Unpopular Idea #1 - Inherited Wealth

“A son can bear with equanimity the loss of his father, but the loss of his inheritance may drive him to despair.”
Niccolo Machiavelli

The older I get, the more ideas I adopt that would be regarded as heretical by most people. I don’t know if that’s a good thing or a bad thing; whether it indicates that the public at large is a vast pool of unthinking, irresponsible, self-serving idiocy and I recognize it more with age or simply that I am descending into coot-hood. Given things like endless war and ubiquitous self-destructive behaviour I am inclined to think it is the former, but I could be wrong.

One such eccentric idea currently on my mind has to do with wealth, specifically inherited wealth. It is on my mind because of a recent small undertaking. I did some website work for someone for no fee. It was not a major job, but did require a few hours of my time and attention. It was related to another job I had done for another party - a peripheral as it were. As of yet, the beneficiary of this work has yet to say “Thank you” or even acknowledge my effort in any manner though he had, in fact, requested that I do it. This would, of course, be inexcusable behaviour by anyone, but what is especially noteworthy here is that this person is wealthy - very wealthy. He is part of a dynastic family of great wealth and power. Lest that lead you to think that he is perhaps simply too busy to notice or take the time to acknowledge my modest contribution to his little empire, I should point out that the man leads a life of self-indulgent leisure the rest of us hoi polloi can only dream of.

Now, what comes to mind is that this is not the first such event in my life and that, in every case the other person has been wealthy, and not wealthy because of their own efforts but because a parent or two had the decency to die, leaving behind their bundles of cash and other assets. I have never encountered such arrogance or ingratitude from either “normal” people or those whose wealth was a result of their own work.

Inherited wealth seems to instil an attitude that I can best illustrate with an example from my past. Years ago back in Canada I was involved in a business with a very wealthy man. At some point, when discussing another deal in which he was negotiating equity arrangements between himself and a partner who had no money to invest but was doing all the work, he said “I place no value on “sweat capital.” My unspoken response was “”Of course you don’t, because you have never had to expend any!”

Okay, to my point:

The concepts of property and ownership are, I believe, misunderstood by most people. That is, they do not exist in nature. They are imaginary “things” - human-made notions. In nature, an animal takes something and defends it from others who want it. That’s all. Humans codify that behaviour in law and call it “property”. The law defends your access to and control of “stuff”, rather than your doing it yourself. That’s all there is to property.

That seems fair enough to me. Certainly it is better than the jungle life alternative despite the bickering and lawsuits etc. that law gives rise to. What does not sit so well with me though is extending this legal concept and protection of law beyond life. I “own” this computer. The law allows me to own it and defends my claim to ownership of it. But I still “own” it after I am dead? Huh!

A person accumulates wealth throughout his or her life then dies. The law allows the person to dictate the use or disposal of that wealth when no longer alive. How bizarre!

One result of permitting inheritance (and subject for much lengthier discussion) is the accumulation and perpetuation of vast capital pools - a la the Rockefellers. Generations of descendants who did nothing to create the wealth enjoy the benefits and power that wealth bestows. Is that the intended purpose of laws written to protect property? I think not.

Simply put, the protection of law provided to “property” should end when the life of the beneficiary of those laws ends. A football game referee has no power over the football players once the game has ended. Those football laws no longer apply.

Of course the obvious question arises “What’s a person to do about taking care of the family etc etc etc.”. Simple. Whatever it is you would give them after your death, give them while you are alive - when you actually do “own” it. Gifts, annuities, insurance policies, whatever. There are a million ways to ensure that the people you are concerned about are taken care of in the manner you wish.

So, that’s my unpopular idea: Exempting a few essentials such as a family home or small business and a modest amount of cash, inheritance taxes should be 100%.

Stay tuned. I will let you know when my burning at the stake is to take place.