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63 Tax L. Rev. 1 (2009-2010)
What Should Society Expect from Heirs - The Case for a Comprehensive Inheritance Tax

handle is hein.journals/taxlr63 and id is 9 raw text is: What Should Society Expect from Heirs? The Case for a Comprehensive Inheritance Tax LILY L. BATCHELDER* I. INTRODUCTION One of the fundamental questions that every society faces is how to shape the intergenerational transmission of wealth. It is a question that cannot be avoided. Each year many individuals die without a will.' Claims on property inherited by hypothetical descendents not yet born become administratively unenforceable.2 Moreover, nations that apply a broad-based income or consumption tax must decide whether and to what extent they will include inherited wealth in the tax base. The issue, therefore, is not whether the law should influence the pattern of intergenerational wealth transfers, but how. Currently, the United States is facing this question once again in the context of its tax system. With a looming fiscal gap of about $20-40 * Professor of Law & Public Policy, NYU School of Law. For helpiul comments and discussion, I am grateful to Anne Alstott, Aviva Aron-Dine, Noel Cunningham, Louis Kaplow, Mitchell Kane, Fred Goldberg, Michael Graetz, Daniel Halperin, Deborah Schenk, David Schizer, Reed Shuldiner, Dan Shaviro, Michael Udell, David Walker, and Ethan Yale, and participants in the 2008 Harvard Law School Seminar on Current Research in Taxation and the 2008 Tax Law Review Symposium. I owe special thanks to Jim Hines, Wojciech Kopczuk, Ann Mumford, and Tom Nagel for their extensive reactions to an earlier version of this article. Rachel Jones and Annmarie Zell provided outstanding research assistance. I am particularly indebted to Surachai Khitatrakun for his work on the revenue and distributional estimates contained in this article and our joint work. This Article builds on several prior pieces, including Lily L. Batchelder & Surachai Khitatrakun, Dead or Alive: An Investigation of the Incidence of Estate and Inheritance Taxes (Oct. 28, 2008) (unpublished manuscript, available at http://papers.ssrn.com/sol3/ papers.cfm?abstract.id=1134113); Lily L. Batchelder, How Should an Ideal Consumption Tax or Income Tax Treat Wealth Transfers? (unpublished manuscript, 2008); Lily L. Batchelder, Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax (Brookings Inst., Hamilton Project Discussion Paper 2007-07, 2007); Lily L. Batchelder, Taxing Privilege More Effectively: Replacing the Estate Tax with an Inheritance Tax, in The Path to Prosperity: Hamilton Project Ideas on Income Security, Education and Taxes (Jason Furman & Jason E. Bordoff eds., 2008). All errors are mine. 1 Among Americans aged fifty or older, 40% report not having a will. AARP Research Group, Where There Is a Will . . . Legal Documents Among the 50+ Population: Findings from an AARP Survey 1 (2000), available at http://assets.aarp.org/rgcenter/econ/will.pdf. 2 Jens Beckert, Inherited Wealth 11 (Thomas Dunkiop trans., Princeton Univ. Press 2008) (2004). 1 Imaged with the Permission of N.Y.U. Tax Law Review

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