The Inheritance Tax and the Idle Rich
Psst! There's a saboteur working at the Wall Street Journal editorial page! How else to explain its publication of Melik Kaylan's March 6 op-edarguing that the inheritance tax should be abolished because America needs to nurture its wealth-based aristocracy? To wit:
The immediate effect of the inheritance tax, when first imposed in this country, was the eradication of the great American country-house culture. In Britain, it led to the pulling down of storied castles and historic mansions for lack of upkeep. Libraries and art collections, codes of chivalry and good manners alike, husbanded over centuries, disappeared virtually overnight, taking with them a refined and cultivated way of life.
Yo, Melik! You're supposed to argue that the inheritance tax should be abolished because it constitutes double taxation, once when you're alive and once when you're dead, and because it makes it hard for Pops, who runs the corner hardware store, to pass the business on to Junior. Ix-nay on the ich-ray! Do you have any idea what Dick Gephardt can do with this?
The heart of Kaylan's argument seems to be as follows:
[I]f I could pass on the kind of inheritance that would allow my kids to spend a lifetime visiting rain forests, collecting Rembrandts or redeciphering the Rosetta Stone, I most certainly would.
Here's why I would--and I'm not ashamed to be philosophical about it. An inheritance is good for one's children, and for society. It allows parents to remove a significant burden from their children's lives, enabling them to transcend the humdrum. A future in which succeeding generations are freed from the need to spawn wealth anew can allow children--and grandchildren--to lead lives on a higher plane. Why can't I give my children a life of contemplation, or of connoisseurial study and acquisition, or of patronage and cultural stewardship?
Chatterbox won't dispute that some people who inherit vast sums of wealth devote their lives to contemplation and philanthropy. But based on Chatterbox's glimpses of the "I inherited so much money that I'll never have to work" set, enlightened magnificos constitute a very small fraction, and are dwarfed by the number of head cases, drug addicts, and rustic dropouts. (Abigail Trafford of the Washington Post coined the marvelous phrase "WASP rot" to describe this phenomenon.) Every single heroin user Chatterbox has known in his life was either a member of this class or working very hard to insinuate himself (they were all guys) into it. George Gilder, among other conservative commentators, has observed striking parallels between the welfare-supported poor and the trust-fund-supported rich. "The playboy kind of syndrome is in many ways similar to descriptions that people make of the underclass," notes Seymour Martin Lipset, professor of public policy at George Mason University. In both instances, he says, the knowledge that one's economic lot isn't going to change encourages dissolution.
Of course, none of this has escaped the attention of more liberal types, either. Andrew Hacker, a professor of political science at Queens College, says that every year he takes a look at the Forbes 400 list.Very few heirs on this list (who constitute about one-third of the total) have surnames that are familiar to him because of any conspicuous philanthropic or intellectual activity. "They just disappear into the woodwork. They go back to Palm Beach or Palm Springs. You just never hear about them." John Sedgwick, the author of Rich Kids: America's Young Heirs and Heiresses, How They Love and Hate Their Money (and, more recently, a novel The Dark House, whose main character belongs to this class), speaks of "learned helplessness," a term borrowed from the animal studiesof psychologist Martin Seligman: "Children brought up in luxury, with every need taken care of, lose, or never find, the ability to take care of themselves in any meaningful way." P.G. Wodehousemade an entire literary career out of this same observation. When you solicit examples of superrich American families that have sustained a commitment to the commonweal over many generations, the list usually begins and ends with the Rockefellers.
These arguments are all based on anecdotal rather than statistical evidence, so Chatterbox can't quantify with any precision the dissolute nature of the idle rich. In the next few days, he'll try to uncover some hard data.
[Update, March 7: Breakfast Tabler Dan Rottenberg, author of The Inheritor's Handbook, says that in the world of philanthropy, "New money is bigger--and more generous--than old." Click here for his extended thoughts. Meanwhile, Chatterbox is continuing to consult the social science literature on WASP rot.]