What Role Does an Estate Tax Have in a Meritocracy?

The appeal of a meritocratic system runs deep in American society. We believe that this country should be one where everyone gets a chance. "Equality of opportunity" has become the phrase of choice when approaching what composes a just system of distribution. If everyone starts from the same place, then let them end up where their merits take them. Thus we believe that people should have the right to reasonably exercise control over property that they gained from an initial position of equality with others.

The question of the levying of an estate tax, however, provides a challenge to this meritocratic premise. On the one hand, an estate tax can be construed as seizing the earned property of an individual who justly acquired it. While an argument can be put forth that property rights do not carry on past the grave, it's a strange argument to say that I could transfer my property whatever way I choose while still alive but that I could not, while alive, will my property to certain ends contingent upon my death. Most reasonable people would agree that individuals have a right to some control of their property after death. If I earned my property starting from a position of equality, then the meritocratic prerogative is for me to have control over the transfer of that property.

On the other hand, the ability to collect on an inheritance is a challenge to the meritocratic system. No one is given a chance to choose or "earn" their parents, but regardless, they most often find themselves as the primary beneficiaries of their parents' inheritances. Some may say that children "earn" the inheritance of their parents through love, affection, etc., but children are, by their relationship to their parents, already in a position to provide this love, affection, etc. that puts them in an initial position of inequality with others. Thus, bestowing inheritance stands at odds with meritocratic values.

How can this apparent contradiction be resolved?

One philosopher who provides a pertinent perspective on this case is John Rawls. In his seminal work A Theory of Justice, Rawls points out that our qualities that make up what we call our "personality," qualities such as intelligence, social skills, and work ethic, come to us as a result of luck. We have no control over our genetic endowment or our environment, so however we end up is of no merit of our own. Thus, a Rawlsian analysis of the estate tax would conclude that the estate tax is inherently just as a method of balancing inequalities that arise from unequal distribution of personality assets.

Through this line of reasoning, Rawls explicitly rejects a meritocratic political philosophy. This assertion is highly controversial and came under fire from philosophical libertarians such as Robert Nozick as well as critics of classically construed liberalism such as Alasdair MacIntyre and Michael Sandel. The overarching argument made by both sides is that it is nonsensical to say we could ever fully separate ourselves from our qualities. To say that there is some "me" that cannot be described by my intelligence, social skills, work ethic, sense of humor, interests, or background is an abstraction that tests the bounds of the meaning of "identity," and in the opinion of Nozick, MacIntyre, and Sandel, shatters it.

To say that there is a "me" that has no claim over the fruits of my labor is incorrect. Rawls cannot be dismissed so easily, though. Just because an individual can be established to have some claim over her property does not necessarily mean that this individual has a claim to all her property at the expense of everyone else's. No matter what position of equality one begins in, a system of public infrastructure is necessary to provide for the opportunity for individuals to flourish economically, socially, and politically, and that infrastructure requires public upkeep. This balance was well articulated by Senator Elizabeth Warren in a 2011 speech (fast-forward to 0:50).



What does this mean for the estate tax? It means that it would be unjust to tell people that they have no claim to provide their children with some inheritance with which to be comfortable and launch their lives. But it would be equally unjust to say that some of that money cannot be used to help other children in the community do the same. No fortune is dug out of the mud by an individual alone. A meritocracy depends on a social infrastructure to function, and infrastructure needs taxes.

What kind of people do you want to buy from?

Think of your favorite restaurant. Now think of what you like about it. Maybe it's the food. Maybe it's the "ambience." If you're a particular cheapskate, it may even be the price. But something that is important for almost any dining experience is that the hosts treat you well. Of course, there are exceptions, but a rude server can be the make-or-break component for a good evening and even a customer's permanent personal opinion of the locale.

This attitude doesn't only apply to restaurants, though. The appeal of good barber shops, bakeries, car shops, insurance salesmen (I could go on) is that they provide a good service coupled with a good attitude. In his book Good to Great, Jim Collins says that successful companies require people who are passionate for their work and believe they are providing a valuable service. This is more true than ever at the point of interaction between seller and buyer.

This analysis, though, clashes sharply with one of the most famous lines in classical economic literature. In Adam Smith's Wealth of Nations, Smith says "It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest."

While some have argued that this statement comes a bit out of context, it is nonetheless a building block of our understanding of market economics. People create not as a way to help others, but as a way to get what they want from others. One incisive critique of this viewpoint, however, comes from Alasdair MacIntyre in his book Dependent Rational Animals. He imagines an experience in which we walk into a butcher shop and observe the butcher suffering from a heart attack. He says that our first inclination would not be to move on and find another butcher who is in more of a position to sell us meat, but we would rather feel compelled to find help.

