Obviously, any consideration regarding the harmfulness of inheritance tax, which it is, goes beyond such proposals and the reasons given distortive and profoundly unfair, and penalizes savings and investments, especially if combined with other forms of double taxation. It rather, it must be eliminated, without any exception. In fact, the tax changes the behavior of the interested parties and produces an incorrect allocation of resources, given that they make decisions on saving and investments based on the potential tax implications rather than on what is most productive. In particular, the higher the inheritance tax, the more likely they are to stop saving in the long term and start consuming immediately: saving for the next generation is therefore discouraged in favor of immediate consumption and, as wealth declines, it simultaneously reduces both the desire and the ability to secure bequests for heirs.
On the subject, Murray N. Rothbard underlined that: «it is particularly devastating because (…) the prospect of inheritance tax destroys the incentive and ability to save and develop a family wealth. Inheritance tax is perhaps the most devastating example of a tax also on capital.” In turn, Ludwig von Mises he noted that depending on the tax in question: «within a generation a considerable part of all the means of production (would) transfer into the hands of society. But, above all, such a measure would slow down the formation of new capital and a part of the existing capital would be squandered.”
Nor is a different result achieved by preparing corrective measures to ensure, in any case, a minimum threshold for the application of the tax or exemptions for certain categories of people or assets. Such measures do not achieve the objective and rather induce people to buy and sell goods to subsequently avoid taxation, sometimes to the exclusion of other objectives. For example, exemptions for gifts made during life encourage the early transfer of assets, precisely to avoid inheritance tax, and where possible encourage the creation of trusts, foundations or other to protect assets and wealth, which often end up being placed inefficiently and do not constitute the keys to economic growth. As a consequence of this, the victims of the tax remain those who have not managed, for the most varied reasons, to avoid it and have been forced to deliver the inheritance into the hands of the tax authorities and the Stateand all those who to escape tax have engaged in inefficient forms of tax planning to protect assets from taxation.
Economists have understood all these things well. Starting from Adam Smith And David Ricardowho saw inheritance as a fundamental incentive for saving, to move on to Alfred Marshallwho maintained that “family affections are the main reason for saving” and others Josef Schumpeter, who identified the “family reason” as the “spring” of savings, which, if it were loosened as a result of the State’s interference with taxation, would lead to a restriction regarding “the time horizon of the businessman (… ), approximately, to his life expectancy.” Also of the same opinion Pascal Salin, who promptly observed: «The ability to project oneself into the future, even beyond death, is a human prerogative. The cycle of life and the cycle of generations cannot be separated from the cycle of assets, from their birth, growth, transformation and end. The transmission of goods – through free transaction or by inheritance – is one of the primary tools through which the unpredictable evolution of human history takes place.”