This paper was originally written as a requirement for the LL.M. at Harvard Law School. I am indebted to Victoria Summers for supervising the paper, to William Andrews, Gordon Bale, Neil Brooks and James Davies for sources and materials, and to Kathleen Gallivan for helpful comments on earlier drafts. I am also indebted to Joseph Carens for supervising earlier work on distributive justice and to Michael Sandel for giving me the opportunity to re-learn Aristotle.I would also like to thank student editor Heather McLeod for her thoroughness. The views expressed herein are those of the author alone and not necessarily those of the Fair Tax Commission.

1. In Canada, the federal estate tax was abolished in 1971, and provincial succession duties disappeared during the fourteen years thereafter. See Bird, Richard M. “The Case for Taxing Personal Wealth” in Report of the Proceedings of the Twenty-Third Tax Conference, 1971 (Toronto: Canadian Tax Foundation, 1972) 6;Google Scholar Bossons, John “Economic Overview Tax Reform Legislation” in Report of the Proceedings of the Twenty-Third Tax Conference, 1971 (Toronto: Canadian Tax Foundation, 1972) 45;Google Scholar Carter, George E. “Federal Abandonment of the Estate Tax: The Intergovernmental Fiscal Dimension” (1973) 21 Can. Tax J. 232;Google Scholar Bird, Richard M. “Canada’s Vanishing Death Taxes” (1978) 16 Osgoode Hall L. J. 133;Google Scholar Smith, David W. and Rochwerg, Martin J. “Abolition of Ontario Succession Duty and Gift Tax” (1979) 27 Can. Tax J. 360;Google Scholar Hartle, Douglas G. “Some Analytical, Political and Normative Lessons from Carter” in Neil Brooks, W. The Quest for Tax Reform (Toronto: Carswell, 1988) 397;Google Scholar McQuaig, Linda Behind Closed Doors (Markham: Penguin, 1988) at 174–81;Google Scholar and Banting, Keith “The Politics of Wealth Taxes” (1991) 17:3 Canadian Public Policy 351.Google Scholar In Australia, wealth transfer taxes were abolished in 1979. See Pedrick, Willard H. “Oh, To Die Down Under! Abolition of Death and Gift Duties in Australia” (1983) 35 Tax Lawyer 113.Google Scholar In Great Britain and the United States, recent exemption increases and incomplete integration of estate and gift taxes have seriously weakened what limited effectiveness these taxes once had. On Great Britain, see James, Simon and Nobes, Christopher The Economics of Taxation, 3rd ed., (Oxford: Philip Allan, 1988) at 236–37.Google Scholar On the United States, see Graetz, Michael J. “To Praise the Estate Tax, Not to Bury It” (1983) 93 Yale L.J. 259;Google Scholar and Gutman, Harry L. “Reforming Federal Wealth Transfer Taxes After ERTA” (1983) 69 Va. L. Rev. 1183.Google Scholar With the exception of France and Luxembourg, the relative importance of wealth taxation has also declined among E.E.C. countries. See Kessler, Denis and Pestieau, Pierre “The Taxation of Wealth in the EEC: Facts and Trends” (1991) 17:3 Canadian Public Policy 309 at 310–12.CrossRefGoogle Scholar

2. See, e.g., Haslett, D.W. “Is Inheritance Justified?” (1986) 15 Phil. & Pub. Affairs 122;Google Scholar Hartle, supra, note 1 at 418–21; McQuaig, supra, note 1 at 42, 174–81, 347–49; Halbach, Edward C. Jr. “An Accessions Tax” (1988) 23 Real Pty. Prob. & Trust J. 211 (1988);Google Scholar Maloney, Maureen A. “Distributive Justice: That Is the Wealth Tax Issue” (1988) 20 Ottawa L. Rev. 601;Google Scholar Bale, Gordon Wealth Transfer Taxation: An Important Component of a Good Tax System (Victoria, N.Z.: Institute of Policy Studies, 1989);Google Scholar Ascher, Mark L. “Curtailing Inherited Wealth” (1990) 89 Mich. L. Rev. 69;Google Scholar Munzer, Stephen R. A Theory of Property (Cambridge: Cambridge University Press, 1990) at 380–418;CrossRefGoogle Scholar Maloney, Maureen A. “The Case for Wealth Taxation” (1991) 34:2 Can. Pub. Admin. 241;Google Scholar and McCready, Douglas J. “Is Wealth Taxation a Plausible Reform?” (1991) 34:2 Can. Pub. Admin. 260.Google Scholar See also the recent conference on wealth taxes in (1991) 17:3 Canadian Public Policy.

3. New Democratic Party, An Agenda for People (August 18, 1990) at 1–2.

4. The Government has referred the issue to the Province's Fair Tax Commission which is scheduled to report to the Treasurer in the fall of 1993. In the interim, the Fair Tax Commission has established a specific working group to consider the viability of alternative types of wealth tax for Ontario.

5. The accessions tax idea has a long history, dating back to Rudick, Harry J. “A Proposal for an Accessions Tax” (1945) 1 Tax L. Rev. 25 (1945)Google Scholar, and Rudick, Harry J. “What Alternative to the Estate and Gift Taxes?” (1950) 38 Calif. L. Rev. 150.Google Scholar Prominent analyses since then have included Andrews, William D. “The Accessions Tax Proposal” (1967) 22 Tax L. Rev. 589;Google Scholar Sandford, C.T., Willis, J.R.M. and Ironside, D.J. An Accessions Tax (London: Institute for Fiscal Studies, 1973);Google Scholar and Halbach, supra, note 2. An accessions tax was introduced in Ireland in 1984, and was proposed in the 1992 election platform of the British Labour Party. On the Irish accessions tax, see Organization for Economic Cooperation and Development (OECD), Taxation of Net Wealth, Capital Transfers and Capital Gains of Individuals (Paris: OECD, 1988) at 81.Google Scholar On the Labour Party proposal, see Lawson, Peter “An Accessions Tax?” 129 Taxation (5 March 1992) at 537.Google Scholar

6. See, e.g., Brown, Robert D. “A Primer on the Implementation of Wealth Taxes” (1991) 17:3 Canadian Public Policy 335.Google Scholar This is particularly true with respect to the introduction of a wealth transfer tax in a sub-national jurisdiction of a federation in which no other jurisdiction (national or sub-national) taxes wealth transfers.

7. Cited in Eisenstein, Louis “The Rise and Decline of the Estate Tax” (1956) 11 Tax Law Rev. 223 at 224.Google Scholar See also Simons, Henry C. Personal Income Taxation: The Definition of Income as a Problem of Fiscal Policy (Chicago: University of Chicago Press, 1938) at 126 Google Scholar (“There is now little dispute as to the propriety of taxing gifts, inheritances, and bequests”); and Rudick (1945), supra, note 5 at 28 (“it is doubtful whether any statesman today would have the temerity to suggest the complete abolition of death duties”).

8. The same may also be said for progressive income taxes, which have also declined over the past decade. See Bale, supra, note 2 at 1–10.

9. See Sandford, Cedric T. Taxing Inheritance and Capital Gains: Towards a Comprehensive System of Capital Taxation (London: The Institute of Economic Affairs, 1967) at 13–14;Google Scholar and Sandford, Cedric T. Taxing Personal Wealth (London: George Allen & Unwin, 1971) at 73–74.Google Scholar

10. See Rudick (1945), supra, note 5 at 26–27; and Eisenstein, supra, note 7 at 225–27.

11. See Rudick (1945), supra, note 5 at 27–28; and Eisenstein, supra, note 7 at 230–31.

12. Davies, James B. –Does Canada Need Capital Transfer Taxation?— in Thirsk, Wayne R. and Whalley, John eds, Tax Policy Options in the 1980s, Canadian Tax Paper No. 66, (Toronto: Canadian Tax Foundation, 1982) 337 at 338.Google Scholar

13. See Sandford (1971), supra, note 9 at 68 (Table 2.5).

14. Eisenstein, supra, note 7 at 239.

15. Ibid, at 240.

16. Graetz, supra, note 1 at 264–67. See also the figures in Pechman, Joseph A. Federal Tax Policy, 5th ed., (Washington, D.C.: Brookings Institution, 1987) at 370 (Table D–4).Google Scholar

17. See Sandford (1971), supra, note 9 at 68 (Table 2.5); and OECD, supra, note 5 at 27 (Table 0.2).

18. Pechman, supra, note 16 at 370 (Table D–4).

19. OECD, supra, note 5 at 27 (Table 0.2). For a brief overview of the Japanese inheritance tax, see Bird, Richard M. “The Taxation of Personal Wealth in International Perspective,” (1991) 17:3 Canadian Public Policy 322 at 326–27.Google Scholar

20. See, e.g., Thurow, Lester C. Generating Inequality: Mechanisms of Distribution in the U.S. Economy (New York: Basic Books, Inc., (1975) at 197:CrossRefGoogle Scholar “In practice, loopholes have become so large that inheritance taxes have virtually ceased to exist: collections amount to an annual wealth tax of less than 0.2 percent. For all practical purposes, gift and inheritance taxes do not exist in the United States. They do not stop wealth from being transferred from generation to generation.” For an extensive survey and critique of estate tax avoidance techniques in the United States, see Cooper, George A Voluntary Tax? New Perspectives on Sophisticated Estate Tax Avoidance (Washington, D.C.: Brookings Institution, 1979).Google Scholar

21. I ignore for the purposes of this analysis the added issue of whether, as one recent study suggests, transfer taxes actually reduce net tax revenues by encouraging avoidance measures that lower income tax receipts. See Bemheim, B. Douglas “Does the Estate Tax Raise Revenue?” in Summers, Lawrence H. ed., 1 Tax Policy and the Economy (Cambridge, MA: NBER and MIT, 1987) 113 at 132 (estimating (that U.S. estate taxation induced a net loss of federal tax revenues of about $3 billion in 1983).Google Scholar To the extent that these results depend enormously on the specific design of the transfer tax, it is impossible to generalize from this U.S. experience to other transfer tax regimes.

22. See infra, section II.B.1.

23. Eisenstein, supra, note 7 at 240–41. In the United States, for example, less than 2 percent of those who died in 1985 were subject to estate or gift taxes, a figure that was expected to fall even further as a 1981 increase in the exemption amount becomes fully effective. Pechman, supra, note 16 at 238–39. Even the more broadly-based Japanese inheritance tax only fell on 6.9 percent of decedents in 1986. Bird, supra, note 19 at 326.

24. See, e.g., Westfall, David “Revitalizing the Federal Estate and Gift Taxes” (1970) 83 Harv. L. Rev. 986 at 995–1000, 1002–06;Google Scholar and Verbit, Gilbert Paul “Do Estate and Gift Taxes Affect Wealth Distribution?” (1978) 117 Transfer & Estate 598 at 674–77.Google Scholar

25. See, e.g., Gutman, supra, note 1 at 1219–21; and OECD, supra, note 5 at 100–07 and 113.

26. See infra, sections II.B.1.(C)(2) and II.B.2(B)(3).

27. See, e.g., Sandford (1971), supra, note 9 at 156; Sandford et al, supra, note 5 at 4–6, and 20; Bird, ichard M. “Taxing Personal Wealth” (1980) 2 Can. Taxation 35 at 37;Google Scholar and Munzer, supra, note 2 at 382.

28. Sandford (1971), supra, note 9 at 156.

29. See, e.g., Wagner, Richard E. Inheritance and the State: Tax Principles for a Free and Prosperous Commonwealth (Washington, D.C.: American Enterprise Institute for Public Policy Research, 1977) at 23;Google Scholar and Dobris, Joel C. “A Brief for the Abolition of All Transfer Taxes” (1984) 35 Syracuse L. Rev. 1215 at 1217–18.Google Scholar

30. See, e.g., Eisenstein, supra, note 7 at 224–25 and 253.

31. See especially Hartle, Douglas G. Political Economy of Tax Reform: Six Case Studies, Discussion Paper No. 290, (Ottawa: Economic Council of Canada, 1985) at 56–84 Google Scholar (outlining the decline and fall of Canadian wealth transfer taxes in terms of a public choice perspective of political costs and benefits).

32. Organization for Economic Co-operation and Development (OECD), Revenue Statistics of OECD Member Countries, 1965–1990 (Paris: OECD, 1991) at 150 (Table 61).Google Scholar

33. Bossons, supra, note 1 at 54.

34. Brooks, Neil Paying for a Civilized Society: The Need for Fair and Responsible Tax Reform (Ottawa: Canadian Centre for Policy Alternatives, 1990) at 13.Google Scholar

35. See, e.g., Ascher, supra, note 2 at 91–93 (arguing that wealth transfer taxes offer an opportunity to achieve “deficit reduction in a painless and appropriate fashion”). Unfortunately, Ascher takes this argument too seriously, allowing considerations of revenue-production to influence the design of his proposed tax. I return to this issue at infra, section II.B.1.(C)(2).

