Are death taxes good?

A question from Yahoo! Answers:

Can ppl come to see their own selfinterest & happiness in equal distribution of deceased estates?
is this argument false? ‘wealth shouldnt be distributed equally among ppl bc ppl arent equally qualified & arent working equally – better that a lazy heir gets the money than everyone’

It’s way more complicated than you think. Inheritance accounts for a surprisingly large share of capital formation. “Equal distribution of deceased estates” would lower the rate of capital formation and leave the society undercapitalized in the long run.

For more information, read:

Kotlikoff, Laurence J. and Lawrence Summers, “The Role of Intergenerational Transfers in Aggregate Capital Formation,” Journal of Political Economy, 89: 706-732, 1981.

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