In Australia, one of the campaigns against the Labor party in the recent election involved a fear of the introduction of a ‘death tax’. The death tax was said to be a tax on inheritance. The truth of an inheritance tax appears to be nothing more than a scare tactic, however, the tactic seems to have been fruitful as a contributor to Labor’s loss.
From the right leaning side of politics, the existence of an inheritance tax as something to be feared strikes me as something quite bizarre. Firstly, since the United States, a country that is far more in line with neoliberal philosophies than Australia has an inheritance tax. Secondly, neoliberal right wing philosophy prides itself on meritocracy, the belief that our individual successes and failures are mostly a result of our own merit, not the result of life chances we did not earn.
The belief of meritocracy held by those who value free-market capitalism raises a serious question: why are you afraid of an inheritance tax? After all, it is not income you have directly earned. Some may say they earned it from being a good child, but anyone who was good child merely to attain inheritance says a lot about their character (so much it would be evidence that they don’t deserve such inheritance).
Also, meritocracy only makes sense if you believe everyone has an approximately equal chance of succeeding in life, that any failures are merely the result of failing to pull oneself up by their own bootstraps. Hence, those who believe in meritocracy ought to be not only unafraid of inheritance taxes, but in favour of them.
There are some conceivable arguments in favour of rejecting inheritance taxes. Such arguments are respect for the dead or duties to family. However, these are irrelevant to the topic of meritocracy. So advocates either must reject the existence of meritocracy or produce an argument that inheritance plays no role in life chances.
Therefore, a more extreme view logically follows if one wants to seriously argue that we live in a meritocracy, which is not a tax on inheritance, but inheritance abolition. In a world where no wealth is passed on to offspring, this is much closer to a world where people are born with equal life chances than a world where wealth is inherited. Of course, this ignores the existence of non-economic influences of life chances, such as social and cultural capital. It is for this reason why my view on social justice always considers those who have lucked out on the natural lottery, which is more of a Rawlsian/Marxist view on justice. Nonetheless, any world where meritocracy could conceivably exist would need to include the abolition of inheritance.
Even if meritocracy (which probably would) still be a myth in a world where inheritance was abolished. I argue that this would be a more just society. Of course, this would be true if and only if it were applied universally. I would not donate all my wealth to charity under the system that exists now. The wealth that a person died with would be distributed to the community, thus would be in line with a socialist, or at least social democracy view of justice.
How this distribution is best done falls out of my expertise, since I am not an economist. However, I will put forward a proposal and let economists who read this argue amongst themselves over what is possible and what is not. The best way I believe to conduct this, at least as a start under a capitalist economy, is through a universal basic income (UBI). All actual money owned by the deceased would be placed into a UBI fund and all assets would be sold and the profits would be added to the budget. Businesses and companies would be sold and same profits would also be added. Each financial year whatever exists in the fund is to be distributed equally amongst its citizens as a monthly income, no questions asked. An advantage of this approach to a UBI is it does not require the removal of welfare and social programs, which is normally a concern of left leaning advocates of UBI. The disadvantage, or perhaps non advantage, is that there is no guarantee that it would provide for someone’s basic needs, hence would not guarantee providing the ‘B’ in UBI. That said, since welfare and social programs would not be under threat, this would not be a major issue.
The reason a UBI would be preferable to wealth just going to state, deciding what to do with the funds, risks misuse of what the funds are used for. If abolition of inheritance is allowed only under the condition for its use for UBI and for no other use, this minimises risk of abuse.
Hence, the combination of the abolition of inheritance and the implementation of a UBI brings us more closely to a true meritocracy. Something neoliberals pride themselves on.