36. See, e.g., Eisenstein, supra, note 7 at 241; Graetz, supra, note 1 at 270–73; Gutman, supra, note 1 at 1193–96; and Maloney (1988), supra, note 2 at 602, 611.

37. Maloney (1988), supra, note 2 at 611. See also Bale, supra, note 2 at 10.

38. Graetz, supra, note 1 at 272. Similar estimates can be found in Gutman, supra, note 1 at 1194–96. See also the Report of the Royal Commission on Taxation (Carter Commission), (Ottawa: Queen’s Printer, 1966), Vol. 3 at 474 (explaining that taxes on middle and high income earners would have to increase by 7 to 10 percent to raise an equivalent amount of revenue to that raised by the federal gift and estate taxes then in force).

39. See, e.g., Graetz, supra, note 1 at 274–78; and Maloney (1988), supra, note 2 at 611–26. See also infra, section II.B.2(A)(3)(b).

40. See, e.g., Jantscher, Gerald R. “The Aims of Death Taxation,” in Halbach, Edward C. Jr. ed., Death, Taxes and Family Property (St. Paul: West Publishing Co., 1977) 40 at 41 Google Scholar (noting that, although the $4.6 billion raised by U.S. estate and gift taxes in 1975 was “not negligible…the addition of just one percentage point to the full range of federal individual income tax rates would add an even larger sum to income tax receipts, at what presumably would be a minor addition to administrative and compliance costs”)

41. See Graetz, supra, note 1 at 273 (“The principal reason, therefore, to revise the estate tax is to rescue this mechanism for achieving progressivity, and perhaps to rescue progressivity itself, from both shortand long-term threats.”).

42. See, e.g., Shoup, Carl S. Federal Estate and Gift Taxes, (Washington, D.C.: The Brookings Institution, 1966) at 104;Google Scholar Westfall, supra, note 24 at 989; Bird (1971), supra, note 1 at 17–18; Brannon, Gerard M. “Death Taxes in a Structure of Progressive Taxes” (1973) 26 Nat. Tax J. 451–52;Google Scholar Graetz, supra, note 1 at 273; Gutman, supra, note 1 at 1188; Pechman, supra, note 16 at 234; and Maloney (1988), supra, note 2 at 628.

43. Pechman, supra, note 16 at 234.

44. See, e.g., Bird (1971), supra, note 1 at 17 (“Only if the estate motive, the desire to pass wealth on to one’s heirs, is dominant at the margin will death taxes have much economic effect.”).

45. See, e.g., Sandford (1967), supra, note 9 at 25: “unlike income tax, estate duty influences only work and enterprise undertaken from one particular motive. Whatever the motive, income tax exerts its effects.” See also Sandford et al, supra, note 5 at 128: “A death duty (unlike an income tax) does not prevent a man from himself enjoying the full fruits of labour or of risk-taking. Enterprise and effort will only be affected by death duty considerations if the person concerned wishes to save at least a part of the income so acquired for his heirs or to pass his business on to them.”

46. Bird (1971), supra, note 1 at 17. See also Pechman, supra, note 16 at 234–35 (“Income taxes reduce the return from effort and risk taking as income is earned, whereas death taxes are paid only after a lifetime of work and accumulation and are likely to be given less weight by individuals in their work, saving, and investment decisions.”).

47. Maloney (1988), supra, note 2 at 628.

48. Brannon, supra, note 42 at 451. See also Thurow, supra, note 20 at 49; and Jantscher, supra, note 40 at 42.

49. See the discussion of this issue in Krouse, Richard and McPherson, Michael “Capitalism, ‘Property-Owning Democracy,’ and the Welfare State,” in Gurmann, Amy ed., Democracy and the Welfare State (Princeton: Princeton University Press, 1988) 79 at 97.Google Scholar

50. See, e.g., Sandford et al., supra, note 5 at 128; Blinder, Alan S. “Intergenerational Transfers and Life Cycle Consumption” (1976) 66:2 Amer. Econ. Rev. 87 at 92;Google Scholar and Davies, James B. and St—Hilaire, France Reforming Capital Income Taxation in Canada: Efficiency and Distributional Effects of Alternative Options (Ottawa: Minister of Supply and Services, 1987) at 111–15.Google Scholar

51. See, e.g., Sandford et al, supra, note 5 at 128.

52. See, e.g., Sandford (1967), supra, note 9 at 22–24; Bird (1971), supra, note 1 at 17; Ireland, Thomas (R.) “Inheritance Justified: A Comment” (1973) 16 J. Law & Econ. 421;Google Scholar Thurow, supra, note 20 at 141–42; Haslett, supra, note 2 at 144–45; and Ascher, supra, note 2 at 102–10. For contrasting views, emphasizing intergenerational altruism or self-interested exchange with one’s heirs (“strategic bequests”), see Tomes, Nigel “The Family, Inheritance, and the Intergenerational Transmission of Inequality” (1981) 89 J. Pol. Econ. 928;Google Scholar Bernheim, B. Douglas, Schleifer, Andrei and Summers, Lawrence H. “The Strategic Bequest Motive” (1985) 93 J. Pol. Econ. 1045;Google Scholar and Bernheim, B. Douglas “How Strong Are Bequest Motives? Evidence Based on Estimates of the Demand for Life Insurance and Annuities” (1991) 99 J. Pol. Econ. 899.Google Scholar For a useful review of much of this literature, see Davies and St.-Hilaire, supra, note 50 at 105–27.

53. See Sandford (1967), supra, note 9 at 23; and Hurd, Michael D. “Savings of the Elderly and Desired Bequests” (1987) 77 Amer. Econ. Rev. 298.Google Scholar

54. Bernheim, Schleifer and Summers, supra, note 52 at 1069.

55. See Shoup, supra, note 42 at 17–25; Pechman, supra, note 16 at 243–44; and Bernheim, Kotlikoff and Summers, supra, note 52 at 1071.

56. See Thurow, supra, note 20 at 137–42; and Brittain, John A. Inheritance and the Inequality of Material Wealth (Washington, D.C.: The Brookings Institution, 1978) at 59–66.Google Scholar

57. See, e.g., Shoup, supra, note 42 at 89; Sandford (1967), supra, note 9 at 26; Sandford et al., supra, note 5 at 131; Bird (1971), supra, note 1 at 17–18; Jantscher, supra, note 40 at 44–45; Maloney (1988), supra, note 2 at 627;. and Ascher, supra, note 2 at 106.

58. See Jantscher, supra, note 40 at 45–46.

59. See the discussion and criticisms of this standard in Warren, Alvin “Would a Consumption Tax Be Fairer Than an Income Tax?” (1980) 89 Yale L.J. 1081 at 1092.CrossRefGoogle Scholar In one respect, section II.B. can be viewed as an extended critique of this concept of distributive justice as a guide to tax policy.

60. Simons, supra, note 7 at 50.

61. Ibid, at 56–58, 125–47. The same approach was adopted in the ill-fated U.S. income tax of 1894 [Tariff Act of 1894, ch. 349, s. 28, 28 Stat. 553],—declared unconstitutional by the U.S. Supreme Court on other grounds in Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429, on rehearing, 158 U.S. 601 (1895), and was also proposed by the Carter Commission, supra, note 38, Vol. 3, Ch. 17. For an excellent summary and analysis of the Commission’s proposals on the taxation of gifts and bequests, see Jantscher, Gerald R. “Death and Gift Taxation in the United States After the Report of the Royal Commission” (1969) 22 Nat. Tax J. 121.Google Scholar For a more recent recommendation for income tax treatment of gifts and bequests by a contemporary U.S. tax scholar, see Dodge, Joseph M. “Beyond Estate and Gift Tax Reform: Including Gifts and Bequests in Income” (1978) 91 Harv. L. Rev. 1177.CrossRefGoogle Scholar

62. See Simons, supra, note 7 at 128: “the objective of policy must be fairness among persons, not fairness among kinds of receipts (whatever that might be construed to mean).” See also Carter Commission, supra, note 38, Vol. 3 at 465 (“the source of a gain and the expectation and intentions of the recipient of a gain are completely irrelevant”); and McQuaig, supra, note 1 at 349 (observing that the slogan “a buck is a buck is a buck” that was used to describe the view of the Carter Commission meant “that the government wasn’t going to pass judgment on how that buck came to be in the taxpayer’s pocket. What mattered was that it was there and that it gave the taxpayer a certain command over available resources”).

63. Simons, supra, note 7 at 144.

64. Ibid, at 143–47.

65. See, e.g., ibid, at 135–43; Carter Commission, supra, note 38, Vol. 3 at 497–500; Jantscher, supra, note 61 at 122–24; and Dodge, supra, note 61 at 1202–08. (Subsection entitled “Support Obligations” dealing with what members of the family should be included in the taxable unit.)

66. See, e.g., Shoup, supra, note 42 at 100–01, 107–08; Jantscher, Gerald R. “Proposal to Tax Gifts and Bequests as Income to the Recipient,” in Report of the Proceedings of the Twentieth Tax Conference, 1967 (Toronto: Canadian Tax Foundation, 1968) 417 at 421–23;Google Scholar Andrews, William D. “What’s Fair About Death Taxes?” (1973) 26 Nat. Tax J. 465 at 466–67;Google Scholar Report of a Committee Chaired by Professor Meade, J.E. (hereinafter Meade Committee Report), The Structure and Reform of Direct Taxation (London: George Allen & Unwin, 1978) at 317;Google Scholar and Dodge, Joseph M. “Redoing the Estate and Gift Taxes Along Easy-to-Value Lines” (1988) 43 Tax L. Rev. 241 at 248–51.Google Scholar

67. See the excerpts from Kaldor’s 1956 recommendations to the Indian government in Cutt, James “A Net Wealth Tax for Canada?” (1969) 17 Can. Tax J. 298 at 304Google Scholar (“The main argument in equity for the [annual tax on wealth] is that income taken by itself is an inadequate yardstick of taxable capacity as between incomes from work and incomes from property, and also as between the different property owners. The basic reason for this is that the ownership of property in the form of disposable assets endows the property owner with a taxable capacity as such, quite apart from the money income that the property yields.”).

68. See, e.g., Bird (1971), supra, note 1 at 8 (“the possession of wealth, it may be argued, provides advantages of opportunity, flexibility and security…over and above the income enjoyed from the employment of capital; it is therefore in itself an appropriate subject for differential taxation.”). See also Meade Committee Report, supra, note 66 at 40, 317–18.

69. See Bird (1971), supra, note 1 at 8 (mentioning as “important forms of property which do not produce anything recognized as taxable income…owner-occupied houses and consumer durables,…cash and other low-yielding assets,…non-income-earning art objects, etc.,…[and] unrealized capital gains”).

70. Ibid, at 8. See also Gutman, supra, note 1 at 1188–93 (emphasizing also the proliferation of tax preferences in the U.S. federal income tax, and the role of federal estate and gift taxes as “a ‘backstop’ to the income tax by taxing the wealth that taxpayers accumulate through tax-preferred income sources”).

71. See, e.g., Jantscher, supra, note 40 at 48 (“If death taxes are intended to tax wealth once a generation, there is a clear case for either exempting transfers between spouses, but taxing all transfers from parents to children, or taxing transfers between spouses, but subsequently exempting the transfer of the same property to children (because the property had already been taxed once in that generation). Transfers to one's parents should be tax-free, or even occasion a refund of tax, but transfers to grandchildren should be charged at double the rate that applies to transfers to children.”). For transfer tax proposals based on this periodic wealth tax approach, see Vickrey, William Agenda for Progressive Taxation (New York: The Ronald Press Company, 1947), Ch. 8 and Appendix IV;Google Scholar Andrews, supra, note 5; Meade Committee Report, supra, note 66; Cooper, George “Taking Wealth Taxation Seriously” (1979) 34 The Record of the Ass’n of the Bar of the City of New York 24 at 48–53;Google Scholar and Halbach, supra, note 2.

72. These complexities are inherent in any tax that attempts to substitute a single tax at the moment of transfer for a periodic flow of taxes without knowing how long the recipient will retain the property. As Jantscher observes: “Some heirs will cling to their property all of their lives; others will consume their inheritances within a few years.” Jantscher, supra, note 40 at 48. Moreover, some heirs will live for many years before the property is transferred once again, while others will enjoy their inheritance for only a short time before death intervenes and the property is again subject to taxation. Thus, as Jantscher concludes: “Obviously death taxes of different sizes are called for if they are intended to replace annual taxes that would have been imposed during the duration of the heirs' ownership.” Ibid. For an especially complex arrangement to achieve horizontal equity along these lines, see Meade Committee Report, supra, note 66 at 317–49.

73. See, e.g., Mill, John Stuart Principles of Political Economy, ed., Winch, Donald (London: Penguin Books, 1970) at 371–72Google Scholar (concluding that “the feudal family…has long perished, and the unit of society is not now the family or clan, composed of all the reputed descendants of a common ancestor, but the individual; or at most a pair of individuals, with their unemancipated children.”). (Book II, Chapter II, paragraph 3)

74. Bird (1971), supra, note 1 at 8. See also Sandford (1971), supra, note 9 at 137; Jantscher, supra, note 40 at 48; and Dodge, supra, note 66 at 250–51.

