Home | Databases | WorldLII | Search | Feedback Edited Legal Collections Data

Wagner, Richard E. --- "Inheritance" [2005] ELECD 132; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics, Second Edition" (Edward Elgar Publishing, 2005)

Book Title: The Elgar Companion to Law and Economics, Second Edition

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845420321

Section: Chapter 8

Section Title: Inheritance

Author(s): Wagner, Richard E.

Number of pages: 8

Extract:

8 Inheritance
Richard E. Wagner


Private property, freedom of contract and personal liability provide the cen-
tral legal framework for a market economy, as Walter Eucken (1952) explains
in his well-known statement of Ordnungstheorie. While there is little dispute
about the principal features of this framework, there is much dispute about
the status of property when the owner dies. There are two polar regimes in
this regard, free inheritance and collective inheritance. Under free inherit-
ance, an owner of assets would have the same right to dispose of his assets
upon death as he had during life. Any state involvement would be minimal, as
illustrated by such things as the usual recordation fees charged when certain
asset titles are transferred. Under collective inheritance, an owner of assets
would have the full use of his assets only during his lifetime, and those assets
would become state property upon his death. Collective inheritance would
entail the imposition of a 100 per cent tax on all assets that were held by a
decedent at the time of death.
A pure regime of collective inheritance is almost certainly impossible in
modern societies. There are several related reasons why any effort to tax
estates at 100 per cent would collect little, if any, revenue. The effort to
impose such a tax would induce people who had accumulated wealth during
their lifetime to consume it before their death, by doing such things as
converting that wealth into annuities. It would also induce such people to
...