THE question has been raised as to whether the effectiveness of the death tax might not be increased to compensate for some loss of revenue and distributive equality resulting from a reduction of middle- and top-bracket income-tax rates. This substitution is recommended on the ground that the death tax affects business incentives less than the surtax. Most of the interests in accumulating a fortune, except certain acquisitive ambitions for one's family, are undisturbed by the death tax. Although death taxes cut heavily into the supply of available capital, no shortage in savings, as such, is anticipated at present. The shortage, if any, is in risk-seeking capital, and though inherited funds may be employed in this role, the likelihood is less than when such funds are in the hands of the founder of the fortune.
For many years, economists have proclaimed strong social and economic grounds for death taxation. A classic summary of this view by John Stuart Mill reads:2
The inequalities of property which arise from unequal industry, frugality, perseverance, talents, and to a certain extent even opportunities, are inseparable from the principle of private property, and if we accept the principle, we must bear with these consequences of it; but I see nothing objectionable in fixing a limit to what anyone may acquire by the mere favor of others, without any exercise of his faculties, and in requiring that if he desires any further accession of fortune he shall work for it.