2.4.6 The work stimulating justification/incentive to work justification

One of the most recent justifications for the death tax is that it motivates a person to work despite receiving gratuitous wealth, which is good for both the economy and the individual.1 Under Wedgwood, an individual who inherits property might have less incentive to work to accumulate assets on his or her own. Therefore, taxing inherited wealth may increase the incentive for the beneficiary to work or, at least, will not act as a disincentive against work.2

Hauser, however, is of the view that to state that the death tax does motivate a person to work, is not at all clear. Moreover, in her view, the market value and individual moral value of paid work are not obvious truths. Hauser also refers to some scholars (amongst others, Edward McCaffery) who argued that the estate tax in the US suppresses the motivation to work. If one purpose of working is to accumulate wealth for the next generation, then “the estate tax is a tax on virtue. It punishes industry, thrift, intergenerational altruism and savings.”3 However, some scholars disagree that the estate tax suppresses the incentive to work. Hauser referred to Professor Ascher who argued that the transmission of property to the family is not the sole motivation for work.4

Regardless of whether a death tax does or does not suppress the incentive to work, I am of the view that one thing is clear: the work stimulating justification is based on the mere assumption that an individual may have no incentive to work if no death tax is levied. Thus, it should not be regarded as a primary justification of death taxation.