Taxing Inheritance Is Inherently Wrong

In their 1848 Communist Manifesto, Karl Marx and Friedrich Engels made the case for "wrest[ing], by degrees, all capital from the bourgeoisie … by means of despotic inroads on the rights of property." This included "abolition of all right of inheritance."

Regrettably, modern-day liberals are very much influenced by their socialist forebears (who, by the way, also called for "abolition of the family" and "abolition of property in land" in addition to the abolition of inheritance). The essayist Joseph Sobran explains:

Liberalism – retail socialism – doesn’t seek the direct confiscation of property … It prefers incremental measures: progressive taxation, redistributive programs of a piecemeal sort, regulations on the use of private property, inheritance taxes. It resents being identified as socialist, and pretends its assorted measures are ‘pragmatic,’ ideologically unrelated to one another. It proceeds gradually, masking the principle involved even as it is consistently guided by principle: at every step it moves toward socialism, and furiously attacks any proposal to rescind its progress.

Liberalism is tactful. Its modus operandi is to anesthetize its victims. It rarely seizes property that is already physically possessed; it prefers to intercept wealth at the transmission points ...

For those who think socialists have gone the way of the dinosaur, I remind you that a professing socialist, Congressman Bernie Sanders, is currently running for the United States Senate. Incredibly, Democratic National Committee chairman Howard Dean has endorsed the man (even though Sanders is not a Democrat), saying "a victory for Bernie Sanders is a win for Democrats." Amazing.

Fortunately, there is a concerted effort among the non-socialists in Congress to wipe out the federal death tax once and for all, and in 2006 efforts will be made at the state capitol to nix Oklahoma’s death tax as well. A poll conducted in May 2004 by Cole Hargrave Snodgrass & Associates found support for the idea: 61 percent of registered in voters in Oklahoma favor repealing Oklahoma’s death tax (indeed, 44 percent of voters “strongly favor” repeal), while only 27 percent oppose repeal.

Ironically enough, The Wall Street Journal noted in a July 8 editorial that "Karl Marx must be rolling in his grave, and don’t even ask about V.I. Lenin: Russia eliminated its inheritance tax last month. Its move comes after January's decision by the government of Sweden, the birthplace of the modern-day welfare state, to eliminate its estate tax. Like the Russians, the Swedes have come to believe that the tax is unjust and economically counterproductive."

Yes, the tax is unjust and economically counterproductive. At the state level, it doesn’t generate much annual revenue (less than one percent of what the state collects and spends each year), and the revenue it does generate is almost certainly offset by the loss of residents, family farms, small businesses, employment, and other tax revenues. OCPA has made those arguments before and will continue to make them.

But in this space, I wish to make a different argument, a moral argument: Oklahomans have a right and a responsibility to transmit property to their heirs. Policymakers should protect that right and not interfere with the performance of that duty.

An Inherent Right

Let's ask ourselves a fundamental question: Who really holds title to a man’s property – the man or his government? In his book Death and Taxes, first published almost 30 years ago by the Heritage Foundation, the economist and businessman Dr. Hans Sennholz wrote, "In final analysis, the crucial question of who holds an anterior title to property must be raised and answered. When the state is the source of property … the state holds the first title upon any estate."

But if property is not a creature of civil government, if indeed men have been endowed by their Creator with an unalienable right to own property and transmit that property by inheritance, then the state has no business interposing itself as first heir.

This crucial question has been debated for centuries, says attorney Richard Huenefeld, and although "the debate has never been settled in the numerous volumes of literature, the Declaration of Independence settled the matter for the United States."

The passage is familiar: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. That to secure these rights, Governments are instituted among Men …"

"In Jefferson's day," Huenefeld writes, "the common sense of the subject was that the pursuit of happiness included the unalienable right of the individual to acquire, possess, protect, and dispose of property."

Certainly the pursuit of happiness was not limited to or synonymous with the right to property, but it did include it. For Jefferson to have used the familiar Lockean phrase "life, liberty and property" would have in a sense been redundant: It was well understood that property ownership went hand in hand with the pursuit of happiness. The English jurist William Blackstone had written that the denial of property rights is "destructive of man’s real happiness, and therefore that the law of nature forbids it."

As the Bill of Rights to the Virginia Constitution (adopted a month before the Declaration) put it, men have inherent rights to "the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety." Note the similarity between that language and the language in Oklahoma’s own Bill of Rights, which declares that "All persons have the inherent right to life, liberty, the pursuit of happiness, and the enjoyment of the gains of their own industry."

Not only were property rights key to the pursuit of happiness, they were key to liberty as well. "The right of property is the guardian of every other right," said Arthur Lee of Virginia, "and to deprive the people of this, is in fact to deprive them of their liberty."

According to the Declaration, government does not endow men with rights, government exists to secure rights. Property rights preceded government; they are not conferred by government. "God and the natural law that he has established endow humans with unalienable rights," says OCPA adjunct scholar J. Rufus Fears, a classics professor at the University of Oklahoma. "Governments are instituted among men to secure these rights."

