The Uneasy Case for Wealth Transfer Taxation

Abstract

The estate tax, meant to separate large concentrations of wealth, has failed to raise significant revenue due to it having multiple exceptions, exemptions, and exclusions. This Article argues that the estate tax contravenes liberal egalitarian ideals, considers and then rejects a tightened estate tax on effectiveness grounds, and proposes an alternative: a progressive consumption-without-estate tax which has a separate and steeper rate schedule on consumption and allows deductions for certain expenses (e.g., medical and educational expenses). The proposed tax upholds political liberal values by collecting on wasteful spending of private wealth, therefore incentivizing private savings and enlarging the macroeconomic pie.