The relative efficacy AND morality of a high inheritance tax.

By Mark Stewart

Disclaimer: Mr. Stewart is as strident as it gets for reducing federal taxes. He urges the correct Constitutional interpretation that would end almost all spending under the "Commerce Clause", and return federal spending to only the 18 categories permitted under Article I sec. 8. A budget 1/10 the size it is now is realistic and proper.

The Case for Inheritance Taxes

To the extent the federal government needs revenue, a high Federal inheritance tax is far more moral than an income tax, sales tax, or any federal tax in use now.

The efficacy of taxing the real property and large liquid assets is far easier to calculate than the incomes of anyone but straight W-2 earners. The morality is far easier – we tax someone who dies at age 75 or older and in his long life managed to hoard money rather than pass it to others.

If a 70 year old with high assets isn't choosing to pass a portion to children, grandchildren, or worthy others, he is stingy. (A $5,000,000 nest egg allows $300,000 a year of spending for the next forty years. If you really want to hoard more and not give your heirs some money along the way, then we should not tax others to suddenly pay a huge sum when you croak.)

The Math

Look how much taxation is needed to "balance" out an 80% inheritance tax: approximately 3,000,000 Americans over 70 die annually. If 1/3 of them have substantial assets (say $800,000 or more and a median of $1,200,000), an 80% tax raises $960,000,000,000. That is enough to fund the entire (bloated) defense budget.

To raise $960,000,000,000 via the income tax would cost each household $40,000. (We use only households with HHI above $200,000, about 18,000,000 in the USA. Few households with less income can sustain a $40,000 annual hit, so they would be paying less.)

Most of us would rather see an estate that benefits nobody funding our defense budget and NOT pay $40,000 more annually.

The Morality

To the extent we appreciate government "prodding" to do morally good activities, reducing the income tax is far more moral than lowering inheritance taxes. The "trust-fund teenager" who expects a multi-million dollar payout has a reduced incentive to be better educated, to grow social skills, or to work hard.

By contrast, everyone who could save tens of thousands by not paying so much Federal Income Tax can use it FOR better education, for a first mortgage, for a start-up-business, for a retreat to experience a foreign country.

Best Federal Taxes Hierarchy

Yes, earners at any age should have the right to do with every dollar what they wish. To the extent we can restore this principle, start with the most immoral tax of all…the federal income tax on citizens. (We can accept keeping it on non-citizens). Our "best federal taxes" hierarchy as of 2025 remains:

1. Lotteries (including a foreign immigration lottery)
2. Use fees
3. Immigration tax ("Gold Card" and lesser forms)
4. Inheritance taxes
5. Wealth tax on foreigners owning real property and vessels
6. Corporate income tax
7. Triple damages restitution for crimes
8. Optional social security (opt-in SSDI, Medicare, and Obamacare)
9. Capital Gains Taxes
10. Foreign government holdings 11 – 99. Everything else
11. Federal income tax on citizens