I believe the US has one already but I don't know specifically what it is/entails.

If I die and I have a fortune, I would want my children to get the money, but maybe not all of it. But that decision should be mine, not the government's. I don't think there should be an inheritance tax (especially in cases where the money is non-renewable, e.g. inheriting a bank account, not a business).

The Inheritance tax is in place to prevent dynastic wealth. Having an entrenched wealthy class who do nothing to contribute to the economy and just sit on money earned by their parents or grandparents is not an equitable or efficient solution. Since those are the only two objectives any economic policy should go for, then an inheritance tax is needed in order to encourage people to keep working and innovating and contributing to the economy. To spend money rather than sit on it.

@bo - It's called an estate tax. I believe its 50% of anything over $5 million

Inheritance taxes are essentially double taxation. The estate already paid taxes on that money. What gives the government the right to tax it again?

I say "f*ck the gummint"
I've paid tax on it when I earned it, paid capital gains tax (don't get me started on that one...) on my gains, paid money to get advice on wise investments, got screwed on stamp duty and every other form of nickel-and-dime tax/duty/fee, depending on the jurisdiction.
Why the hell should the government get ANOTHER slice of it? And if you're interested in levelling the field, find some other way apart from ANOTHER DAMNED TAX.
/rant

Wait, there's an inheritance tax in addition to the estate tax?

Sadly Draugnar, the legislature can give the Government the "right". At least on paper.

@BrownPaperTiger - can you suggest some other way?

Sure.
Educate the masses preferentially would be my first suggestion.
Any other method that gives in response to under-privilege rather than takes away from (perceived?) over-privilege

The federal estate tax used to only kick in at like $1.2M per individual. IIRC a year or two ago, it was increased to $5.25M. That means that for the vast majority of Americans, it should be a non-issue.

There additionally is a potential state estate tax (called inheritance tax in some states). In California (where I live), it's $5M.

Basically, this is an old issue that today practically is a non-issue.

What Draug said. The money has already been taxed, and should not be taxed again. Whether the legislature has the right to do that or not is irrelevant; it shouldn't be allowed.

I can find some arguments against the principle of preventing dynastic wealth, and forcing offspring to work. Jobs are already scarce enough as it is. Wouldn't removing some of the potential workforce free up jobs for those without the benefit of a large inheritance, and increase the overall quality of life for Americans as a whole?

The argument for this seems to be a rather idealistic one: Children should have to work, regardless of their parents' success. If I ever would be fortunate to become wealthy, I would not give my children a free ride through life, but shouldn't that be MY decision, not the government's?

Its still double-tax. And its still theft.
We do not have any such tax in NSW, not sure about other states of Aus.
And then you've got all the issues around what its levied on...total assets? free cash?

Think of the can of worms involved in forcing someone to sell or split up a business due to death in the family. Might well put people out of work. Its not hard to imagine.

Roger that, Skittles.

Interesting to hear the other side of the argument, b/c the only argument I've ever heard before against this "death tax" was the from sensationalist right-wing portion of the media, saying it was the gummint's plot to rob everyone blind.
(concerning the media statement: yes, there is also the sensationalist left-wing media, I'm not trying to blast them any more than I'd blast the sensationalist left-wing media).

Australia used to have death taxes (a state tax) until the 1970s (I believe) but then the government in Queensland had the bright idea of abolishing the tax as a way of encouraging rich people to move to and invest in Queensland - to the detriment of the other states. Ultimately this led to all the other states abolishing the tax.

Inheritance tax = legalized grave robbery

^ Now there's the argument I'd been hearing before.

"Educate the masses preferentially would be my first suggestion."

Sure. How do you pay for this planned massive increase in educational opportunities without creating the bubble in higher education that subsidized college loans have caused? If you find a good way to do this without raising some other sort of tax, then please let me know. Otherwise, you're just driving the government further into debt.

Also, the double-taxation is a non-issue here. All capital gains are already double-taxed, so it's not like this is against the law or the spirit of the law.

"Jobs are already scarce enough as it is. Wouldn't removing some of the potential workforce free up jobs for those without the benefit of a large inheritance, and increase the overall quality of life for Americans as a whole"

This "workforce" you talk of is in the thousands of people. Maybe tens of thousands. Taking them out would have no effect on unemployment rates. The largest number of households that have fallen under this have been.....0.7% of households. More recently, it's been 0.3%

http://www.cbsnews.com/news/estate-tax-victims-are-only-the-03/

Andrew Carnegie endorsed an estate tax even greater than the one in place today. As did like minded J.P. Morgan.

@BrownPaperTiger - no businesses would ever be forced to split up, because any successful business is going to be a corporation and not a sole proprietorship.

