The other day we got into a discussion with someone insisting that taxing gifts and inheritance is illegal, immoral, and fattening . . . or maybe just unjust. It doesn’t really matter; this individual just kept insisting that you cannot be for justice and at the same time tax inheritance. In addition, a few comments were made claiming that “person” doesn’t mean “that which has rights,” a somewhat problematical claim for an attorney.
Obviously, there are a couple of fallacies and mis-directions involved here. First, it is not inherently unjust for a government to tax inheritance or gift, or anything else within its purview. To deny that is to deny the right of government to tax at all, a right that is vested in government by the governed. A government may — with the consent of the governed — tax property, income, publications, salt, road use, gasoline, and yes, gift and inheritance without violating justice. If you want to argue that gift and inheritance taxes are unjust per se, you must make the case that any and all taxation is unjust per se.
It is also proper for a government to limit how much and what can be owned. For certain type of assets, even mere accumulations of wealth (as in the case of today’s super-rich), constitute a monopoly or virtual monopoly that means that others may not own, even if there is no legal or technical barrier preventing them. Mere concentration of wealth itself creates a barrier. As Chesterton said,
I am well aware that the word “property” has been defiled in our time by the corruption of the greedy capitalists. One would think, to hear people talk, that the Rothchilds and the Rockefellers were on the side of property. But obviously they are the enemies of property; because they are enemies of their own limitations. They do not want their own land; but other people’s. . . It is the negation of property that the Duke of Sutherland should have all the farms in one estate; just as it would be the negation of marriage if he had all our wives in one harem.
Admittedly, we say that an income tax consisting of a single rate levied on all income from whatever source derived above an amount sufficient to meet common domestic needs adequately is the most just tax. Saying that an income tax is the most just tax, however, does not say that other taxes are unjust. As Pope Leo XIII noted when describing the benefits of widespread capital ownership in § 47 of Rerum Novarum,
|Pope Leo XIII|
These three important benefits, however, can be reckoned on only provided that a man's means be not drained and exhausted by excessive taxation. The right to possess private property is derived from nature, not from man; and the State has the right to control its use in the interests of the public good alone, but by no means to absorb it altogether. The State would therefore be unjust and cruel if under the name of taxation it were to deprive the private owner of more than is fair.
Thus, as long as a tax is fair — as determined by the people themselves through their duly elected representatives — anything in civil society can be taxed. If you object to it, then elect somebody else and work for a tax you think is fair — if you can convince others.
That being said, we do propose a way that gifts and inheritances can pass untaxed, by shifting taxation from the estate to the recipient, but granting a generous exemption to anyone receiving a gift or inheritance.
For example, suppose the exemption is $1 million, the estate is $10 million, and the gift and inheritance tax rate (if different from the single rate on all income) is 10%. If a single individual received the entire estate, he or she would pay $900,000 in inheritance taxes ($10 million - $1 million x 10%). If the estate were divided equally among five people, the tax would be $50,000 ($2 million - $1 million x 5). If the estate were divided equally among ten people, the tax would be $0 ($1 million - $1 million x 10).
|A principle of Western law is temples are not taxed.|
We also say that even the super-rich should be left with their current accumulations intact, with any redistribution of existing wealth dictated by the need for a temporary assist in “extreme cases” (Rerum Novarum, § 22). What the super-rich would lose under the Just Third Way is their virtual monopoly over the ownership of future wealth.
On the other hand, a government may not legitimately tax religions or families, or interfere in them in any way that does not involve the civil rights of religious adherents or family members (e.g., human sacrifice would violate a person’s right to life, a civil right, and the State should prohibit it). Government is concerned with civil society, not religious society or domestic society. It permits a tax deduction for contributions to a recognized religion to encourage it for the general benefit to society but is not obligated to do so. It may not, however, tax recognized religions per se because it does not have jurisdiction over religious society, any more than it can tax an allowance given to a minor child in domestic society (although it can decide if the “allowance” is being used by a parent or guardian to evade taxes or if the “church” is a tax dodge).
|Robert Owen, the capitalist socialist|
The recent intrusion of government (meaning over the past 200 years or so) into religious and family affairs is one of the fruits of the “New Things” — rerum novarum — of socialism, modernism, and New Age thought, one of the goals of which is to merge civil, religious, and domestic society into a single unit. That is why one of the early names for socialism was “the Democratic Religion,” and many of its prophets called for the establishment of a temporal theocracy with the State as Hobbes’s “Mortall (and often only) God,” and the abolition of private property, elimination of marriage and family, and the eradication of organized religion, particularly the Catholic Church. That was the import of the “Declaration of Mental Independence” speech given by Robert Owen on July 4, 1826, in New Harmony, Indiana, and to which Fulton Sheen responded a century later with his Declaration of Dependence (1941).