75. See. e.g., Shoup, supra, note 42 at 101.

76. See OECD, supra, note 5 at 30–75.

77. See, e.g., Meade Committee Report, supra, note 66 at 317–49.

78. See, e.g., Eisenstein, supra, note 7 at 256; Shoup, supra, note 42 at 100–01; Jantscher, supra, note 66 at 419, and 421; Bird (1971), supra, note 1 at 8–9; Andrews, supra, note 66 at 465; Jantscher, supra, note 40 at 49–51; Dodge, supra, note 61 at 1190; and McQuaig, supra, note 1 at 347.

79. See, e.g., McQuaig, supra, note 1 at 347, (describing material inheritance as “nothing more than a windfall, a lottery-like prize for being born into the right family,” and commenting that “[i]n a reasonable moral scheme of things, we might expect inheritances to be taxed at higher rates than regular income, reflecting our greater respect for those who earn what they receive”. I return to this argument for wealth transfer taxation at infra, section II.B.2(A)(3).

80. See, e.g., the description of this argument in Bird (1971), supra, note 1 at 8–9 (“It has sometimes been urged that a special justification for death taxes lies in the fact that many inheritances contain a substantial windfall component and hence a special ability to pay tax without in any way affecting the actions before or after the lucky, and surprised heir receives his benefaction.”).

81. See the descriptions of this argument in Jantscher, supra, note 66 at 419; Sandford et al., supra, note 5 at 45; and Jantscher, supra, note 40 at 49.

82. See, e.g., Shoup, supra, note 42 at 107; Jantscher, supra, note 66 at 421; Bird (1971), supra, note 1 at 9; Jantscher, supra, note 40 at 49; and OECD, supra, note 5 at 102.

83. First, in terms of utilitarian theory itself, there are undoubtedly exceptions to this presumed pattern of expectations. As Jantscher observes: “We can all think of instances in which a distant relative has a higher expectation of receiving a bequest than a close relative”; furthermore: “A child who receives an unusually large bequest may have a much larger ‘taxable surplus’ than a cousin who received a small bequest.” Jantscher, supra, note 40 at 49–50. See also Ontario Committee on Taxation Report (Toronto: Ontario Printer, 1967), Vol. III at 136; and Sandford et al., supra, note 5 at 45. Second, and more seriously, by assuming a rigid conception of the family as uniformly nuclear, this approach contradicts the principle of family autonomy inspiring the current shift to more pluralist conceptions of the family. See infra, section II.B.2.(B)(3).

84. See supra, note 59.

85. See Jantscher, supra, note 40 at 50 (“the case for graduating the tax according to putative expectations rests on the assumption that these are formed without regard to the tax that will fall on the bequest. This assumption seems highly unrealistic. If bequests to children are taxed heavily and this fact is well known, children presumably form expectations about their inheritances net of the tax that they must pay. That is, even when bequests come as no surprise, the effect of the tax has often been discounted already and the tax is then no more burdensome than it is when the bequest was truly unexpected.”).

86. Dobris, supra, note 29 at 1226.

87. See, e.g., Bird (1971), supra, note 1 who although emphasizing “the social case for wealth taxation” nevertheless distinguishes this justification from traditional ability to pay arguments and consigns the former to the realm of unresolvable “value judgments”. See also Cooper, supra, note 71 at 30 (describing the “social policy” argument for “a capital-directed wealth tax” as “a little more sticky” than traditional equity arguments).

88. See, e.g., Levy, Michael B. “Liberal Equality and Inherited Wealth” (1983) 11 Pol. Theory 545;CrossRefGoogle Scholar Haslett, supra, note 2; Maloney, supra, note 2; Munzer, supra, note 2; and Ascher, supra, note 2.

89. Infra, sections II.B.1.(B)(2) and (3).

90. Infra, sections II.B.1 .(C)(1) and (2).

91. Infra, section II.B.2.(A).

92. Infra, sections II.B.1.(C)(2) and II.B.2.(B)(2).

93. Infra, sections II.B.1.(B)(4) and II.B.2.(A).

94. Infra, section II.B.2.(B)(3).

95. Aristotle, The Politics, trans. Lord, Carnes (Chicago: University of Chicago Press, 1984)CrossRefGoogle Scholar Book IV, Chapter 11 (1295bl3–1296al5) (arguing that since “those who are preeminent in the goods of fortune…neither wish to be ruled nor know how to be….[whereas] those who are excessively needy…are too humble [and] do not know how to rule but only how to be ruled, and then in the fashion of rule of a master,” a regime with a moderately equal distribution of wealth will be most stable and best governed, while a regime characterized by great extremes of wealth “is a city not of free persons but of slaves and masters, the ones consumed by envy, the others by contempt.”).

96. As Eisenstein relates, Jefferson’s image of the ideal United States was “a country in which none was very rich; none very poor; all were producers, all owners and consumers.” Eisenstein, supra, note 7 at 259.

97. The liberal argument appears in Rawls, John A Theory of Justice (Cambridge, MA: Harvard University Press, 1971) at 225–26,Google Scholar and 277 (criticizing “[disparities in the distribution of property and wealth” and advocating progressive inheritance taxes to “encourage the wide dispersal of property which is a necessary condition, it seems, if the fair value of the equal liberties is to be maintained”). Communitarian arguments can be found in Walzer, Michael Spheres of Justice: A Defense of Pluralism and Equality (New York: Basic Books, 1983) at 119–28.Google Scholar

98. See Rudick (1945), supra, note 5 at 27; Eisenstein, supra, note 7 at 226–27; and Chester, Ronald Inheritance, Wealth, and Society (Bloomington: Indiana University Press, 1982) at 52–58.Google Scholar Among the leading figures of this nineteenth century “death tax movement” was Andrew Carnegie, who favoured a progressive transfer tax that should exempt “moderate sums” to dependents, but rise “rapidly as the amounts swell.” See Rudick (1945), supra, note 5 at 27; and Eisenstein, supra, note 7 at 227.

99. See Eisenstein, supra, note 7 at 228–29; and Chester, supra, note 98 at 60.

100. See Eisenstein, supra, note 7 at 235–36.

101. Report of the Ontario Committee on Taxation, supra, note 83, Vol. Ill at 136.

102. See, e.g., Verbit, supra, note 24 at 609 (concluding that since “transfer taxes have not been effective wealth redistributors or deconcentrators…the transfer tax system should be relieved of the burden of wealth redistribution and/or deconcentration and should instead be viewed primarily as a revenue producer”); and Graetz, supra, note 1 at 271 (concluding that because “the estate tax has done very little to dilute the greatest concentrations of wealth” this ‘deconcentration’ aim is a “myth” that, by condoning the “narrowing of the estate tax base…necessarily defeats the contribution of this tax to the progressivity of the federal tax system.”). For a critique of both these revenue-raising and progressivity arguments for wealth transfer taxation, see supra,, section II.A. 1–3. Evidence that wealth transfer taxes may have contributed to reduced wealth inequality in Great Britain over the course of the twentieth century can be found in Atkinson, A.B. and Harrison, A.J. The Distribution of Personal Wealth in Britain (Cambridge: Cambridge University Press, 1978).Google Scholar

103. See, e.g., Rudick (1945), supra, note 5 at 29; Eisenstein, supra, note 7 at 252–55; Shoup, supra, note 42 at 101–03; Bird (1971), supra, note 1 at 10–12; Brannon, supra, note 42 at 451; Jantscher, supra, note 40 at 51–55; Maloney (1988), supra, note 2 at 603–04, and 612–13; and Munzer, supra, note 2 at 403–11.

104. See, e.g., Wagner, supra, note 29 at 35–36; Brittain, supra, note 56 at 3–6; Davies, James B. “On the Size Distribution of Wealth in Canada” (1979) 25 Rev. Income & Wealth 237;CrossRefGoogle Scholar Verbit, Gilbert Paul “Taxing Wealth: Recent Proposals from the United States, France, and the United Kingdom” (1980) 60 Boston U. L. Rev. 1 at 8–9;Google Scholar Haslett, supra, note 2 at 123–24; Munzer, supra, note 2 at 383–88; Davies, James B. “The Distributive Effects of Wealth Taxes” (1991) 17:3 Canadian Public Policy 279;CrossRefGoogle Scholar and Aaron, Henry J. and Munnell, Alicia H. “Reassessing the Role for Wealth Transfer Taxes,” (1992) 45 Nat. Tax J. 121–30.Google Scholar

105. See, e.g., Thurow, supra, note 20 at 129–54; Brittain, supra, note 56; Kotlikoff, Laurence J. and Summers, Lawrence H. “The Role of Intergenerational Transfers in Aggregate Capital Accumulation” (1981) 89 J. Pol. Econ. 706;CrossRefGoogle Scholar Haslett, supra, note 2 at 125–26; Modigliani, Franco “The Role of Intergenerational Transfers and Life Cycle Saving in the Accumulation of Wealth” (1988) 2 J. Econ. Perspectives 15;CrossRefGoogle Scholar Munzer, supra, note 2 at 392–94; Aaron and Munnell, supra, note 104 at 130–32; Davies, James B. “Inheritance and the Distribution of Wealth in Britain and Canada,” Paper Prepared for the International Symposium on Saving and Bequest, (Tokyo: Institute for Telecommunications Policy, 1992);Google Scholar and Wolff, Edward N. “Changing Inequality of Wealth” (1992) 82 Amer. Econ. Rev. 552.Google Scholar

106. Although the omission of pension and social security wealth and measures of human capital overestimates measures of wealth inequality, the omission of the value of trust funds underestimates evidence of wealth inequality. Furthermore, since human capital is inalienable and riskier than physical capital, and since wealth therefore represents an important determinant of economic security above and beyond the income it provides, it is questionable whether human and physical capital should be weighed equally in arriving at measures of overall wealth distribution. See, e.g., Thurow, supra, note 20 at 17–18; Brittain, supra, note 56 at 4, 6–7; Chester, supra, note 98 at 4,78; and Munzer, supra, note 2 at 383.

107. See, e.g., Sandford (1971), supra, note 9 at 28; Brittain, supra, note 56 at 51–72; and Munzer, supra, note 2 at 388.

108. Since many inheritances occur only after the recipients are well into adulthood, it is important to consider the effects over at least two generations to get a good sense of the relationship between inheritance and inequality. Unfortunately, from my brief review of the empirical studies it seems as though most studies are confined to the impact of material inheritance on the immediately following generation. Consequently, it is not surprising that these studies suggest that material inheritance plays a lesser role in the perpetuation of inequality than does the inheritance of genetic and socio-cultural endowments. Regardless, for the purposes of the present argument, it is sufficient to accept the findings of most studies that the relationship between material inheritance and economic inequality in the immediately following generation is at least significant, even if not substantial.

109. Brittain, supra, note 56 at 3.

110. Aaron and Munnell, supra, note 104, Table 4. These figures are based on a narrow definition of wealth that includes the replacement value of tangible assets, the market value of equities, the book value of bonds, and the cash surrender value of trusts and pensions, but excludes the full value of trusts and pensions and the present discounted value of social insurance benefits. However, even according to the broadest definition of wealth, the shares of the top 20 percent, 1 percent and 0.5 percent of households are 67.5 percent, 21 percent and 16 percent respectively, while the shares of the lowest 40 percent and the bottom 20 percent increase only slightly to 3.4 percent and 0.2 percent

111. Ibid.

112. Ibid. Figure 3. This evidence is based on estate tax returns and has yet to be confirmed by household survey data. For an analysis of factors likely to have caused increased U.S. wealth inequality in the 1980s, see Wolff, supra, note 105.

113. Davies, supra, note 105, Table 3. These estimates have been challenged on the grounds that they fail to adequately portray the extreme upper tail of the wealth distribution, particularly by underreporting the value of stock ownership. Correcting for these defects, Davies estimates that the share of wealth held by the top 1 percent is likely more in the range of 23–27 percent. Ibid, at 16.

114. See Atkinson, Anthony B., Gordon, James P.F and Harrison, Alan “Trends in the Shares of Top Wealth Holders in Great Britain, 1923–1981” (1981) 51 Oxford Bulletin of Economics and Statistics 315.Google Scholar

115. See Kessler and Pestieau, supra, note 1 at 316 (Table 7).

116. See Bird (1971), supra, note 1 at 11; and Simons, supra, note 7 at 18–19.

117. See, e.g., Hare, R.M. “Justice and Equality,” in Arthur, John and Shaw, William H. eds, Justice and Ecortomic Distribution, (Englewood Cliffs, NJ: Prentice-Hall, 1978) 116 at 125;Google Scholar and Haslett, supra, note 2 at 135.