While this is a good point, I would argue that it does not take so dire a situation to find mutual interest in a routine economic exchange. All in all, we are best benefitted when we are sold meat by someone who A) wants to be a butcher and B) we want to support. There is a certain value that we gain from supporting the community butcher instead of buying at Wal-Mart, something that goes beyond the quality of the good. The best economic exchanges are ones in which we not only are happy to get what we want, but ones in which we are also happy to give.

Economics is often presented as a zero-sum game, but the best economic transactions are not ones in which people rationally balance gains and losses, it is the ones where people collapse the benefits bestowed with the benefits accrued. This means that an economic transaction must be viewed as more than just a means to an end, but as an end in itself. Think back to your favorite restaurant. When they are at their best, they aren't serving you food because they see you as an instrument, but they are undergoing the essential Kantian moral obligation by treating you as an end yourself.

This takes us back to Collins. In Good to Great, Collins says that the most successful companies are focused on on quality in particular: excellence. While the classical economist says that profit is about Xs and Os, companies like Apple, Chic-fil-a, and Chipotle continue to defy this logic by putting excellence first and letting the profits follow from that. And they've done pretty well for themselves.

Government's Role in Fostering Healthy Communities and Fulfilling Relationships

A fundamental aspect of liberal economic theory is that individuals are the best judges of what will effect their own happiness. The point of a market system is to allow individuals the ability to spend as they wish on what they wish, thus leading to outcomes that are favorable to their personal happiness. Recent research, however, is calling this assumption into question. It turns out that many of the economic decisions that we make do not necessarily lead to our own fulfillment, likely because of our inability to foresee effects of our decisions and misunderstanding of what it is that truly makes us happy.

What is the government's role in rectifying this error? While our current condition in America of political polarization is centered on a question of what the role of government truly is, arguments on both sides are built on a single assumption: that government exists to promote the welfare of its citizens. While this is a perspective that stands in contrast with that offered by the Rand/Nozick/Friedman camp, the theory of the role of government put forth by Nozick is not one that is generally accepted in moral discourse. When people talk about the benefit of limited government, it is defended by the claim that limited government will better work to promote the welfare of its citizens. The modern understanding of government is deeply Aristotelian.

Thus, if government exists to promote the welfare of its citizens, then it has an obligation to work to create systems that benefit its citizens. If science can show us that individuals find more fulfillment in lives that are social rather than solitary, as recent research has begun to uncover, then government should be working to foster the communities, friendships, and families that facilitate that fulfillment.

This is where psychology is beginning to connect with views of human nature put forth by MacIntyre in Dependent Rational Animals. Human beings are built to live in communities and to care about others. When we create systems that encourage people to separate from one another, we are not actually facilitating freedom, but are instead cutting people off from the opportunity to enjoy fundamental human capacities. This is not to say that a more invasive government is the answer in this respect, it may very well be that a more laissez-faire government can allow people to have more authentic experiences with one another. But it does say that government has an interest in healthy relationships and communities within its jurisdiction and that it has an obligation to promote them amongst their citizens.

Why I Don't Use the Word "Communitarianism"

In yesterday's Washington Post, sociologist and journalist E.J. Dionne published an incisive op-ed concerning the modern GOP's decision to turn away from the traditional conservative value of community. In the op-ed, Dionne talks about the tension between American commitment to individualism and the commitment to community life by saying that "we are communitarian individualists or individualistic communitarians, but we have rarely been comfortable with being all one or all the other."

While thinkers like Alasdair MacIntyre, Michael Sandel, Charles Taylor, and Michael Walzer are often lumped into the category of "communitarian," Dionne's use of the word is an illustration of the reason that these philosophers routinely reject the label. "Communitarianism" is often described as a foil to liberalism. These thinkers are described as critics of liberalism at its foundation, offering a new way of thinking that is fundamentally opposed to the liberal thesis. The basis of this supposed critique is that liberalism considers the individual as primary and that communitarianism concerns the primacy of community.

A look at these thinkers, however, shows that this view is an oversimplification of their true positions. MacIntyre, in his 1999 book Dependent Rational Animals, places special importance on the individual's ability to exercise "independent practical reason." Taylor, in The Ethics of Authenticity, iterates the importance of authentic individuality for flourishing. Even Walzer in Spheres of Justice lays out a system of justice that is focused on goods accrued to individuals.

The takeaway from this is that the thinkers and the philosophical tradition that is often labeled "communitarian" is not the antithesis to individualism that Dionne describes, but is rather a position that supports Dionne's thesis. MacIntyre, Sandel, Taylor, and Walzer are not critics of liberalism at its most fundamental level, but are rather offering critiques within liberalism.

Thus, the use of the phrase "communitarian" does little more than to reinforce misconceptions and cause confusion. It would be nice if there were some catch-all phrase to describe the philosophy of this critique, but at this point there is not, so the best we can do is shy away from a label that does nothing but obfuscate the positive contributions of the cause.