The estate tax is a bad tax say economists (2001)
By far, the best investment Warren Buffett ever made was to let his kids know that they would have to earn their own money.<p>Also, I&#x27;m now dying to know how many economists in total have an opinion on estate taxation.  They ought to know better than anyone else that sometimes proportions are more significant than absolute values.<p>My own, not-an-economist opinion is that the estate tax is bad, only because it waits until someone has died before making an intervention, then tries to do too much, all at once, and probably too late to make a difference.  The letter is correct in that death should not be a taxable event.  The tax should probably be invoked every time wealth is transferred from an elder benefactor to a younger, adult recipient, and defined such that all the trusts and offshore accounts and sham business arrangements are transparent to the taxing authority.  If your &quot;job&quot; is to be an executive assistant to mommy or daddy, and for that you earn six figures, then the taxing authority should be able to determine the amount paid in excess of the median executive assistant and levy the nepotism tax on that.  The idea is not to make money, but to discourage certain behaviors.  If the rich people avoid the tax by employing their peers&#x27; children instead of their own, that&#x27;s fine; it gives those kids the opportunity to work for a boss that won&#x27;t cut them slack just to avoid awkwardness at the holidays.<p>The estate tax isn&#x27;t just a tax on a parent&#x27;s hard work and success.  It is a tax on spoiled little rich kids, who never learned the value of actual <i>work</i> in the economy, who then go on to own companies and control what people do in them.  It&#x27;s a tax on being disconnected from the conditions experienced by lower classes, wherein it is essential to <i>earn</i> what you get, rather than <i>accept</i> whatever it is you think you deserve as your birthright.<p>I don&#x27;t begrudge rich people their ability to provide additional opportunities to their children.  But when their children turn out to be aristocratic twits, I also feel the desire to teach them the hard lessons that the rest of us likely got much earlier in our lives, to perhaps make them better, more empathetic people.  And those are lessons best learned by <i>not</i> having so much money that self-discipline and self-sacrifice are never necessary.  I get the feeling that fewer people would be laid off by stack ranking or to shore up quarterly results if those doing it had some inkling of what it means to be the one laid off--the panic, the fear, the depression, the austerity, and maybe even the irrational optimism.