Yet estate taxes, and other rules governing the transfer of wealth between generations, are vital to the American experiment. They help ensure equal opportunity and prevent the rise of a small set of families whose money and political power separate them permanently from the rest of us. Estate taxes protect us from the dangers of aristocracy.
Why worry about aristocracy in an age of democracy? Aristocracy conjures up visions of bygone ages when noblemen believed that the blood in their veins distinguished them from the common herd. Despite the rhetoric about property rights that has dominated the current debate, the real question is whether we should allow the children of the super rich the status of nobles by inheriting their parents' wealth and the social and political privileges that wealth confers. The movement to repeal estate taxes is in reality nothing less than an effort to establish an American aristocracy.
The fight against aristocracy goes back to the nation's founding and is part of our democratic tradition. Nobody feared aristocracies more than Thomas Jefferson. In Jefferson's day, aristocracies were far-reaching. European nations had powerful nobles who inherited their status, promoted their own self-interested politics and often considered their interests to be superior to those of the majority. They demanded legal privileges unavailable to others. In contrast, Jefferson hoped to create a society in which all citizens were considered equal.
Americans today agree that hard work ought to be rewarded, but inheritance of great wealth and power works against this core American value. Jefferson hoped to replace a permanent aristocracy with what he called a "natural aristocracy" of talent and virtue, but he recognized this meant giving the children of each generation an equal start.
Jefferson argued that the best way to prevent an aristocracy was to limit inheritance. In a 1789 letter to his friend James Madison, Jefferson wrote that "the earth belongs in usufruct to the living" and "the dead have neither powers nor rights over it" — that is, the dead should not control the opportunities of the next generation. Every child deserves a fair chance.
The estate tax's critics claim that it violates property rights, but how can the dead have a right to property? The right to property emerges from labor, the nation's founders believed. With death, that right returns to society. "The portion occupied by an individual ceases to be his when himself ceases to be, and reverts to the society," Jefferson told Madison. It is up to citizens to determine what and how much children inherit from their parents.
Jefferson's strategy to prevent aristocracies was to mandate partible — that is, divisible — inheritance, apportioning estates equally among all one's children. In Jefferson's time, this was a radical proposal. In the 18th century when a man died his estate often passed complete to his eldest son. This form of inheritance, known as primogeniture, sustained aristocracies by keeping family wealth intact over generations. Partible inheritance, Jefferson hoped, would force wealth to be divided successively over generations.
By the 1830s America had become one of the most egalitarian societies in world history, at least for white men. Alexis de Tocqueville, an acute observer of American democracy during the Jackson era, attributed the nation's equality to partible inheritance. Dividing estates, he wrote in "Democracy in America," creates a "revolution in ownership" that "works upon the very soul" of American society. Rather than inherit their status, Americans must earn it anew.
Yet in the 1830s equality was threatened, as it is today, by the growing income and wealth gap between employers and workers. If such inequalities could be maintained over generations in the same families, the rich would think of themselves as a class apart. "What is this, if not aristocracy?," Tocqueville wondered.
In words that resonate today, Tocqueville speculated that "if permanent inequality of conditions and aristocracy are ever to appear in the world anew," they would come from the growing distance between the few and the many. Jefferson was confident that partible inheritance would limit intergenerational inequality. By the 1830s it was clear that we would need to do even more.
As old-fashioned as the word aristocracy sounds, the danger is current. The issue is not just money but how the wealthy relate to society. A permanent elite, as Jefferson feared, might not concern themselves with the majority's welfare. At a time when the gap between America's rich and the rest of society is growing, we must avert an American aristocracy by preventing the richest families from perpetuating their wealth.
Estate taxes reward hard work and talent and protect civic equality. They promote America's most enduring values. We can't afford to repeal them.