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Richard Rockefeller, an heir to Standard Oil founder John D. Rockefeller, noted that a stronger estate tax would also encourage more philanthropy, since charitable gifts can reduce one's taxable estate.
"If the world I leave behind is one of gated communities, growing inequality and misery among the have-nots, downward mobility for the middle class, a degraded environment and a rotting social and physical infrastructure -- then [my children's] inheritance will be a shabby one -- no matter how much money they get," he said.
It's a challenging debate - how much to tax inheritance. The two sides I will discuss:
1) If I manage to save a lot of money over my lifetime, why shouldn't I be able to pass it along to my children if I so choose, and without the government getting their hands all over it?
2) Use it or lose it. Spend it or donate it, but passing it along to perpetuate a block of wealth is not in greater society's best interests.
Let's say that I do really well at my job financially and decide to save a lot of the money I earn rather than spend it as I take it in. With those savings, I did a few things that worked out. The financial tools like stocks, funds, and bonds that I chose, overall, did very well. I purchased some real estate that I turned into rental property and that made some money. The house that we bought and improved over the years is worth much more than the price I paid plus the equity invested. Now it's time for me to decide what to do with my money.
On the one side. . .
I have two children and they're pretty good people, so they get the money. It will not only allow them to lead comfortable lives as well as help provide for their families, but may allow them to pursue an occupation that, perhaps does not pay as well but it what they love to do. Perhaps they will, in turn, invest it effectively and see it grow.
What I don't want to see is the government decide how to spend my money. They already took taxes out of it once, either through income taxes or capital gains taxes. Now they want to tax it again? If I want to donate some of it to schools, medical research, or another benevolent purpose, that is my business.
On the other hand . . .
I want to give some money to my children. Like paying for clothing, food, college and weddings, I enjoy gifting to my children. At some point, though, they need to stand on their own two feet and make their own way. By giving them an abundance of wealth, I am enabling them to live lives of leisure rather than action. I made my money though hard work and making wise investments. Those are the lessons that I want to pass along. By no means do I want my legacy carried on by people who live in the spotlight or at a country club.
Having a higher tax rate will either force me to donate part of my wealth to organizations and groups who have values that I would like perpetuated or it will go toward paying for government expenditures on things that we all need like infrastructure and research.