118. Mill, supra, note 73 at 379 (“it must be apparent to every one, that the difference to the happiness of the possessor between a moderate independence and five times as much, is insignificant when weighed against the enjoyment that might be given, and the permanent benefits diffused, by some other disposal of the four-fifths.”). Book II, Chapter II, paragraph 4.

119. See Thurow, supra, note 20 at 38–39.

120. The term “a permanent bequeathable property right” is derived from Robert Nozick’s theory of private property rights. See Nozick, Robert Anarchy, State, and Utopia (New York: Basic Books, Inc., 1974) at 178.Google Scholar

121. See, e.g., Hare, supra, note 117 at 125. For an excellent exposition of this tension in utilitarian theories of property rights, see Ryan, Alan Property and Political Theory (Oxford: Basil Blackwell, 1984) at 91–117.Google Scholar

122. Rawls, supra, note 97 at 27.

123. See Sandel, Michael J. Liberalism and the Limits of Justice (Cambridge: Cambridge University Press, 1982) at 165–68Google Scholar (arguing persuasively that the former failure to take seriously the distinction between persons is merely symptomatic of this latter failure to take seriously the qualitative distinctions of worth between different orders of desires—a failure rooted in an impoverished account of the good shared by Rawls– own theory of justice as fairness).

124. See, e.g., Thurow, supra, note 20 at 35–36.

125. See, e.g. Hayek, Friedrich A. The Constitution of Liberty (Chicago: University of Chicago Press, 1960) at 93;Google Scholar Tullock, Gordon “Inheritance Justified” (1971) 14 J. Law & Econ. 465 at 472;CrossRefGoogle Scholar Wagner, Richard E. Death and Taxes: Some Perspectives on Inheritance, Inequality, and Progressive Taxation (Washington, D.C.: American Enterprise institute for Public Policy Research, 1973) at 48–49;Google Scholar Wagner, 'supra, note 29 at 19–20, and 83; and Ward, David A. “The Case Against Capital Taxes” (1980) 2 Can. Taxation 31.Google Scholar

126. See, e.g., Bird (1971), supra, note 1 at 11; and Walzer, supra, note 97 at 121.

127. See Mill, supra, note 73 at 379 (Book II, Chapter II, paragraph 4); and the Ontario Committee on Taxation Report, supra, note 83, Vol. III at 136. See also Rawls, supra, note 97 at 225–26, 277; and Walzer, supra, note 97 at 127.

128. See Walzer, supra, note 97 at 121 (arguing that concentrated wealth “also has political effects…in the market itself and in its firms and enterprises”).

129. See, e.g., Munzer, supra, note 2 at 248, and 397.

130. See, e.g., Marx, Karl Wage Labour and Capital, in Marx, Karl and Engels, Frederick Selected Works in One Volume, (New York: International Publishers, 1968) at 64–94.Google Scholar See also the useful analysis of Marx and Hegel in Munzer, supra, note 2 at 148–87.

131. Smith, Adam The Wealth of Nations (Chicago: University of Chicago Press, 1976) at 74–75 Google Scholar (observing that: “A landlord, a farmer, a master manufacturer, or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year without employment”).

132. See, e.g., Hayek, supra, note 125; Friedman, Milton Capitalism and Freedom (Chicago: University of Chicago Press, 1962);Google Scholar and Nozick, supra, note 120.

133. Weber, Max “Freedom and Coercion,” in Max Weber on Law in Economy and Society, 20th Century Legal Philosophy Series, Vol. 6 (Cambridge, MA: Harvard University Press, 1954) 188 at 188–91Google Scholar. See also Scanlon, Thomas M. “Liberty, Contract and Contribution” in Dworkin, G., Bermant, G. and Brown, P.G. eds, Markets and Morals (Washington, D.C.: Hemisphere Publishing, 1977) at 61.Google Scholar

134. See Waldron, Jeremy The Right to Private Property (Oxford: Clarendon Press, 1988) at 438.Google Scholar

135. More detailed design issues are discussed in Andrews, supra, note 5; Alexander, John H. “Federal Estate and Gift Taxation: The Major Issues Presented in the American Law Institute Project” (1967) 22 Tax L. Rev. 635;Google Scholar Ontario Committee on Taxation Report, supra, note 83, Vol. III at 143–44, and 147–208; Jantscher, supra, note 61; Goodman, Wolfe D. The New Provincial Succession Duty System: An Examination of the Succession Duty Acts of the Atlantic Provinces, Manitoba and Saskatchewan, Canadian Tax Paper No.56, (Toronto: Canadian Tax Foundation, 1972);Google Scholar Sandford et al., supra, note 5; The Advisory Committee on Succession Duties (Langford Committee), Report, (February 23, 1973); Meade Committee Report, supra, note 66 at 316–49; Gutman, supra, note 1; Dodge, supra, note 66; Halbach, supra, note 2; and Ascher, supra, note 2.

136. See, e.g, Sandford et al., supra, note 5 at 11–14; and OECD, supra, note 5 at 80–81. For this purpose, it is the legal incidence and structure of the tax, not its ultimate incidence that matters. Hence, provided that the tax is based on the amount received by each beneficiary, it does not matter that the tax may actually be paid by donors or their estates. Nor is this design principle violated if for administrative reasons legal obligations to withhold taxes are imposed on donors, executors or trustees.

137. See, e.g., Sandford et al, supra, note 5 at 14–19 and 27–31. While most OECD countries levy taxes on amounts received by beneficiaries, few aggregate all gifts and inheritances into a common base, and only Ireland levies tax on the basis of gifts and inheritances received from all donors as opposed to receipts from each individual donor. See OECD, supra, note 5 at 81 and 94–100.

138. See Eisenstein, supra, note 7 at 252–55; Sandford et al., supra, note 5 at 53; Haslett, supra, note 2 at 152–53; Munzer, supra, note 2 at 406; and Ascher, supra, note 2 at 101–02, 132–35.

139. See Eisenstein, supra, note 7 at 254 (commenting on Franklin D. Roosevelt’s proposal to exempt a “reasonable inheritance” with the admonition that: “a ‘reasonable inheritance’ does not carry the same arithmetical connotations to everybody. The most reasonable minds will quarrel over what is reasonable”). While the notion of a “moderate amount” is similarly indeterminate, I believe that it nevertheless conveys a more precise meaning than the idea of a “reasonable” amount.

140. For example, if mean household wealth is $250,000, this amount could be receivable free of tax. For a demonstration of how such an exemption might operate under a lifetime accessions tax, see Sandford et al., supra, note 5 at 27–31.

141. This suggestion closely follows a similar proposal in Haslett, supra, note 2 at 153.

142. Ascher, supra, note 2 at 132.

143. Haslett, supra, note 2 at 153.

144. See Eisenstein, supra, note 7 at 255 (“A policy of levelling is rooted in the tacit premise that if an estate exceeds a certain amount, whatever that amount may be, the excess should be taken away. It logically follows that as the excess becomes larger, the progression should become sharper.”); Ontario Committee on Taxation Report, supra, note 83, Vol. III at 186 (“only a progressive tax would help to prevent undue concentrations of wealth from being transmitted by inheritance without at the same time being unduly severe to those of modest fortune”); and Munzer, supra, note 2 at 406 (advocating “steeply progressive rates”).

145. See, e.g., Sandford et al, supra, note 5 at 13–14; and OECD, supra, note 5 at 81. For the purpose of this argument, it does not matter whether many donors would actually change the pattern of their gifts and bequests in order to obtain a tax saving, only that some marginal effect is created to further the general objective of the tax.

146. For a critical exposition of the idea of simple equality, see Walzer, supra, note 97 at 18.

147. The former issue of difference and autonomy is considered at infra, section II.B.2.

148. See, e.g., Hayek, supra, note 125 at 91; Boston, Michael J. “An Economist’s Perspective on Estate Taxation,” in Halbach, Edward C. Jr. ed., Death, Taxes and Family Property (St. Paul: West Publishing, 1977) 56 at 62–63;Google Scholar and Wagner, supra, note 29 at 16. For two recent responses to this argument, see Maloney (1988), supra, note 2 at 620–22; and Munzer, supra, note 2 at 414.

149. See, e.g., Wagner, supra, note 125 at 40–41; Wagner, supra, note 29 at 69; and Ward, supra, note 125 at 34. Detailed considerations of this argument can be found in Shoup, supra, note 42 at 94-97; Sandford (1967), supra, note 9 at 28–42; Sandford (1971), supra, note 9 at 90–126; Bird (1971), supra, note 1 at 20–21; Sandford et al., supra, note 5 at 134–36; Graetz, supra, note 1 at 284–85; and Maloney (1988), supra, note 2 at 630–38.

150. See, e.g., Tullock, supra, note 125 at 471; Wagner, supra, note 125 at 23–25; Boskin, supra, note 148 at 60–62; Wagner, supra, note 29 at 14–19; and Wagner, Richard E. “Sense versus Sensibility in the Taxation of Personal Wealth” (1980) 2 Can. Taxation 23 at 26–27.Google Scholar For opposing arguments, see Shoup, supra, note 42 at 86–91; Sandford (1967), supra, note 9 at 22–27; Bird (1971), supra, note 1 at 16–18; Sandford et al., supra, note 5 at 127–33; Jantscher, supra, note 40 at 41–46; Haslett, supra, note 2 at 144–45; Maloney (1988), supra, note 2 at 627–29; Munzer, supra, note 2 at 414–16; and Ascher, supra, note 2 at 100–10.

151. See, e.g., Hayek, supra, note 125 at 90–91; Sandford (1967), supra, note 9 at 27; Smith, Dan Throop “A U.S. View of a Wealth Tax,” in Report of the Proceedings of the Twenty-Third Tax Conference, 1971 (Toronto: Canadian Tax Foundation, 1972) 24 at 25–27;Google Scholar Boskin, supra, note 148 at 64; Ward, supra, note 125 at 34; and Levy, supra, note 88 at 551. Diverse responses appear in Shoup, supra, note 42 at 91–93; Bird (1971), supra, note 1 at 18–19; Graetz, supra, note 1 at 278–83; Haslett, supra, note 2 at 145–48; Maloney (1988), supra, note 2 at 627–30; and Ascher, supra, note 2 at 110–11.

152. See, e.g., Hayek, supra, note 125 at 88–91; Friedman, supra, note 132 at 164; Wagner, supra, note 125 at 48; Boskin, supra, note 148 at 62–63; and Wagner, supra, note 29 at 16, 83, and 85.

153. These are addressed at infra, section II.B.2.(B).

154. For Friedrich Hayek and Richard Wagner, these incentives threaten a return to a semi-feudal state, as “men…look for other ways of providing for their children, such as placing them in positions which might bring them the income and prestige mat a fortune would have done,” and as this “increased inheritance of occupational positions” retards social mobility and makes “caste and status…loom larger than they do now in the social order.” Hayek, supra, note 125 at 91; Wagner, supra, note 29 at 85. For Michael Boskin, on the other hand, the concern is strictly economic and explicitly utilitarian: “these taxes create an incentive for wealthy individuals to give their heirs human instead of nonhuman capital, creating inefficiency by decreasing the total utility of a given level of transfer.” Boskin, supra, note 148 at 63.

155. Hayek, supra, note 125 at 91.

156. See, e.g., Brittain, supra, note 105 at 7, n. 19.

157. Although, even here, it is possible to reduce this bias by also taxing certain transfers of human capital, such as tuition payments for students above a stipulated age of majority. Indeed, some such transfers are arguably already taxable, for example private elementary and secondary education, for which parents must pay additional fees above and beyond public school taxes. Furthermore, as Munzer argues, the extent to which capital can be transferred in human form may be limited by the recipient’s “capacity to absorb and profit from education.” Munzer, supra, note 2 at 414.

158. On a broader utilitarian analysis, one would have to consider the aggregate utility associated with the taxation and redistribution of wealth, and with the transfer of human capita! to the frustrated heir.

159. Supra,, section II.B.1.(B)O).

160. Infra, section II.B.2.(A)(2).

161. See, e.g., Wagner, supra, note 125 at 40–41; Wagner, supra, note 29 at 69; and Ward, supra, note 125 at 34.

162. Maloney (1988), supra, note 2 at 630. See also Sandford (1967), supra, note 9 at 32, and Sandford et al., supra, note 5 at 135 (emphasizing the loss of family control and the inequity of forced liquidation in an imperfect market where sudden sales are apt to yield unfavourable terms);and Bird (1971), supra, note 1 at 20 (noting the “hardship” caused by “realization under compulsion” and “uncertainty as to the amount of tax that will be due”).

163. See, e.g., Sandford (1967), supra, note 9 at 30–32; and Sandford (1971), supra, note 9 at 148: “heavy death duties carry the danger of diminished efficiency through a reduction in the scale of production.”

