The system of capitalism works in a way in which if an individual works hard, they will be rewarded. It is a system of free choice and consequence. It is not perfect, but it is the best system we, as human beings, have come up with so far. The downside to capitalism is its tendency to accelerate inequality. The top 1% begin accumulating capital, while the bottom 90% struggle. This is an unfortunate side effect of capitalism, the rich keep getting richer, and the poor stay poor.
The reason for this inequality is capital accumulation. Families can build massive amounts of wealth based on previous generations. This system is unfavorable for ethnic minorities that, historically, faced heavy discrimination that hampered their ability to accumulate capital. To reduce the inequality presented by capitalism, an inheritance tax should be implemented to ensure a fair and competitive market for all.
The system of capitalism does not state that, if you are born into a rich family you will be rewarded. Capitalism is meant to reward hard work, not luck in the ovarian lottery. An inheritance tax would ensure that every child is given an equal playing field when beginning their lives and careers. Taxes from inheritance can be used to improve schooling, provide additional care to at-risk teens, and fund secondary education. Only six states currently have an inheritance tax, and the federal government has no form of an inheritance tax.
As with all government policies, the effects of the inheritance tax on incentives must be considered. If you are a wealthy, elderly individual with massive amounts of capital that you would like to be passed on to your children, how will the inheritance tax affect your decisions? Most people want to make sure that their children and future generations of their family will be taken care of. Implementing a tax on the wealth transfer will not affect incentives if it is a flat tax rate. Charging a different inheritance tax on varying levels of wealth will inevitably lead to the destruction of incentives, tax evasion, and potential fraud.
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