Legal scholar James Kent, "America’s Blackstone," declared that "the right to acquire, to hold, to enjoy, to alien, to devise, and to transmit property by inheritance, to one's descendants, in regular order and succession, is enjoyed in the fullness and perfection of the absolute right." This is consistent with Blackstone himself, who believed the right of private property "consists in the free use, enjoyment, and disposal of all [personal] acquisitions."

In short, men are endowed by their Creator with certain unalienable, absolute, inherent rights, including the right to own property and transmit that property by inheritance. This is a right that inheres in men, not a right granted by government. State legislators should respect and protect this right, not violate it.

In 1798, Justice Samuel B. Chase wrote: "An ACT of the Legislature (for I cannot call it a law) contrary to the first great principles of the social compact, cannot be considered a rightful exercise of legislative authority."

Even the liberal Supreme Court Justice William O. Douglas (he of "penumbras" fame) acknowledged in 1961: "The institutions of our society are founded on the belief that there is an authority higher than the authority of the State; that there is a moral law which the State is powerless to alter; that the individual possesses rights, conferred by the Creator, which government must respect. The Declaration of Independence stated [this] theme …"

And indeed, Oklahoma policymakers should uphold the Declaration and defend its principles. After all, the Declaration isn't merely a document renouncing our allegiance to the mother country. It's "a powerful statement of enduring political principles," Dr. Fears reminds us.

In the Enabling Act admitting Oklahoma to the Union, Congress declared in 1906 that the state must draft a constitution which "shall not be repugnant to … the principles of the Declaration of Independence" and in his "Proclamation of Statehood" on November 16, 1907, President Theodore Roosevelt declared that Oklahoma had done so. (Recall, for example, Article 2, Section 2 of the state constitution: "All persons have the inherent right to life, liberty, the pursuit of happiness, and the enjoyment of the gains of their own industry.")

These enduring political principles should animate legislators even today.

A Moral Duty

Not only do Oklahomans have a right to transmit property to their heirs, they also have a moral duty to do so. And just as politicians shouldn’t trample on a right, neither should they interfere with the performance of a duty.

Remember, men are "endowed by their Creator with certain unalienable rights." That Creator has made it clear that parents have a moral duty to save up for their children (2 Cor. 12:14), and that government shall not interfere with that duty by "tak[ing] from the people's inheritance, thrusting them out of their possession" (Ezek. 46:18). The inherent right to property is so self-evident that the Creator could tell of a man asking the rhetorical question, "Don’t I have the right to do what I want with my own money?" (Matt. 20:15).

Is it appropriate to make these sorts of moral arguments at 23rd and Lincoln? Well, if Senate leader Mike Morgan can argue that raising taxes for Medicaid is "morally right," if Governor Henry can argue that education is our state’s "greatest moral obligation," if left-wing lobbyist Gary Jones can quote an expert saying "our state budgets are memos to God about the priorities of our society," then, yes, it would appear that moral arguments are within the pale.

Conclusion

A government limited to its proper functions – securing our inherent rights – will necessarily be small. A government that does everything from operating golf courses to tracking down emotionally stunted newborns will necessarily require more taxes, including death taxes.

"For much of the nation’s history taxes and government spending were not a problem," Lew Uhler and Barry Poulson wrote for OCPA in 2003. "As recently as the mid-1920s, government at all levels taxed and spent but 10 percent of the national income (3 percent federal, 7 percent state and local). The unwritten fiscal constitution prevailed – a limited role for government, deficits during periods of war but paid down during peacetime, and no direct taxes on the incomes of the people. All that changed with the adoption of the 16th Amendment in 1913 and the expansion of the federal government during the New Deal/Great Depression era. Following World War II the U.S. embraced the welfare state, conforming to the intellectual orthodoxy of Western Europe and much of the rest of the world."

Indeed, it was the 16th Amendment, Dr. Sennholz points out, that "opened the door to progressive income and estate taxation, and ushered in a new age."

"It was necessary to break down private attachments and private institutions, so that a centralized government would be free to act directly upon individuals," adds Glenn Ellmers, former research director at the Claremont Institute. "The first and foremost of these private attachments, of course, was the family. That is why many Progressives also advocated a steep inheritance tax. Rather than parents working and saving to make a better life for their children, government would become the caretaker and provider."

Is that the vision state legislators wish to embrace in 2006? Or will they choose to respect and protect the people’s right to own and transmit property? Between growth revenue and government waste, surely they can find a way to "afford" to kill the death tax. (Former state Senator Dave Herbert’s remark is instructive: "I don’t know a good department head that doesn’t have five percent fluff in case he needs it.")

"The affection of parents towards their children is the most powerful and universal principle which nature has planted in the human breast," St. George Tucker wrote, "and it cannot be conceived, even in the most savage state, that anyone is so destitute of that affection and of reason, who would not revolt at the position, that a stranger has as good a right as his children to the property of a deceased parent." Especially when that stranger is a politician.