164. See, e.g., Sandford (1967), supra, note 9 at 35–37 (mentioning also gifts and partial sale as alternative anticipatory measures to avoid the potential liquidity problems of transfer tax liability); Bird (1971), supra, note 1 at 20 (emphasizing inducements to merge and hold liquid assets, and the disincentive to invest as owners get older); Wagner, supra, note 125 at 40, and Wagner, supra, note 29 at 69 (citing figures on tax-induced mergers of closely-held enterprises with larger corporations); and Maloney (1988), supra, note 2 at 630 (commenting that “the prospect of forced liquidation at death may reduce investment in small businesses which would have unfortunate implications for the economic growth of the country”).

165. I return to this issue at infra, sections II.B.2.(B)(2) and (3).

166. See the analysis and studies cited in Sandford (1967), supra, note 9 at 33–35; Bird (1971), supra, note 1 at 20–21; Sandford et al., supra, note 5 at 134–46; Graetz, supra, note 1 at 284–85; and Maloney (1988), supra, note 2 at 631.

167. Graetz, supra, note 1 at 285. See, e.g., Ontario Committee on Taxation Report, supra, note 83, Vol. HI at 138 (reporting that of all estates subject to succession duty in 1963,65 percent of assets were liquid—a percentage that increased to 81.4 percent among estates valued at $1,000,000 or more).

168. Sandford (1967), supra, note 9 at 33.

169. See, e.g., Sandford (1967), supra, note 9 at 38–40; Bird (1971), supra, note 1 at 20; Sandford et al., supra, note 5 at 137–45; and Maloney (1988), supra, note 2 at 632.

170. See, e.g., Sandford (1967), supra, note 9 at 40–42; Sandford (1971), supra, note 9 at 146–49; Bird (1971), supra, note 1 at 20; and Maloney (1988), supra, note 2 at 630–33.

171. Maloney (1988), supra, note 2 at 632. See also Sandford (1967), supra, note 9 at 40; and Bird (1971), supra, note 1 at 20.

172. See Sandford (1971), supra, note 9 at 146–47; and Maloney (1988), supra, note 2 at 633.

173. This is not to suggest that some other principle, as yet unexpressed, cannot justify preferential tax treatment for family enterprises. See infra, sections I1.B.2.(B)(2) and (3).

174. See, e.g., Sandford (1971), supra, note 9 at 151; Bird (1971), supra, note 1 at 20; Gutman, supra, note 1 at 1259–71; and Maloney (1988), supra, note 2 at 631.

175. See, e.g., Sandford (1967), supra, note 9 at 37–40.

176. Meade Committee Report, supra, note 66 at 359–60.

177. But see infra, sections 1I.B.2.(B)(2) and (3).

178. See supra,, section II.A.3.

179. Bird (1971), supra, note 1 at 18: “the quantitative significance of all these effects is close to nil.”

180. See supra,, section II.A.3.

181. See, e.g., Shoup, supra, note 42 at 89; Sandford (1967), supra, note 9 at 26; Bird (1971), supra, note 1 at 17–18; Jantscher, supra, note 40 at 44–45; Maloney (1988), supra, note 2 at 627; and Ascher, supra, note 2 at 106.

182. See, e.g., Jantscher, supra, note 40 at 53: “Death taxes receive high marks for being less burdensome than alternative instruments of redistribution, principally the income tax and a hypothetical wealth tax.”

183. See, e.g., Sandford (1971), supra, note 9 at 13: “no other form of capital tax can achieve the same effect with less antagonism and less economic disturbance.”

184. See, e.g., Ontario Committee on Taxation Report, supra, note 83, Vol. Ill at 187. See also Munzer, supra, note 2 at 406–11; and Ascher, supra, note 2 at 109. Since a subsequent section of this paper argues that, above the lifetime threshold, accessions should be taxed more heavily than ordinary income, I assume here that the top marginal income tax rate is less than 50 percent.

185. This is nothing more than a restatement of the traditional microeconomic insight that the marginal propensity to save increases with income and wealth.

186. See, e.g., Hayek, supra, note 125 at 90–91; Sandford (1967), supra, note 9 at 27; Smith, supra, note 151 at 25–27; Boskin. supra, note 148 at 64; Ward, supra, note 125 at 34; and Levy, supra, note 88 at 551.

187. See, e.g., Hayek, supra, note 125 at 90–91 (defending private inheritance as an “essential…means to preserve the dispersal in the control of capital and as an inducement for its accumulation”).

188. See, e.g., Levy, supra, note 88 at 551 (observing that diminished savings undermines “the welfare and opportunity of future generations”); and Boskin, supra, note 148 at 64 (explaining that “a decrease in saving and capital accumulation will decrease the capital-labour ratio in the economy” thereby increasing the return to capital and decreasing “the productivity of labour and wage rates compared to what they would have been otherwise”).

189. See, e.g., Sandford (1967), supra, note 9 at 27 (warning that transfer tax revenues “cannot be used for current expenditure without being inflationary”); and Levy, supra, note 88 at 551 (rejecting statecontrolled accumulation on the grounds that “capital would become concentrated in ways that might be detrimental to liberty”). See also Friedman, supra, note 132 at 7–21 (emphasizing the relation between economic and political freedom).

190. See, e.g., Graetz, supra, note 1 at 279.

191. See, e.g., Graetz, supra, note 1 at 279; and Maloney (1988), supra, note 2 at 627.

192. See Graetz, supra, note 1 at 279, n. 121.

193. Summers, Lawrence H., “How Best to Give Tax Incentives to Saving and Investment?” Testimony to the Senate Finance Committee, (September 29, 1989) at 4 (Figure 2).Google Scholar

194. Ibid, at 2–5.

195. See, e.g., Sandford (1967), supra, note 9 at 27; Sandford (1971), supra, note 9 at 137; Bird (1971), supra, note 1 at 19; Graetz, supra, note 1 at 282–83; Maloney (1988), supra, note 2 at 629; and Ascher, supra, note 2 at 91–92, and 110–11. This approach to the use of transfer tax revenues was suggested almost 150 years ago by John Stuart Mill and was reiterated by Franklin Roosevelt in his 1935 Message to Congress. See Mill, supra, note 73 at 174 (Book V, Ch. 2, para 7) (observing that “the argument [that inheritance taxes will reduce capital accumulation] cannot apply to any country which has a national debt, and devotes any portion of revenue to paying it off; since the produce of the tax, thus applied, still remains capital, and is merely transferred from the tax-payer to the fundholder”); and Verbit, supra, note 24 at 680 (citing Roosevelt’s statement that “the proceeds of this tax should be specifically segregated and applied, as they accrue, to the reduction of the national debt. By so doing, we shall progressively lighten the tax burden of the average taxpayer, and, incidentally, assist in our approach to a balanced budget”).

196. Okun, Arthur M., Equality and Efficiency: The Big Tradeoff (Washington, D.C.: The Brookings Institution, 1975,) at 88.Google Scholar

197. See, e.g., Simons, supra, note 7 at 24 (“To stress obligations to our children’s children is often a means of diverting attention from patent obligations to our contemporaries”).

198. Unger, Roberto Mangabeira, False Necessity: Anti–Necessitarian Social Theory in the Service of Radical Democracy (Cambridge: Cambridge University Press, 1987).Google Scholar

199. Meade, J.E., Efficiency, Equality, and the Ownership of Property, (Cambridge, MA: Harvard University Press, 1965) at 40–65.Google Scholar

200. Ibid, at 53–54, 59. See also Okun, supra, note 196 at 99; and Summers, supra, note 193.

201. Meade, supra, note 199 at 40,59.

202. See, e.g., Unger, supra, note 198 at 491–502.

203. See, e.g., Meade, supra, note 199 at 40–41; and Krouse and McPherson, supra, note 49 at 91.

204. Rolph, Earl and Break, George, Public Finance (New York: Ronald Press, 1961)Google Scholar cited in Bird (1971), supra, note 1 at 19.

205. Aristotle, , Nicomachean Ethics, trans. Terence Irwin, (Indianapolis: Hackett, 1985),Google Scholar Bk. IV, Ch. 1.

206. See Walzer, supra, note 97 at 123–28.

207. I return to this issue at infra, section II.B.2.(C)(2).

208. See, e.g., Munzer, supra, note 2 at 381. Consider birthday presents and the exchange of gifts during religious and secular holidays.

209. See, e.g., Walzer, supra, note 97 at 123: “If I can shape my identity through my possessions, then I can do so through my dispossessions.”

210. See, e.g., Wagner, supra, note 125 at 27–28; and Wagner, supra, note 29 at 84 (defending the institution of private inheritance on the grounds that it “makes possible the establishment of private sources of wealth…to compete with public wealth in supporting a variety of artistic, cultural, educational, philanthropic, and scientific activities,” thereby promoting the diversity of views that is essential to a free society “by preventing monopoly control over the financing of such spheres of life”). See also Friedman, supra, note 132 at 17 (emphasizing “a role of inequality of wealth in preserving political freedom that is seldom noted—the role of the patron”). As criticisms of strict prohibitions against public philanthropy, these comments are unimpeachable. As arguments for unlimited private inheritance, however, they are vulnerable to two rejoinders: first, in each case, the alleged arguments for inheritance and inequality are really only arguments against cultural monopolization in the hands of the state, not against transfer taxation to ensure moderate equality in private holdings of wealth; second, as the sections on democracy and autonomy argued, far from threatening freedom and diversity, the promotion of moderate equality through wealth transfer taxation is likely to ensure even more political freedom and greater cultural diversity, since those with minority opinions need not depend on the uncertain support of a few wealthy patrons (or foundations) to advance their views.

211. See, e.g., Collie, Marvin K., “Estate and Gift Tax Revision” (1973) 26 Nat. Tax J. 441 at 448Google Scholar (endorsing the idea of a “partnership” between government and private philanthropy); and Mill, supra, note 73 at 380, n. 3 (commending the “[m]unificent bequests and donations for public purposes, whether charitable or educational, [which] form a striking feature in the modern history of the United States, and especially of New England”) (Book II, Chapter II, paragraph 4, footnote). These solidaristic initiatives can take many forms, from donations for First or Third World food relief, to individual payment for the medical treatment of a friend or community member, to community contributions to rebuild a home destroyed by fire or natural disaster. Furthermore, contributions may be made directly to the recipient or indirectly through a charitable or self-protection organization.

212. Walzer, supra, note 97 at 128.

213. See, e.g., ibid, at 128 (concluding that, although the benefits of donative transfers require us “to respect those men and women who give their money away to persons they love or to causes to which they are committed,” this practice must be confined to its proper “sphere”, and cannot be allowed to undermine the egalitarian exigencies of political democracy and individual autonomy).

214. See generally Unger, supra, note 198.

215. Supra, section II.B.l.(B)(4).

216. See, e.g., Rudick (1945), supra, note 5 at 41–42; and Gutman, supra, note 1 at 1244–49. Such an annual exclusion (currently amounting to $10,000) is contained in the U.S. Gift Tax, I.R.C. s. 2503(b). For similar proposals, associated with widely differing tax bases, see Carter Commission Report, supra, note 38, Vol. 3 at 498–99 ($250 annual exclusion; income tax base); Andrews, supra, note 5 at 592 ($1,500 annual exclusion; lifetime accessions tax base); Sandford et al., supra, note 5 at 53–56 (£250 exclusion; lifetime accessions tax base); Halbach, supra, note 2 at 235–36 ($5,000 annual exclusion; lifetime accessions base); and Ascher, supra, note 2 at 143 ($5,000 annual exclusion; estate tax base). Although the notion of a “modest annual exclusion” is as vague as or perhaps more vague than the concept of a “moderate exemption,” $ 10,000 strikes me as unnecessarily excessive; $ 1,000 seems adequate to serve the virtues of individual generosity, particularly where a lifetime exemption also exists to exclude more substantial transfers. Presumably this amount would have to be indexed for inflation.

217. See, e.g., Rudick (1945), supra, note 5 at 42; Sandford el al., supra, note 5 at 55; Gutman, supra, note 1 at 1248; and Ascher, supra, note 2 at 143.

218. See, e.g., Sandford et al., supra, note 5 at 56–58.

219. See, e.g., Levy, supra, note 88 at 559 (recommending “tax exemptions for handicapped heirs”); and Ascher, supra, note 2 at 96–97, 130–31 (proposing a specific exemption for “disabled lineal descendants”). Unfortunately, these proposals have a disturbing tendency to limit the scope of charitable expression to the confines of the traditional nuclear family. If the purpose of the exemption is to allow tax free acts of generosity, why should it matter whether the disabled recipient is a “lineal descendant” or the child of a friend, a member of one’s community, or a foster child whom one has never met?

220. See, e.g., Sandford et al., supra, note 5 at 59–60; and Ascher, supra, note 2 at 135–36.

221. In this respect, see especially McQuaig, supra, note 1 at 44–58 (detailing the extensive use of nominally charitable purpose trusts primarily for private tax avoidance purposes).

222. See, e.g., Westfall, supra, note 24 at 1002–06 (advocating restriction or termination of the U.S. Gift and Estate tax charitable deduction in order to increase revenue); and Ascher, supra, note 2 at 135–36 (limiting the exemption to “20% of a decedent’s estate” in order to protect transfer tax revenues, since “[a]lmost every testator would be able to find at least one charity he or she preferred to the federal government”).

