Anna Nicole Smith

I bet you didn’t expect to see this title on Relentlessly Progressive Economics, and it’s not just an attempt to get more Google hits. This story highlights some important questions about inheritance.

Not surprisingly, men have lined up for DNA tests to stake a claim on her late husband’s fortune via her baby. While some individuals have been criticized for coming forward, no one seems to be questioning the justness of this process.

The generally accepted premise is that Anna Nicole slept with a bunch of men and that whichever one happened to have impregnated her should get the billions of dollars. I do not see much rationale for this approach, but I cannot see a significantly fairer alternative.

The real problem is not the handling of this particular situation, but the whole concept of inheritance. The Anna Nicole DNA lottery underscores the ridiculousness of allocating vast fortunes based on heredity.

Even relying on the neoclassical principles of linking rewards to productivity and “equality of opportunity,” one can make quite a compelling case for abolishing inheritance. Some argue that inheritance is a necessary incentive for savings. However, if any of Marx’s analysis has garnered widespread acceptance, it is his point that accumulation has become an end unto itself in capitalist systems. In any case, the wealthy could create legacies through means other than inheritance such as philanthropy or building big monuments. Bill Gates and Warren Buffett seem to be following this path voluntarily.

While prohibiting inheritance may be impractical, taxing it would be eminently sensible. In addition to raising revenue and curbing the inequity of inheritance, such taxes can induce rich people to devote relatively more of their estates to untaxed charitable purposes (or to building big monuments).

Currently, Canada and Australia are perhaps the only western, industrialized countries without inheritance taxes or other taxes on accumulated wealth (other than property). Both countries used to have estate taxes at the provincial/state level, but interprovincial/interstate competition drove these taxes out of existence. Incidentally, this type of tax competition is the true cause of Canada’s current “fiscal imbalance.”

The US federal Estate Tax is being temporarily phased out, but will automatically be reinstated in 2011. There is a vigorous American lobby to maintain this tax. We should push for the introduction of a comparable tax at the federal level here in Canada.

3 comments

  • Any time money changes hands, the house should get a cut of the action, IMO.

  • It would be relatively simple to sell an inheritance tax to Canadians. simply make the first 350,000 tax free per estate or whatever level exempts the median value of the average estate, and then tax the rest at 30%.

  • I believe that Anna Nicole Smith died because she was taking so many diuretics. She was dehydrated . The diuretics caused her to have a bad Urinary Tract Infection which caused the vomiting, fever collapse. I do feel that she was not treated properly for her medical condition and did not receive the test needed to determine her weakness. I believe she suffered from the Narcissistic Personality Disorder and manipulated others to do the things she wanted done. If they did not do what she wanted ,she made them feel guilty. I feel that Howard K Stern was the victim. He was willing to do what ever she wanted to keep her happy. I do not believe he would have intentionally tried to kill her. She was his meal ticket. I believe that she is better off. She doesn’t have to worry about anything now. As for the little girl left behind, she will survive.

Leave a Reply

Your email address will not be published.