@Goldfinger You said " no businesses would ever be forced to split up, because any successful business is going to be a corporation and not a sole proprietorship."
I call bullshit. You could EASILY have an agri-business (for example) that was sole prop or partnership worth more than AUD5M or USD5M. What happens then?
Both my brothers run service businesses easily worth more than AUD5M, one as sole prop and one as partnership. Both employ 20+ people. Forcing a sale to satisfy death duties would be terrible for the employees.

Education in the US, for example, could easily also be funded by a modest reduction in "defence" spending. Don't ask for an example and then say its unaffordable unless you implement the specific tax under discussion. That's a tenuous link and not especially logical.

If levelling the playing field is the objective, find a way to bring people up, not push them down. Taking something away from people that have, rather than giving to those that don't is an unimaginative solution to a problem.

I agree that it wouldn't have some big impact on unemployment rates, but I'm thinking about those 10,000 families that will have better lives because of it. Then, there's the trickle-down effect: Tier A takes in 10,000 people from Tier B, who them take 10,000 from Tier C, etc.

This is all theorycrafting, and I know things aren't as simple as I write, but I'm stating my point. Should 10,000 families, plus people benefiting from the residual effect, not be put in a better situation because it won't impact the stats?

"The Tax Policy Center calculates less than 50 farms and family-run businesses were required to pay the estate tax in 2011, and only 40 will owe any estate tax in 2012."

http://washington.cbslocal.com/2012/12/12/estate-tax-deadlock-could-hit-hard-on-family-farms/

"The study shows that in 2007, investment real estate — which includes farms, undeveloped land, real-estate investment funds, real estate partnerships and other investments — accounted for only 15% of total portfolios for estates over $3.5 million. Farms are only a fraction of the 15%."

http://blogs.wsj.com/wealth/2010/12/16/does-the-estate-tax-hurt-farmers-and-family-businesses/

While some small business may ultimately be impacted by it, the numbers are very, very small.

I also think you're not understanding what "funding means" Let me explain a bit (hypothetical). Let's say the US government budget is $100 billion, $40 billion of which goes to defense. The US gets $100 billion in revenue from taxes, $2 billion of which comes from the estate tax. Now, let's say the education program costs $10 billion. You cut the tax, cut $10 billion of spending from defense and now you still have a $100 billion budget, but only $98 billion in revenue. You've just increased the budget deficit. That's the point I'm driving at. How do you keep it revenue neutral?

And I want to raise people up as much as anyone else, but some people need to be pushed down, because they have more money than any person has a right to. There are those super-wealthy people like Carnegie, Hershey, Gates and Buffet who have their hearts in the right place and choose to give away their money because they realize this. But for every one of them there is a Walden family, who need to have their money taken from them.

"I'm thinking about those 10,000 families that will have better lives because of it."

A few points. First - you're assuming that all 10,000 of those families wouldn't be working, which isn't a fair assumption to make. Secondly, trickle-down doesn't really work that much, so the benefits there are small. And third, 10,000 people is .0003% of the population of the United States (I think...might be off by a factor of 10). Take the ~$2 billion the estate tax generates, and spread that out to thousands of other people. Several hundred million of that will go to Medicare and Medicaid payments. Hundreds of millions more will go to pay the members of our armed services, or pay factory workers for more military hardware.

I'm sure the rich would spend some of the money they had, should they be allowed to keep it. But the government will spend all of it and more importantly redistribute it to those more in need.

I'm not assuming that all 10,000 of those families wouldn't be working, and my argument is more philosophical in nature. I do understand the effect that it has on the budget, though. When you put it like that, I can certainly see the argument.

I never intended on getting into a heated debate on the subject, as I have neither the desire nor the knowledge to do so. It's a sticky situation, for sure, and I just wanted to add my own two cents on the matter.

Did you really type "need to have their money taken from them" ?

Taxing the super rich won't help reduce national debt or poverty. Whoever it will encourage them to invest here or elsewhere. I'm inclined to believe that the threat of heavy taxation and zero percent interest will chase out the extremely wealthy. They might be better off in the emerging markets

They don't have to be physically present in emerging markets to invest in them. And taxation to France-like levels will chase them out (unless, of course, everyone adopts those taxation levels, in which case it doesn't matter). But as far as normal tax rates go, the US isn't that bad for the wealthy (given all of the loopholes and such).

And @BrownPaperTiger - I was more referring to the Waldens in particular in my mind when I was typing that, since they're the biggest load of scumbags around.

The USA is 31 of 32 of OECD countries for taxation. And yet the higher tax rates don't seem to have done everyone else any harm.

.3% of American households is 300,000 households (approximately 100,000,000 households for 350,000,000 people... So 30 times your 10k estimate.

As far as you Eurothugs wanting to control American economic policies... We kicked Britain ass out of America for that reason. Keep your damned dirty paws off my money. We don't want socialism and especially not from Britain, home of the wealthiest family in the world.