Thicker than water  

Will Baude makes a smart point about the estate tax and estate gifts, the gist (wth Will's usual rhetorical flourishes) being that we view post mortem gifts differently depending on whether the recipient is a family member or not, and that perhaps we shouldn't. He hasn't convinced me to oppose estate taxes yet, but I think I agree on this point at least: large gifts should be taxed regardless of who the recipient is. (And certainly they should be taxed long before wages, which we should be doing our best to incentivize.)

What's really important here is not the notion of passing wealth through some kind of blood line, but rather the concentration of wealth through time. Does it really make any difference (to Kleiman, for example) whether the recipients of the relevant super-wealth are sons and daughters or Will's young, well-liked proteges? Either gift distorts the very American ideal of equal opportunity for all. Meanwhile the very idea of family is accompanied by all kinds of confusion even before money gets involved. As far a gift to Harvard goes, I don't know whether it would even be taxable if made during one's lifetime (wouldn't a university qualify for tax free gifts?), but the standard on this point should be the same whether the giver is living or dead.

MORE: Just a couple quick points about Will's response... it seems to me that both sides of this argument things begin to fray at the edges. I certainly agree that the gift exemption is a good idea, and even for the reasons Will suggests. But I also think that large estates (per the law before the recent changes) should be taxable just as any other wealth transfers would be. This seems reasonable regardless of whether the person has "earned" the transfer or not, which avoids Will's question about what it means to earn.

As for charitable contributions, I wasn't trying to make a statement about whether those contributions should be tax deductible or not (in fact, I tend to think charitable contributions should probably never be tax deductible); instead I just wanted to point out that the treatment should be the same whether the person is giving while alive or as part of an estate. This is complicated by the question of who pays the tax (either the recipient, as income tax with the donor writing it off, or the donor, as income tax before the gift), but I believe the consequences for the recipient will be similar mathematically regardless of when the tax is levied (?).

Will is right, of course, that the public policy on this question is philosophically incoherent; the reason for this is that the philosophical position being espoused is somewhat extreme (shall we say it has a pinkish hue?), and therefore practically unachievable. This doesn't mean, however, that we need to throw out the policy for being too compromising. Philosophical coherence doesn't have all that much relevance to policy anyway; usually the aim is to find a solution that's functional and practical (especially in a democracy).