Capital Income Taxation and Estate Taxation

Matt Yglesias gives us a Piketty and Saez paper that argues for capital income taxation as a backdoor inheritance tax.

I don’t think there is any good reason not to have an inheritance tax of at least 50% on any inheritance over $100,000 per person except that the rich people don’t want it. It would help give people an equal starting point (you could spend that money on Head Start or successful charter schools). It would encourage rich people to give their money away to charity.

The only economics argument against it is that it would provide a disincentive to accumulate large amounts of wealth. While it may provide some disincentive, I do not believe it would significantly reduce entrepreneurial activity. I’ll have to find some research on it.

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