James Buchanan on inheritance: a critique
| Published date | 05 October 2012 |
| Date | 05 October 2012 |
| Pages | 159-165 |
| DOI | https://doi.org/10.1108/20452101211261435 |
| Author | Walter Block |
| Subject Matter | Strategy |
James Buchanan
on inheritance: a critique
Walter Block
Economics Department, Loyola University, New Orleans, Lousiana, USA
Abstract
Purpose – What are the reasons for writing this paper? The purpose of this paper is to make the case
for liberty, and free enterprise, against the criticisms of this system. Specifically, the present essay is
an attempt to criticize the case for inheritance taxation. This is made by many, but the author
focuses on James Buchanan’s contribution to this support for socialism. The author does so because
James Buchanan is widely known as a champion of capitalism and free markets, and he is nothing of
the sort, at least in this one case.
Design/methodology/approach – The approach used in this paper is to quote widely from the
adherents of inheritance taxes, and then to show the flaws in the cases they offer in support of
this system.
Findings – The finding is that none of the arguments offered on behalf of inheritance taxation have
been shown to be valid. There are flaws in all of them. This, of course, does not imply no such
arguments can be shown to be successful; only that the ones herein cited do not justify this market
interference.
Social implications – Why do entrepreneurs engage in entrepreneurship? For a whole host of
reasons, surely; these might in the extreme be as different as there are different entrepreneurs. But one
motivation, certainly an important one, likely to be felt by most entrepreneurs, is to leave a bequest
upon demise, so that one’s heirs and loved ones may share in the fruits of one’s entrepreneurial
activities. Thus, taxes on inheritances, let alone those approaching the 100 percent level, must
be anathema to at least most if not all entrepreneurial activities. The present paper makes the case
against such attacks on we alth, bequests, inheritances.
Originality/value – To the best of the author’s knowledge, although there are of course defenses of
bequests, and critiques of Buchanan on other matters, there are no criticisms of this Nobel prize
winning economist on this particular issue.
Keywords Entrepreneurship, Inheritance, Incentives, Entrepreneurialism, Inheritance tax
Paper type Research p aper
It is the contention of the present paper that[1] a strong motive for much if not all
entrepreneurship[2] is the goal of amassing wealth so that, among other things, the
capitalist businessman can leave a bequest to his heirs, family and loved ones. How can
this be done? It can be accomplished through the institution of inheritance. But, of
late, inheritance has had a bad press. There are calls for 100 percent tax on bequests.
The chorus proposing such measures even includes some who, otherwise, have
reasonably good free enterprise credentials.
Are such schemes justified? Proponents offer the following for our consideration:
(1) The heirs have done nothing to deserve this largesse (apart from being astute
in choosing rich parents).
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2045-2101.htm
Journal of Entrepreneurship and
Public Policy
Vol. 1 No.2, 2012
pp. 159-165
rEmeraldGroup Publishing Limited
2045-2101
DOI 10.1108/20452101211261435
JEL classification – L0, M13
The author wishes to acknowledge Ministry of Science and Technology Innovation Malaysia
(MOSTI) for funding this project.
159
James Buchanan
on inheritance:
a critique
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