223. See, e.g., Collie, supra, note 211 at 448 (emphasizing the role of charitable transfers both in widening the distribution of wealth and as a “substitute for [government] revenues otherwise needed for (charitable) purposes”).“Every deductible dollar paid to charity must be devoted to public purposes and, in many instances, will substitute for Federal revenues otherwise needed for these purposes.”

224. See, e.g., Nozick, supra, note 120 at 168 (“redistribution is a serious matter indeed, involving, as it does, the violation of people’s rights”). See also Ward, supra, note 125 at 31 (“All taxation may be defined as the compulsory seizure of privately-owned property or money by the State”); Wagner, supra, note 150 at 28 (“Inheritance is an aspect of private property…. The taxation of inheritance therefore represents the socialization of property”); and Epstein, Richard A., Takings: Private Property and the Power of Eminent Domain (Cambridge, MA: Harvard University Press, 1985) at 304 Google Scholar (“there is no principled distinction between the right of property and the right of succession”).

225. See, e.g., Nozick, supra, note 120 at ix: “Individuals have rights, and there are things no person or group may do to them (without violating their rights).”

226. See, e.g., Hayek, supra, note 125 at 87; and Friedman, supra, note 132 at 174: “I find it hard, as a liberal, to see any justification for graduated taxation solely to redistribute income. This seems a clear case of using coercion to take from some in order to give to others and thus to conflict head-on with individual freedom.”

227. Galston, William A., Justice and the Human Good (Chicago: University of Chicago Press, 1980) at x.Google Scholar

228. Wagner, supra, note 29 at 27–28 (adding that: “To say that one must participate in a collective choice over the distribution of rewards is to commit a holistic fallacy. It treats the pattern of distribution as something that must be agreed to and chosen by all for all”).

229. Nozick, supra, note 120 at 153–64. See also Hayek, supra note 125 at 87 (objecting to “all attempts to impress upon society a deliberate[ly chosen] pattern of distribution, whether it be an order of equality or of inequality”).

230. See Nozick, supra, note 120 at 150–53 (explaining his “entitlement theory” of distributive justice as the articulation of three elements: (1) a principle of justice in acquisition, describing “how unheld things may come to be held,… the things that may come to be held by these processes, the extent of what comes to be held by a particular process, and so on”; (2) a principle of justice in transfer, describing the “processes [by which] a person [may] transfer holdings to another [and by which] a person [may] acquire a holding from another who holds it,” including “general descriptions of voluntary exchange, and gift and (on the other hand) fraud, as well as reference to particular conventional details fixed upon in a given society”; and (3) a principle of just rectification that attempts to correct for violations of the first two principles by formulating “its best estimate of subjunctive information about what would have occurred (or a probability distribution over what might have occurred, using the expected value) if the injustice has not taken place.”).

231. Bird (1971), supra, note 1 at 14; and Bird, supra, note 27 at 36.

232. See, e.g., Bird (1971), supra, note 1 at 14–15; and Maloney (1988), supra, note 2 at 618–20 (arguing, among other things, that “[t]he conditions upon which income may be kept and wealth held are determined by a free and democratic government, elected by the populace who agree to abide by its rules. The individual taxpayer, informed of the rules of the game, chooses to earn or hold property on this basis. Quite simply there is no coercion.... [T]he owners of property do not earn, inherit or hold property except at the behest of the state which provides laws concerning private ownership, intestacy, contract and the institutions to enforce them. The ownership of property does not and cannot exist without state recognition and enforcement.”). An excellent articulation of this position appears in Mill, supra, note 73 at 350: “[T]he Distribution of wealth…is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. They can place them at the disposal of whomsoever they please, and on whatever terms. Further, in the social state, in every state except total solitude, any disposal whatever of them can only take place by the consent of society, or rather of those who dispose of its active force. Even what a person has produced by his individual toil, unaided by any one, he cannot keep, unless by the permission of society. Not only can society take it from him, but individuals could and would take it from him, if society only remained passive; if it did not either interfere en masse, or employ and pay people for the purpose of preventing him from being disturbed in the possession. The distribution of wealth, therefore, depends on the laws and customs of society. The rules by which it is determined are what the opinions and feelings of the ruling portion of the community make them, and are very different in different ages and countries; and might be still more different, if mankind so chose.”(Book II, Chapter I, paragraph 1)

233. See, e.g., Bird (1971), supra, note 1 at 15 (“These views simply cannot be reconciled except through the cumbersome mechanism of the political process—which is, as has been well said, the only game in town!”); and Maloney (1988), supra, note 2 at 620 (“In the final analysis, most people would agree that there should be some restriction or state regulation over the transmission of excess wealth”).

234. Mill, supra, note 73 at 350.(Book II, Chapter I, para. 1)

235. See Blackstone, Commentaries 10–11, cited in Ascher, supra, note 2 at 77 (arguing that inheritance is “no natural, but merely a civil, right…[f]or, naturally speaking, the instant a man ceases to be, he ceases to have any dominion”); Magoun v. Illinois Trust and Savings Bank et al, 170 U.S. 283, 288 (1898) (“[t]he right to take property by devise or descent is the creature of the law, and not a natural right,—a privilege,—and therefore the authority which confers it may impose conditions on it.”); and Irving Trust Co. et al. v. Day, 314 U.S. 556, 562 (1942) (“Rights of succession to the property of a deceased, whether by will or by intestacy, are of statutory creation, and the dead hand rules succession only by sufferance.”).

236. Ascher, supra, note 2 at 78. For extensive discussions of this modified positivism, see Chester, supra, note 98 at 11–58; and Ascher, supra, note 2 at 76–85.

237. See, e.g., Levy, supra, note 88 at 562, n. 17 (avoiding the “more complex” issue of lifetime gifts “since it limits the absolute property rights of the living“).

238. See, e.g., Meade Committee Report, supra, note 66 at 54–55 (criticizing the then U.K estate tax, which excluded lifetime gifts, as “farcical” since: “Any rich property owner, in the absence of a similar tax on gifts inter vivos, can avoid any death–duty obstacle to the concentration of his own wealth into the possession of a single wealthy heir by transferring the greater part of his property as a gift during his life time.”).

239. See, e.g., Cooper, supra, note 71; and James and Nobes, supra, note 1 at 239 (describing the current U.K. transfer tax, which excludes all gifts made more than 7 years before death, as “largely voluntary and paid by those who are either over optimistic about the timing of their demise or who consider leaving money to their relatives worse than leaving it to the government!”).

240. Cooper, supra, note 71 at 79.

241. See, e.g., Ward, supra, note 125 at 34 (describing death taxes as “a tax on incompetence”).

242. Cooper, supra, note 71 at 79.

243. Mill, supra, note 73 at 371 (Book n, Chapter II, paragraph 3) (arguing that “although the right of bequest, or gift after death, forms part of the idea of private property, the right of inheritance, as distinguished from bequest, does not.”).

224. Munzer, supra, note 2 at 405, n. 35.

245. Supra, note 230.

246. See, e.g., Mill, supra, note 73 at 358–59 (observing that “[t]he social arrangements of modern Europe commenced from a distribution of property which was the result, not of just partition, or acquisition by industry, but of conquest and violence: and notwithstanding what industry has been doing for many centuries to modify the work of force, the system still retains many and large traces of its origin. The laws of property have never yet conformed to the principles on which the justification of private property rests.”(Book II, Chapter I, para. 3)); Tait, Alan A., The Taxation of Personal Wealth (Urbana: University of Illinois Press, 1967) at 17 Google Scholar (“Existing distribution is the outcome of historical accident, immured in time and fossilized by law. It is necessary to clear this point, that the original distribution of property, often on some basis no longer socially acceptable (rule of force, exploitation of child labour, etc.), is legalized and transmuted through generations by the power of the law.”); Sandford (1971), supra, note 9 at 24 (“Many of the inequalities in the distribution of wealth, perpetuated by inheritance, stretch far back into history, some with their origin in acquisition by conquest—which would not nowadays be thought to constitute a morally strong claim!”); and Bird (1971), supra, note 1 at 9 (“The existing distribution of assets among individuals at any point in time is to a large extent the outcome of historical accident, as condoned by the state and fossilized in law.”).

247. Consider, for example, the history of slavery and colonialism, and the conquest and dispossession of aboriginal peoples throughout the world.

248. Again, consider the current social and economic status of the descendants of colonialists and slaveowners compared to the descendants of the colonized and enslaved.

249. See Wagner, supra, note 125 at 13–17; and Wagner, supra, note 29 at 30–33. While there is probably some truth to this claim, it is likely also true, as Cedric Sandford observes, that: “Wealth generates wealth because large wealth owners obtain a much higher return on their wealth than small wealth holders; a larger proportion of large wealth holdings is in the form of income-yielding investments and also large wealth holders can afford the best advice on where to invest, either for high yield or capital gains.” Sandford (1971), supra, note 9 at 29.

250. Mill, supra, note 73 at 359. (Book II, Chapter I, para. 3)

251. See, e.g., Ward, supra, note 125 at 32 (arguing that “even if [such a rationale] is more or less convincing if applied to the United Kingdom, some European countries and elsewhere, where historical extremes of inherited wealth have persisted for long periods, I doubt whether its premise applies to Canadian conditions.”). While this point has some validity, the current status of Canada’s aboriginal population serves as a constant reminder that even the New World is not free from the historical injustices of the Old.

252. Nozick, supra, note 120 at 179.

253. Waldron, supra, note 134, at 26–61.

254. See, e.g., Tullock, supra, note 125 at 466 (“We are., .compelled by the mere logic of private property to permit a man [or woman] not only to give it away while he [or she] is alive, but also to give it away on his [or her] death”); Wagner, supra, note 150 at 28 (“inheritance is an aspect of private property.... The taxation of inheritance therefore represents the socialization of property”); and Epstein, supra, note 224 at 304 (“there is no principled distinction between the right of property and the right of succession. The conception of property includes the exclusive rights of possession, use, and disposition”). Alternatively, consider the positivistic claim that the concept of private property does not imply an unlimited right to give or bequeath. Without something more, these are just empty expressions at cross purposes.

255. Bird (1971), supra, note 1 at 14.

256. Nozick, supra, note 120 at 150–82.

257. Contra Epstein, supra, note 224 at 304: “There is no residual claim that runs in favour of strangers or of the public at large.”

258. Nozick, supra, note 120 at 175–77.

259. See, e.g., Mill, supra, note 73 at 376: “property is only a means to an end, not itself the end.” (Book II, Chapter II, para 4)

260. Efficiency arguments are as old as Aristotle, were emphasized by John Locke, and are most recently associated with economic theories of private property. See Aristotle, Politics, supra, note 95, Bk. II, Ch. 3 (1261b35); Locke, John, Second Treatise of Government, Macpherson, C.B., ed., (Indianapolis: Hackett, 1980),Google Scholar Ch. V, para. 36–37,40; Demsetz, Harold, “Toward a Theory of Property Rights” (1967) American Economic Review, Proceedings and Papers, Vol. 57 at 347–59;Google Scholar Nozick, supra, note 120 at 177; Becker, Lawrence C., Property Rights: Philosophical Foundations (Boston: Routledge & Kegan Paul, 1977) at 67–74;Google Scholar and Munzer, supra, note 2 at 191–226. Autonomy arguments are frequently associated with G.W.F. Hegel, and are eloquently restated by Jeremy Waldron. See Hegel, G.W.F., Hegel’s Philosophy of Right, trans. T.M. Knox, (London: Oxford University Press, 1952),CrossRefGoogle Scholar para. 41–71 ; and Waldron, supra, note 253 at 284–445. Finally, libertarian arguments appear in Hayek, supra, note 125; Friedman, supra, note 132; Nozick, supra, note 120; and Becker, supra, at 75–80.

261. Unger, supra, note 198.

262. See, e.g., Tullock, supra, note 125 at 470; Wagner, supra, note 125 at 5–6; and Wagner, supra, note 29 at 11–14.

263. On the other hand, to the extent that the sections on efficiency and generosity are specifically devoted to the analysis of inherited wealth, additional arguments would have to be forthcoming.

264. See, e.g., Eisenstein, supra, note 7 at 257–58 (“an economic system which prides itself on equality of opportunity should level ‘unreasonable’ estates without compunction.”); Bird (1971), supra, note 1 at 9 (“The unlimited right to pass along accumulated wealth to subsequent generations fundamentally violates the principle of equality of opportunity alleged to be upheld in our society.”); and Maloney (1988), supra, note 2 at 612 (“Freedom of testation is in direct contradiction to the ideal of enhancing equality of opportunity.”).

