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Chapter 16
How should the burden of the inheritance tax be distributed, that is, how should the tax rate be scaled?

This demos issue would require the same kind of display on its page and response from the voter as the previous two issues, the corporate and business tax and the personal income tax. The issue would be presented as a line graph. As with the line graphs discussed in the previous chapters, the vertical axis would express percentage tax rates. The horizontal axis would express the value amounts of inherited estates. As before, the voter would color various portions of the tax rate line green, yellow, and red to indicate where the tax rate should be increased, kept at the current amount, and decreased. The line could approach the horizontal forming nearly a flat tax or ascend more steeply forming a progressive tax.

In this area, the passing of wealth from one person to another and from one generation to the next, the wealthy have been especially creative in their endeavor to evade paying taxes. Rather than simple wills executed at the time of death, every kind of legal maneuver, trust fund, and other creative entities and methods of slipping wealth from one hand into another without paying inheritance taxes has been created. The changing of the guard of accumulated wealth often or usually does not take place in the singular moment of a death but has advanced into the entire overlapping life spans of the giver and of the receiver and even far into the years beyond the death of the giver. Another dimension of complexity is added to the situation by the common sense understanding that people have a right to feed, clothe, house, educate, and lavish gifts upon their beloved children and others. Where this process ends and where begins inheritance tax evasion by lifelong lavish gift giving, legal maneuvers, and other tricks is a gray area.

A solution to the many evasions in this area of taxation lies beyond the scope of this book. Very likely the government tax agencies involved in the transfer of wealth from generation to generation are already well versed in the many subtle nuances of family expenses occurred in the rearing of children, the giving of gifts involving taxation, and in outright inheritances. The beginning of a solution lies in the complete elimination of all of the creative legal means for the evasion of inheritance taxes by whatever names they may be called. It is not that wealth should not be transferred creatively to protect both the wealth and the receiver and to educate the receiver, but the wealth should not escape taxation during the transfer. Whatever the direct or indirect means for the transfer of wealth, the wealth should be subjected to the inheritance tax rates set by the demos. Given the honest demos electoral process presented in this book that would result in elective bodies that demographically resemble and honestly represent the entire electorate, we could expect an honest review and updating of all laws and rules having to do with inheritance.

Demos control over inheritance tax rates would give it control over the net size of inherited estates after taxes. As discussed in the preceding chapter on the income tax, this is similar to what we do today. The only difference is that instead of the rich few setting the tax rates for themselves and for everyone else in the nation, all of us participating together in the demos would set the tax rate on ourselves. (With the current plutocrats in government claiming to know the American people’s true hearts and minds on this matter, wouldn’t it be interesting to see the manner in which a demos electorate really voted given the chance.)

Given that the demos would have direct control over both the net size of personal income after taxes and of inherited estates after taxes, it would in effect have control over the distribution of personal wealth in America. This power over the distribution of wealth is not new. In America today the wealthy few already hold this power. What would be new is that for the first time in American history (and even in world history), “we the people” would hold this power together.

It should be clearly understood that in removing control of the distribution of wealth from the hands of the few and placing it into the hands of the entire electorate, we do not gain control over the amount of any particular person’s wealth. The electorate’s actions could result in a wider or narrower distribution of wealth in the nation than do the actions of the elite few today, but how much wealth any particular person possessed within that distribution would depend, just as today, on accident of birth and the person’s talents, ambitions, hard work, and luck.

If the demos elected to treat both areas, personal income tax and estate inheritance tax, with a flat tax, then the demos would not affect the distribution of wealth. If the demos consensus resulted in progressive tax rates, then it would in effect be redistributing wealth. However, the demos is only one branch of the government. If the other branches of government handed the tax revenue back to the wealthy again via their expenditures and disbursements, they could partially or totally nullify the effect of the demos on the distribution of wealth. But remember, the demos would also hold the power to elect the president, senators, and representatives. The demos may or may not treat kindly those who undermine its will in the matter of the just distribution of wealth. Thus, we have an interesting new system of checks and balances of power among the branches of government.

Just as with the previous two issues, no exemptions of any kind for anyone could be allowed in the inheritance tax. Again, people in need would need to knock on the door of The Glass House, that part of government that would handle entitlements and handouts.

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