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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
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Taxes (Oct. 28, 2008) (unpublished manuscript, available at http://papers.ssrn.com/sol3/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 (unpublished manuscript, 2008); Lily L.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).

Imaged with the Permission of N.Y.U. Tax Law Review

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