The USC Gould School of Law Tax Institute concludes today with its Estate Planning session. I am honored to deliver the keynote address on Occupy the Tax Code: Using the Estate Tax to Reduce Inequality, 40 Pepp. L. Rev. ___ (2013) (with James R. Repetti (Boston College)):
Inequality has been increasing in the
United States. We should care about this increase because inequality
contributes to a variety of adverse social consequences that persist
across generations. There is also substantial empirical evidence that
inequality has a long-term negative impact on economic growth.For many decades, federal tax policy has
played an important role in reducing inequality, although the impact of
federal taxes on inequality has waxed and waned depending on the focus
of elected officials. We argue that the estate tax is a particularly apt
vehicle to reduce inequality because inheritances are a major source of
wealth among the rich, and studies suggest that inherited wealth has a
more deleterious impact on economic growth than inequality caused by
self-made wealth. Although there are loopholes in the estate tax, it is
still effective in moderating the amount of wealth that is passed within
a family from generation to generation.The major criticism about the estate
tax—that it discourages savings—is inaccurate. Standard tax theory
cannot predict the impact of the estate tax on savings and the empirical
evidence is mixed. Moreover, the estate tax has a less harmful impact
on savings than the income tax for two reasons. First, the event that
triggers estate tax liability—death—is ignored by taxpayers during the
period of life in which they are likely to be most productive. Second,
the expected value of the estate tax’s effective rate is quite low
during the period of life in which most taxpayers create wealth.
Other speakers today include:
- Ronald D. Aucutt
(McGuireWoods, Tysons Corner, VA) - M. Katharine Davidson
(Holland & Knight, Los Angeles) - Jeffrey N. Pennell
(Emory University School of Law) - Scott S. Small
(Wells Fargo, Philadelphia) - Diana S.C. Zeydel
(Greenberg Traurig, Miami)