265. See, e.g., Mill, supra, note 73 at 359 (“Private property, in every defence made of it, is supposed to mean the guarantee to individuals of the fruits of their own labour and abstinence. The guarantee to them of the fruits of the labour and abstinence of others, transmitted to them without any merit or exertion of their own, is not of the essence of the institution.”)(Book n, Chapter I, para. 3); Rudick (1945), supra, note 5 at 31, n. 38 (opposing treating gifts and bequests as income or making progression depend upon the independently accumulated wealth of the recipient, since “these methods would discriminate against those who had earned their wealth.”); Sandford (1967), supra, note 9 at 11 (noting “the particular ethical justification for taxing inherited property that its acquisition is generally unrelated to the merits and efforts of those who benefit from it.”); Bird (1971), supra, note 1 at 10 (“Even if one believes that the right to private property&necessarily entails the right to enjoy the fruits of one’s own labour and abstinence, it does not follow that anyone has the right to enjoy the fruits of anyone else’s labour, even that of his ancestors. By this criterion the distribution of wealth should rest on the earnings of each generation, and we should all be returned by taxation to start with as clean and even a slate as possible.”); Brittain, supra, note 56 at 88 (“The less the rewards of wealth are associated with one’s own contribution, the better the case for taxing them.”; “It&seems appropriate to contrast inheritance—an unearned reward—with earned incomes as targets of redistributive tax policy.”); Chester, supra, note 98 at 80 (“to the extent that tax policy favours wealth associated with one’s own contribution, lifetime accumulation should still be taxes [sic] less than inheritance”); Levy, supra, note 88 at 548–49 (arguing that inherited wealth is “unearned” and “unrelated to personal contribution”); and McQuaig, supra, note 1 at 347 (“In a reasonable moral scheme of things, we might expect inheritances to be taxed at higher rates than regular income, reflecting our greater respect for those who earn what they receive.”).

266. For an extensive survey of the liberal-egalitarian tradition, see Gutmann, Amy, Liberal Equality (Cambridge: Cambridge University Press, 1980).Google Scholar

267. Levy, supra, note 88 at 548.

268. Ibid.

269. Ibid.

270. See, e.g., Okun, supra, note, 196 at 40–50.

271. Levy, supra, note 88 at 548.

272. See, e.g., Okun, supra, note 196 at 44.

273. See, e.g., ibid, at 43,76, 84, and 87.

274. Thurow, supra, note 20 at 27–32. See also Wagner, supra, note 150 at 27 (“equal expected value[s] of lifetime earnings”).

275. Okun, supra, note 104 at 43.

276. Thurow, supra, note 20 at 27. See also Wagner, supra, note 150 at 27 (equating equality of opportunity with the prospect of equal “expected income”).

277. See, e.g., Haslett, supra, note 2 at 128. For an extended analysis of this issue, see Fishkin, James S., Justice, Equal Opportunity, and the Family (New Haven: Yale University Press, 1983). For recent examples of this argument by opponents of inheritance taxation, see Wagner, supra, note 150 at 27; and Ward, supra, note 125 at 32.Google Scholar

278. See, e.g., Brittain, supra, note 105 at 28–29; Fishkin, supra, note 277; and Haslett, supra, note 2 at 128. Although Rawls displays considerable ambiguity regarding both genetics and the family, heaccepts their inegalitarian effects so long as these inequalities are made to work to the maximum advantage of the least fortunate. Since this “difference principle redefines the grounds for social inequalities,” he explains, “the natural distribution of assets and the contingencies of socialcircumstances can be more easily accepted. We are more ready to dwell upon our good fortune now that these differences are made to work to our advantage, rather than to be downcast by how much better off we might have been had we had an equal chance along with others.” Rawls, supra, note 97 at 102–03, 511–12. For Rawls’ pronouncements on genetics and the family, see ibid, at 102–103 (eugenics) and 74,301,511 (family).

279. See, e.g., ibid, at 74, 301, 511; and Haslett, supra, note 2 at 128.

280. See, e.g., Haslett, supra, note 2 at 141 (“To be sure, we do ‘allow’ unearned advantages resulting from biological inheritance to continue to exist because, first of all, we cannot eliminate them and second, even if we could, we would not want to since the costs of doing so would outweigh the benefits.”).

281. See, e.g., Sandel, supra, note 123 at 69,75.

282. On the other hand, see Walzer, supra, note 97 at 230 (suggestingthat the radically inegalitarian character of these dystopian visions is no accident, since the loss of individual autonomy and special affections that these societies necessarily entail dictate social control by a privileged elite).

283. Aristotle, Politics, supra, note 95, Bk. III, Ch. 12 (1283al0) (“If some are fast and others slow, they should not have more or less on this account; it is in gymnastic contests that being outstanding in these things wins honour.”).

284. In the Disabled Olympics, for example, it would be perfectly appropriate to disadvantage an able-bodied competitor.

285. Seeinfra, section II.B.2.(A)(3)(b).

286. Aristotle, Ethics, supra, note 205, Bk. V, Ch. 3 (1131a25).

287. Infra, sections II.B.2.(B)(2) and II.B.2.(B)(3).

288. Seesupra, section II.B.l.(A).

289. Seesupra, sections II.B.l.(B)(2) and II.B.1.(B)(3).

290. For similar instrumental arguments against inherited wealth, seeOkun, supra, note 104 at 83–84; Haslett, supra, note 2 at 128–31; and Maloney (1988), supra, note 2 at 626.

291. See, e.g., Haslett, supra, note 2 at 130 (“Wealth is opportunity, and inheritance distributes it very unevenly indeed. Wealth is opportunity for realizing one’s potential, for a career, for success, for income. There are few, if any desirable occupations that great wealth does not, in one way or another, increase&sometimes dramatically&one’s chances of being able to pursue, and to pursue successfully.”).

292. See supra,, sections II.B.1.(C)(1) and II.B.1.(C)(2); and infra, sections H.B.2.(B)(2) and II.B.2.(B)(3).

293. See, e.g., Martha Minow, “The Free Exercise of Families,” Unpublished Paper Presented to the University of Illinois (4 Oct. 1990). See also David G. Duff and Roxanne Mykitiuk, “Parental Separation and the Child Custody Decision: Toward a Reconception” (1989) 47 U. of Tor. Faculty L. Rev. 874.

294. Consider, for example, Aristotle’s response to Plato’s scheme for the extreme collectivization of child care: “Each of the citizens comes to have a thousand sons, though not as an individual, but each is in similar fashion the son of any of them; hence all will slight them in similar fashion.” Aristotle, Politics, supra, note 95, Book II, Chapter 3 (1262a). See also Hayek, supra, note 125 at 89–90: “The value which most people attach to the institution of the family rests on the belief that, as a rule, parents can do moreto prepare their children for a satisfactory life than anyone else.” As the remarks in the text suggest, these arguments should not be taken to suggest opposition to the provision of child care outsidethe traditional nuclear family. On the contrary, they support precisely the family autonomy of which parent-selected child care is an expression.

295. Ibid, at 90

296. See Sandel, supra, note 123 at 69: “even if compensatory education and other reforms could fully, or even nearly, correct for social and cultural deprivation,it is difficult if not vaguely forbidding to imagine what kind of social policies would be required to ‘correct’ in a comparable way for the contingencies of natural fortune.”

297. See, e.g., Walzer, supra, note 97 at 227–32; and Taylor, Charles, Philosophy and the Human Sciences (Cambridge: Cambridge University Press, 1985) at 295.CrossRefGoogle Scholar

298. Carens, Joseph H., “Difference andDomination: Reflections on the Relation Between Pluralism and Equality,” in Chapman, John and Wertheimer, Alan, eds, Majorities and Minorities: NOMOS XXXII (New York: New York University Press, 1990) 226 at 234.Google Scholar

299. Ibid.

300. Seesupra,, section II.A.4.(A).

301. Infra, section II.B.2.(A)(3)(a).

302. Infra, section II.B.2.(A)(3)(b).

303. Infra, section II.B.2.(A)(3)(c).

304. See, e.g., Hayek, supra, note 125 at 93-100; Friedman, supra, note 132 at 163–66, 172–76; Wagner, supra, note 125 at 48; and Wagner, supra, note 29 at 82–83.

305. See Rawls, supra, note 97, especially at 65–83, 100–08, 274–84, and 310–15.

306. Ibid, at 74.

307. Ibid, at 72.

308. Ibid, at 74.

309. Ibid, at 102, 104. See also Hayek, supra, note 125 at 90 (“There is, of course, neither greater merit nor any greater injustice involved in some people being born to wealthy parents than there is in others being born to kind or intelligent parents”); Friedman, supra note 132 at 166 (“The man who is hard working and thrifty is to be regarded as ‘deserving’; yet these qualities owe much to the genes he was fortunate (or unfortunate?) enough to inherit.”); and Wagner, supra, note 125 at 48 (“It is sometimes suggested that ‘earned’ wealth is more legitimate than inherited wealth, though it is never said just how being born with great athletic ability, a glib tongue, a pleasing singing voice, good looks, high intellect, or a charismatic presence on television can be said to be ‘earned’”).

310. Rawls, supra, note 97 at 313. Although Rawls and libertarians concur on this crucial point, theydiverge enormously on its implications for the ultimate determinationof distributive outcomes. For Rawls, this moral arbitrariness requires a hypothetical social contractwhereby distributive shares are to be determined within a social framework according to which: “Social and economic inequalities are to be arranged so that they are both (a) to the greatest benefit of the least advantaged and(b) attached to offices and positions open to all under conditions of fair equality of opportunity.” Ibid, at 83. For Friedman, on the other hand, the system of economic distribution “must be regarded as instrumental or a corollary of some other principle such as freedom.” Friedman, supra, note 132 at 165. For a useful discussion of this divergence, see Levy, supra, note 88 at 549.

311. See, e.g., Rawls, supra, note 97 at 277: “The purpose of these levies and regulations is not to raise revenue (release resources to government) but gradually and continually to correct the distribution of wealth and to prevent concentrations of power detrimental to the fair value of political liberty and fair equality of opportunity.”.

312. Ibid, at 278: “The unequal inheritance of wealth is no more inherently unjust than the unequal inheritance of intelligence. It is true that the former is presumably more easily subject to social control; but the essential thing is that as faras possible inequalities founded on either should satisfy the difference principle. Thus inheritance is permissible provided that the resulting inequalities are to the advantage of the least fortunate and compatible with liberty and fair equality of opportunity.” See also Friedman, supra, note 132 at 164 (dismissing as “untenable” attempts to distinguish “appropriate” inequalities “resulting from differences in personal capacities, or from differences in wealth accumulated by the individual in question” from “inappropriate” inequalities attributable to inherited wealth).

313. Feinberg, Joel, Doing and Deserving (Princeton: Princeton University Press, 1970) at 48.Google Scholar

314. See, e.g., Nozick, supra, note 120 at 225; Galston, supra, note 227 at 170–76; Sandel, supra, note 123 at 82–95; and Munzer, supra, note 2 at 261–62.

315. See, e.g., Munzer, supra, note 2 at 262 (“If all desert rests on a desert basis, and if that desert basis must rest on some further desert basis, and so on, then the search for an ultimate desert basis must continue ad infinitum. Eventually one comes to universal necessary conditions of desert, and it is hopeless to claim that these are deserved. For example, to deserve anything one must be born, but no one deserves to be born.”). See also Sandel, supra, note 123 at 84 (“there must be some basis of desert prior to desert.”).

316. See, e.g., ibid, at 74 (“whether I deserve the intelligence with which I am bom, for example, isnot the point; what matters is that my nativeintelligence is a fact irreducibly about me”). See also Hayek, supra, note 125 at 90 (“belonging to a particular family is part of the individual personality”); and Levy, supra, note 88 at 549 (describing genetic and socio-cultural assets as “part of one’s personality”).

317. Rawls, supra, note 97 at 72.

318. Consider, for example, Aristotle’s observations that swiftness should be honoured “in gymnastic contests” and that the best flutes should be given to those who are the best flute players: “it is to one who is pre-eminent in the work that preeminence in the instruments should be granted.” Aristotle, Politics, supra, note 95, Bk. 3,Ch. 12 (1282b30-1283al5). See also Galston, supra, note 227 at 172 (“One may well agree that money, goods, or services do not constitute an appropriate means of recognizing moral excellence; not only is there no internal relation between the desert-basis and what is claimed, but also this form of recognition may cheapen or even pervert what it is intended to reward.”).

319. On the contrary, individuals may deserve not only rewards and honours, but redress and compensation or, alternatively, blame and punishment. See ibid, at 175.

320. Seeinfra, section II.B.2.(A)(3)(b).

321. See, e.g., Okun, supra, note 196 at 45 (“The value of my marginal product does not depend solely on my own skills or effort. It can be altered greatly by changes in the behaviour of other people, even though 1 keep doing the same old thing no better or no worse.... In view of those dependencies on other people, the concept of my contribution to output becomes hazy. Production comes out of a complex, interdependent system and may not be neatly attributable to individual contributors”); Graetz, supra, note 1 at 275–76 (“even in a perfectly functioning market economy, most production is based upon the joint use of different resources, typically provided by different people. In such circumstances, it is usually impossible, as an ethical matter, to determine which person&or even which resource&produces or deserves what share of the total output.”); and Maloney (1988), supra, note 2 at 616 (“Sometimes the rewards arethe result of the culmination of many talents and much input for which only one person ultimately is rewarded.”).

