Ann Mumford article - Lecture notes 9 PDF

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Ann Mumford: Inheritance in Socio-Political Context: The case for reviving the Sociological Discourse of IHT Law (2007)  

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HER ARTICLE IS BASICALLY SLIDE 23 – 34 OF OUR IHT PPTX, can refer there for important quotes because my article PDF had some issue with copy pasting :’) Article suggests that engagement by tax lawyers with sociological theories of economic inheritance has potential to revive this discourse Introduction: VICTIM IS DEAD 1905: Simon Baldwin – case for IHT is simple, as long as society agrees some form of tax is necessary to fund the gov, then IHT should be one of the least controversial forms of tax assessment and collection Evolution of IHT as economists’ darling  bane of populists Economics perspective: imposition of wealth of dead will lessen the amount needed from living taxpayers Dead taxpayers will not hire advisers to help them avoid obligations Impact on dead TP should be minimal, even heirs won’t complain that much seeing as they are lucky people who inherited wealth they did not earn

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Politics: seen as attempt to confiscate property from grieving relatives Emotional impact of IHT not often appreciated by politicians Churchill  thinks that ‘psychological impact’ of death duties are less onerous than that of income tax. As a ‘political principle’, the value of increasing death duties is to fund reductions of income tax

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Graetz & Shapiro (USA): supporters of IHT tend to rest too comfortably on its easy logic and miss the fact that in recent years, movements to repeal an “immoral” (double-taxing and non-progressive tax) was becoming mainstream discourse US Context: strong majority of taxpayers (TP) supported the repeal of IHT in US even though most of them would never own estates that could cross the threshold Graetz & Shapiro: reminds us that it was not a heated debate in US to repeal IHT – just low intensity of public opinion about tax questions in general, and estate tax in particular which made it vulnerable to repeal

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Theories of Economic Inheritance JS Mill - progressive taxation could be justified for inheritances - Maintained that the only test of just taxation was equality of sacrifice Max West: suggested 2 ways of looking at IHT A) Fiscal imposition – a fee/tax as a payment for the ‘benefits received’ or as a public contribution according to the ability of the TP Benefits received = gov services enjoyed over a lifetime, services related to expenses of probate courts, or finally a payment for all the tax avoided over a lifetime B) Modification of law of inheritance and bequest

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Giddens - IHT is the obvious mechanism for egalitarian policies argues against abolition and suggests that it should be more progressive and allow fewer exceptions - recommends that more people pay IHT and approves of using the extra money for a trust fund for children/elderly - indicates confidence in stability of IHT

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Durkheim - strong opponent of inherited wealth - wealth from inheritance is neither earned nor deserved, entire social contract is invalidated - does recognise right to leave a will but he suggests that the family unit is diminishing in importance and soon, most people would be leaving behind property to business and other economic organisations

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Beckert - bequeathing property is an economic act, capable of being distinguished from other economic acts as it is not based on K - IHT not that easy to study and does not fit into Marxian analysis

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Parent-child relationship - Value of providing for children transcends purely economic - Children today seen as emotional investment - IHT represents an interference with the ‘No Exit obligation’ = duty to provide the continuity of care - Consideration of “adult” children another factor (often in political scene) - Buttenheim: progressive element of IHT is better than regressive real estate tax

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Harper - Estate and gift tax legislation is largely used to influence behaviour, typically wealth distribution, retention or investment patterns - Whether they are effective inducements for behaviour, not clear - Research has suggested that not all wealthy people will give away wealth just to avoid IHT - (James) such taxes can be voluntary taxes paid by those who dislike their relatives > dislike tax

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Redistribution of wealth - Not true that IHT has positive impact - TP may choose to save less - Lower ‘capital labour ratio’ may result in economy suffering from lack of capital so capital increases in value - (Stiglitz) Income from capital is ‘more unequally distributed’ so in the end the rich may end up richer

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Fairness and the Family Home - Both giver and beneficiary need to be treated fairly - Unfair for those who are normally not rich enough for IHT but now fall under it because sudden rise in property value - IHT avoidance schemes very costly hence only available to the RICH which would

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then make it easier for the wealthy to avoid tax Double taxation = tax on family home ady has been paid by parents, unfair to ask children to pay more tax on it after their death IHT seen as assault to family

Conclusion Suggests that Beckert’s description of the bequeathing of property to be an economic act is the most promising If yes, then can salvage IHT from the emotional debate of family homes IHT’s objective need not be absolute wealth distribution or even wholly aspirational but we do need to address racial and class inequality when looking at intergenerational wealth transfers Sociological theory can help to explain that wealth is still wealth regardless the source...