money one has, the faster one can accumulate even more of it.  In other words, significant wealth has a positive feedback loop.  The implication for some very fortunate people (in the absence of serious risk-taking) is a lifetime of potential near-guaranteed financial growth.  "Lifetime" is the operative word in this case - nature has its own way of limiting the amount of time one has to accumulate and wield financial wealth.

However, there are two exceptions to nature's mortality constraint: corporations and inheritances.  I have dealt with the endless growth potential of corporations, perhaps most interestingly in this musing on a theoretical corporate endgame.  On the other hand, the concept of inheriting wealth is a new exploration for me, but it should be a significant one.  By some estimates, 60% of the wealth in the United States is inherited, and in 2004 one half of the over $200 billion of inherited wealth was attributed to just the top 7% of the estates. (Those numbers have likely become even more concentrated since then.)  [Critics of these assumptions often point to the anecdotal evidence of the very wealthiest people.  For example, more than half of the world's billionaires are supposedly 'self-made'.  But on closer examination, these are (as we might well expect) anomalies - smart privileged men who managed to leverage the pre-existing infrastructure of the global internet to be the first to get their oligopolies out there.  Contrast this with the data gathered by researchers like Thomas Piketty, which included all incomes, not just a few outliers at the top.]

The first thing to note is that society has a long held precedent that the assets of parents should naturally(?) be passed on to their children after death.  There are several important historical differences at play when considering the applicability of that paradigm to the present day.  Lifespans used to be a lot shorter, and social structure was such that your birth lineage determined your social status and position for life.  As times have obviously changed, I began to wonder what moral justification could possibly be made for offspring to automatically claim their dead parents' assets.  I posed the question to several colleagues, and got a great deal of insightful feedback - possibly because they are of an age where (given today's lifespans) they are both recipients and architects of estate wealth management.

In regards to wealth, the briefest summation of this small survey of diverse and intriguing opinions from an astute and thoughtful circle would be:

• A parent can say where they want their assets go (before and after death), but beyond that, a child does not have any moral claim to such wealth.
   
• Parents have a valid biological imperative to offer their child every possible advantage in life.

While I recognize the biological impulses, I will go out on a limb and say that I believe the inheritance of massive wealth is a social injustice – power and assets being conveyed to another simple by nature of birth.  Extremely large inheritances perpetuate and are key to greatly expanding global wealth inequity, using principles with shaky moral foundations.

We already know that the children of wealthy parents start life with very significant advantages.  It also can’t be avoided that rich parents are in the position to give significant gifts of wealth to their kids if they choose.  I don’t believe that inheritance rights are the same thing.  Yes, of course, if society were able to limit wealth inheritance (say, by dramatically increasing estate taxes), the actual transfer could also be accomplished through gifting before death.  However, subtly perhaps, I don’t believe the two transfers are the same, and restricting the first would cause all of society to rethink the second.

One more set of figures might be useful:  A 2011 study by Edward Wolff and Maury Gittleman found that the wealthiest 1% of U.S. families had inherited an average of $2.7 million from their parents.  (447 times more than those with wealth less than $25,000 had inherited.)

So I challenged myself to come up with a theoretical proposal - not something that would ever likely be implemented under society's current paradigm.  Rather, it's an exercise in completing the thoughts surrounding my assertion.  If I'm going to question a global precedent, it is only fair that I eventually turn my mind to an alternative that would address the issues raised.  Here's one possibility:

Imagine, a system with no estate or inheritance taxes.  Instead, estates would only be permitted to bequeath a maximum of $1 million dollars in negotiable assets to any single entity or trust (not including for-profit corporations), and up to an additional $1 million in non-negotiable assets (that were non-negotiable assets at the time of death) to any offspring or dependents.  A higher amount could be willed to a charity or other public institution, subject to a review by a standard community board set-up for such reviews.

Any entitiy could also be granted right of first refusal on the purchase of specified assets at fair market value.

All surplus funds would be used by the community/public sector to pay for important programs like national healthcare and a Guaranteed Basic Income plan.  If this resulted in a surplus of public funds, income tax would be lowered accordingly for all citizens.

Note that, prior to their death, any parent would still be free to gift any asset to anyone, without restriction (although there might have to be some mechanism to review massive gifts transacted within, say, the same window that we use for requests of medically-assisted death when such a death is considered imminent).  Beating the 'deadline' by a day or two is obviously cheating!

By tossing this thought out there, I realize that there will be many who will find fault with the experiment.  And I look forward to hearing from them, so long as their criticism advances the philosophical and ethical objectives.  (To begin with the amounts are somewhat arbitrary but should convey the essential intent.  Feel free to comment.)

To those who would protest that such a system would be 'unfair',

...I challenge them to argue for the 'fairness' of the existing system.

To those who would protest that such a limitation would be meaningless if unlimited gifting before death were still allowed,

...I say: "Well then, what's the problem?"  Personally, as mentioned above, I believe that gifts in-person are NOT the same.  Such gifts carry social obligations and also remove wealth from the still-living parent.  Time would tell how that dynamic would play out. 

To those who protest that such a system could never be enforced - that there would be workarounds just as assuredly as there are billionaires with offshore accounts who pay no tax,

...I remind them that, for the sake of this exploration, let's assume that a society could exist where such a system could be realistic and pragmatic, and work from there.

Your thoughts?