322. See, e.g., Hayek, supra, note 125 at 94 (“The inborn as well as the acquired gifts of a person clearly have a value to his fellows which does not depend on any credit due to him for possessing them. There is little a man can do to alter the fact that his special talents are very common or exceedingly rare.”); Rawls, supra, note 97 at 311 (“Surely a person’s moral worth does not vary according to how many offer similar skills, or happen to want what he can produce. No one supposes that when someone’s abilities are less in demand or have deteriorated (as in the case of singers) his moral deservingness undergoes a similar shift.”); Thurow, supra, note 20 at 197 (“the wealthy are not wealthy because their productive contribution is higher than others, but because they are luckier than others.”); Graetz, supra, note 1 at 275–77 (noting, among other things, that: “The rewards the market place bestows depend on factors outside an individual’s control. In a market economy, people who supply capital or labour to industries or endeavours where demand for the product or service proves strong will do very well; people who work or risk their capital in industries or endeavours where market demand for the product or service proves weak will do quite badly.”); and Maloney (1988), supra, note 2 at 614–17 (arguing that “[t]he empirical evidence does not sustain the premise that the market distributes its rewards in accordance with the particular industry, abilities and talents of the individual who is being rewarded”; that “[s]everal random market factors play an important role in the success of a particular individual. Over many of these factors the individual has little influence or control”; and that “perhaps more conclusively, the rewards that society distributes, particularly the lavish ones, are more often than not the product of sheer luck&being in the right place at the right time—producing or investing in the correct and transient article of consumer taste.”)

323. See, e.g., Brannon, supra, note 42 at 451 (“The concentrations of income and wealth are largely the result of the recipient being favourably positioned vis-a-vis the structure of civilization, that is, the large incomes and wealth holdings are in large part produced by society itself.”); Graetz, supra, note 1 at 276 (“some share of total marketreturns to capital and labour are attributable to societal conditions. The existence of public institutions, including laws and law enforcement mechanisms—criminal and corporate codes and courts to enforce them, for example—affects returns to private institutions and individuals.”); Waldron, supra, note 253 at 404 (“there is no sense to the idea that there is a natural phenomenon called ‘reaping the benefits of one's talents’ which is understood apart from the social arrangements and institutions that defineone’s relationships to other people.”); and Ascher, supra, (note 2 at 86–87 (concluding that “society has a major stake in all accumulated wealth.”).

324. See, e.g., Graetz, supra, note 1 at 277 (concluding that “the justification for a market distribution must ultimately be grounded in concerns about total output—economic efficiency rather than ethics—and in concessions to certain liberties.”).

325. See, e.g., Warren, supra, note 59 at 1090–93 (arguing, among other things, that “a producer does not have a controlling moral claim over the product of his capital and labour, given the role of fortuity in income distribution and the dependence of producers on consumers and other producers to create value in our society—factors that create a general moral claim on all private product on behalf of the entire society.”); Graetz, supra, note 1 at 274–78 (challenging “the analytical starting point of virtually all of the detractors of progressive taxation”); and Maloney (1988), supra, note 2 at 614–19 (adopting a Rawlsian argument for progressive taxation). On the idea of a social basis of desert, see Sandel, supra, note 123 at 66–132. For a persuasive critique of utilitarian arguments for progressive income taxation, see Blum, Walter and Kalven, Harry Jr., The Uneasy Case for Progressive Taxation (Midway Reprint), (Chicago: University of Chicago Press, 1978).Google Scholar

326. Thus, for example, Warren appears to take this argument too far, denying any role for individual desert as a principle of distributive justice, and concluding that “the distribution of social product is a matter for collective decision.” Warren, supra, note 59 at 1091. That the producer’s moral claim is not (as Warren rightly observes) “controlling” does not mean that it is not relevant.

327. See, e.g., Galston, supra, note 227 at 170 (“Desert-related facts need not be moral characteristics. If one claims, for instance, that A deserves to be the contractor for a particular building because he has the most experience with construction of that type, one is basing the judgment, noton virtue, but rather on instrumental ability. Thus,even if the claim that virtue or moral worth cannot logically serve as a basis for distributive shares were valid, this would not prove&that desert simpliciter is an inappropriate basis.”).

328. Rawls,supra, note 97 at 311. See also Hayek, supra, note 125 at 94,99 (commenting that “the value which a person’s capacities or services have for us and for which he is recompensed has little relation to anything thatwe can call moral merit or deserts”; and that “the problem of rewarding action of outstanding merit which we wish to be widely known as an example is different from that of the incentives on which the ordinary functioning of society rests.”).

329. See, e.g., Rawls, supra, note 97 at 303–15 (outlining several instrumental “precepts of justice” and erroneously distinguishingbetween the notion of moral desert and the concept of “legitimate expectations” to the economic rewards promised by just social institutions). See also Maloney (1988), supra, note 2 at 617 (invoking Rawls’ distinction as an argument for progressive taxation).

330. See, e.g., Graetz,supra, note 1 at 277.

331. See, e.g., Hayek,supra, note 125 at 97 (“Though most people regard as very natural the claim that nobody should be rewarded more than he deserves for his pain and effort, it is nevertheless based on a colossal presumption. It presumes that we are able to judge in every individual instance how well people use the different opportunities and talents given to them and how meritorious their achievements are in the light of all the circumstances which have made them possible. It presumes that some human beings are in a position to determine conclusively what a person is worth and are entitled to determine what he may achieve. It presumes, then, what the argument for liberty specifically rejects: that we can and do know all that guides a person’s action. A society in which the position of the individuals was made to correspond to human ideas of moral merit would therefore be the exact opposite of a free society”). Note that part of Hayek’s dilemma here is his misconception of the relationship between individual desert and economic rewards. See supra, section II.B.2.(A)(3)(b).

332. This is not to suggest that I reject the application of desert-based arguments to the taxation of other receipts. Indeed, lottery winnings and speculative gains are two such categories that may be appropriate targets for distinctive treatment. Nevertheless, since the arguments for separate taxation of these bases would require a separate ethical analysis (considering, for example, the potential role of speculative investments in promoting allocative efficiency), Ireach no conclusions on these issuesin this paper.

333. Seeinfra, section II.B.2.(B)(3).

334. Supra, sections II.B.1.(C)(1) and II.B.l.(C)(2).

335. Supra, section II.B.1.(B)(1).

336. See, e.g., Tullock, Gordon, “Inheritance Rejustified” (1973) 16 J. Law & Econ. 425 at 426 Google Scholar(“On the whole, if I am poorer than another man because he inherited his money, this reflects no discredit on me. On the other hand, if we started out equal and he won the race, then that indicates that he is not only wealthier than me but also he is superior to me. Under the circumstances, I may prefer (and many people clearly do prefer) to think that he has been the beneficiary of inherited wealth rather than inherited genes. In any event, many people clearly act as if this were part of their preference function. At the moment, if I find someone who is better off than I, I can excuse this fact to myself by claiming that he inherited his wealth. If we abolish inherited wealth, I could no longer do this and the cost in individual satisfaction might be quite great.”); and Hayek, supra, note 125 at 98 (“it is more than doubtful whether even a fairly successful attempt to make rewards correspond to merit would produce a more attractive or even a tolerable social order. A society in which it was generally presumed that a high income was proof of merit and a low income of the lack of it, in which it was universally believed that position and remuneration corresponded to merit, in which there was no other road to success than the approval of one’s conduct by the majority of one’s fellows, would probably be much more unbearable to the unsuccessful ones than one in which it was frankly recognized that there was no necessary connection between merit and success. It would probably contribute more to human happiness if, instead of trying to make remuneration correspond to merit, we made clearer how uncertain is the connection between value and merit.”).

337. Supra, section II.B.l.(B)(4).

338. Supra, section II.B.l.(C)(1)(b).

339. Supra, section II.B.l.(C)(l)(c).

340. Supra, section II.B. 1.(C)(2).

341. Supra, section II.B.l.(C)(2).

342. Supra, section II.B.2.(A)(2).

343. Halbach, Edward C. Jr., ed., Death, Taxes and Family Property (St. Paul: West Publishing, 1977) at 5 Google Scholar. See also Wagner, supra, note 29 at 19–22 and 84–85 (concluding that “[i]t does not seem unreasonable to suspect that one impact of the abolition of inheritance would be to diminish intergenerational bonds, with potentially far-reaching consequences for the character of the social order”); and Munzer, supra, note 2 at 381, and 410 (arguing that “the abolition of inheritance is apt, over time, to undermine reciprocity between generations. A common, though not unique, way to express love and affection for the next generation is through gifts and bequests. This practice stems from powerful human desires and plays some role in humane care for the elderly by children and grandchildren.”).

344. See, e.g., Haslett, supra, note 2 at 149 (proposing such an exemption in the context of a scheme of complete inheritance prohibition above a generalexemption). An exemption for household and personal effects is relatively common in developed countries with wealth transfer taxes: OECD, supra, note 5 at 114.

345. Supra,, section II.B.1.(C)(1). To prevent double exemption, the value of transferred tangible assets should ideally reduce the amount of the generalmonetary exemption.

346. On the other hand, to the extent that this exemption encourages transfers in these non-taxable forms, additional provisions would be necessary to preclude this method of tax avoidance and to discourage these tax-induced incentives to invest in non-taxable physical assets. One solution might involve a monetary limit on these transfers, although in what way it shoulddiffer from the general monetary exemption is difficult to determine. See Ascher, supra, note 2 at 111–12. Alternatively, by limiting this exemption to the transfer of non-income-producing assets, and by taxing these assets at full transfer tax rates upon subsequent sale, exchange or conversion to income-producingjise, any undesirable incentives to invest in and transfer assets in this form are likely to be minimal.

347. See, e.g., Hayek, supra, note 125 at 90–91 (arguing that “[t]he family’s function of passing on standards and traditions is closely tied up with the possibility of transmitting material goods” and that if the family is to serve as “an instrument for the transmission of morals, tastes, and knowledge&some continuity of standards, of the external forms of life, is essential”). Although Hayek himself employs this argument to support unlimited freedom of private inheritance, his very use of the expression “some continuity” [emphasis added] suggests that this rigid conclusion cannot be sustained.

348. See, e.g., Sandford (1971), supra, note 9 at 147 (“Agriculture is a way of life as well as an occupation, and one can appreciate the human problem posed to an owner-occupier by estate duty”); and Okun, supra, note 196 at 37 (“small businesses and family farms&are extensions of their owners, and that fact helps to explainthe political enthusiasm they engender”).

349. See supra, section II.B.l.(C)(l)(b).

350. Although the underlying value of the asset is often substantial in these cases, the way of life associated with these enterprises, and their general compatibility with the goods of democracy and autonomy suggest that it is the latter considerations that should be controlling, not the former.

351. See the suggestions at supra, note 346.

352. Walzer, supra, note 97 at 126. The following argument draws heavily on Duff and Mykitiuk, supra, note 293 at 877–94.I am especially indebted to Roxanne Mykitiuk for helping me to see the deficiencies of the liberal-individualistic conception outlined below.

353. Mill, supra, note 73 at 372. (Book II, Chapter II, para 3)

354. See, generally, Duff, David G., “The Supreme Court and the New Family Law: Working Through the Pelech Trilogy” (1988) 46 U. of Tor. Faculty L. Rev. 542;Google Scholar and Duff and Mykitiuk, supra, note 293.

355. This principle is widely acknowledge with respect to spousal transfers. See, e.g., Sandford et al, supra, note 5 at 41: “Where the husband has made money, as distinct from inheriting it, it can be (and often is) strongly argued that the wife has a moral right to a share of it; although in form it results from his exertions, his wife in her sphere of activity has contributed perhaps just as much as he has, and his success is in reality a joint effort.” The same principle does not appear to have been recognized as further justification for special treatment for transfers of family enterprises.

356. See, generally, Hovius, Berend, Family Law: Cases, Notes and Materials, (Toronto: Carswell, 1987) at 191–293.Google Scholar

357. Thus, where one spouse dies owning 80 percent of net family property, 30 percent of this should be transferable to the other without incurring any tax liability. Absent any other exemptions, the remaining 50 percent would be taxable at full transfer tax rates.

358. Seesupra,, sections II.B.l.(C)(l)(b) and II.B.2(B)(2).

359. See, e.g., Sandford et al., supra, note 5 at 48–49. For a useful discussion of the design issues involved in such an exemption, see Ontario Committee on Taxation, supra, note 83, Vol. III at 178–81.

360. In this respect, see the discussions in Gutman, supra, note 1 at 1218–39; OECD, supra, note 5 at 100–07; and Ascher, supra, note 2 at 123–30, and 141–45.