Welcome to our PeaSoup Ethics Forum on Stewart Braun’s review of Daniel Halliday ’s The Inheritance of Wealth (OUP, 2018).

From the blurb:

Daniel Halliday examines the moral grounding of the right to bequeath or transfer wealth. He engages with contemporary concerns about wealth inequality, class hierarchy, and taxation, while also drawing on the history of the egalitarian, utilitarian, and liberal traditions in political philosophy. He presents an egalitarian case for restricting inherited wealth, arguing that unrestricted inheritance is unjust to the extent that it enables and enhances the intergenerational replication of inequality. Here, inequality is understood in a group-based sense: the unjust effects of inheritance are principally in its tendency to concentrate certain opportunities into certain groups. This results in what Halliday describes as ‘economic segregation’. He defends a specific proposal about how to tax inherited wealth: roughly, inheritance should be taxed more heavily when it comes from old money. He rebuts some sceptical arguments against inheritance taxes, and makes suggestions about how tax schemes should be designed.

From the review:

The lack of direct attention that has been paid by political philosophers to the moral issue posed by inherited or bequeathed wealth is somewhat striking. While economists and political scientists have written books over the last 40 years or so squarely addressing inheritance, I am aware of only one sustained examination of the subject by a philosopher: D.W. Haslett’s Capitalism with Morality. In his excellently argued and highly original new book, The Inheritance of Wealth, Daniel Halliday effectively fills that gap.

Halliday’s main contention is that it is necessary to effectively tax inheritances or bequests because they are “flows” of unearned wealth, which over time lead to the type of economic segregation or inequality that is corrosive to a fair and equal society. The Rawlsian tone of this argument is unmistakable, and that is something Halliday acknowledges up front—in fact, he claims that one of his main aims is to explain why Rawls was right to call for the taxation of bequest and inheritance (3). If inheritance is a flow of wealth through families, then, when it is not properly taxed, it allows for the dynastic succession of wealth and the creation of a privileged class with the power to undermine the structure of a fair society.

A more subtly argued, but no less important point of the book, is Halliday’s claim that when properly taxed, inheritance and bequest can play important roles in upward social mobility and securing a fair capitalist market system. Fundamental to this position is his endorsement of a Rignano tax, which works by taxing inherited wealth progressively according to its age or, more specifically, the number of times it has been passed down. Halliday contends that the implementation of a Rignano tax will prevent dynastic concentrations of wealth while at the same time protecting incentives for productive work and allowing inheritance to serve as vehicle for the upward social mobility of poor families. Although the Rignano tax seems appropriately sensitive to work and savings incentives, it is rather less clear that it will prove effective in preventing dynastic concentrations of wealth because it appears to allow the process to begin.

[…] [T]he heart of the argument occurs in chapters four, five, and six, where Halliday diagnoses the injustice of improperly regulated inheritance as arising from its causal role in the unwarranted creation of economic segregation. Drawing inspiration from Pierre Bourdieu, Halliday claims that wealth attracts valuable non-financial capital such as exclusive opportunities, access to influential social networks, knowledge of social systems or institutions, and important cultural or behavioral norms that confer significant advantages on their possessors. When a small group in society substantially controls important forms of non-financial capital, pernicious status hierarchies can be developed as a result. Inherited or bequeathed wealth plays a fundamental role in this process by serving as vehicle by which non-financial capital is horded and maintained by an elite group through the intergenerational transfer of substantial financial wealth.

This argument is a real strength of the book because it responds to an oft repeated objection that bequests and inheritances are typically received too late in life to have any appreciable impact on people’s opportunity set or social standing. Once inheritance is conceptualized as a flow of wealth over time, that objection no longer has any force. A future inheritor need not actually possess the wealth to benefit from the non-financial capital that the family has accumulated as result of holding the wealth over time. In other words, if substantial wealth has existed in the family for a couple of generations or more, then non-financial capital will have accrued to the family so that the eventual beneficiary will already have reaped significant social advantages before the bequeathed wealth even arrives.

Another point in favor of this account is the way that it insightfully combines luck and social egalitarian justifications of taxation. What makes inheritance unjust is not simply that it is contingent, á la luck egalitarianism, or that, per social egalitarianism, it may be a cause of social distinctions, but rather that it is an arbitrary cause of privilege that ultimately ends up grounding unacceptable status hierarchies. So basically, the problem with untaxed inheritance or bequest is that it generates inequality that has no good justification. This argument grants Halliday the space to claim that inheritance is acceptable when it is properly taxed since, instead of generating objectionable inequality, it could serve as a vehicle for upward mobility among poor families by enabling them to gain the wealth and non-financial capital they need for increased opportunity.

As Halliday states, “first-generation inheritance may be a valuable means of promoting upward mobility…there is nothing wrong with wealth attracting valuable nonfinancial capital if this is what enables people to get out of poverty…” (154).


The largest quibble I have with the book, however, is the more practical claim that a Rignano tax will effectively prevent the dynastic concentration of wealth and the inequality that accompanies such an occurrence. Halliday’s support for a Rignano scheme is primarily motivated by two concerns: 1) the existence of economic segregation and 2) a concern not to disincentivize entrepreneurial activity or investment saving. A Rignano scheme purportedly addresses both concerns because it chips away at an original inheritance as it is passed down through the generations, thus purportedly preventing the dynastic accumulation of financial and non-financial capital. However, since any newly created wealth can initially be passed on free from taxation or at a significantly lower rate, the Rignano scheme does not dis-incentivize wealth creation or entrepreneurial activity.

To illustrate using Halliday’s example (62), imagine an individual G1 who leaves $100 to her offspring G2 with a Rignano tax scheme in place with rates that increase from 0% to 50% then to 100% per iteration. Because G1 generated the $100 she can pass it on tax free to G2. However, when G2 wants to bequeath the $100, it will incur a 50% tax. Hence, unless G2 creates additional wealth beyond the original $100, G3 will only receive $50. Assuming that G3 creates no additional wealth, her bequest will be taxed at 100% and G4 will receive nothing. According to Halliday, this prevents the dynastic succession of wealth and helps to limit economic segregation because families will not be able to use inherited wealth to ensure the maintenance of their non-financial capital.

But I worry that in contrast to a more traditional tax that is strongly financially progressive, a Rignano scheme allows economic segregation to start. This concern is borne out even in the extreme example of the Rignano scheme just discussed, and it is likely to be even more pronounced in real-world examples where the step-up would be expected to be less severe. The problem is that G1 can pass on all of her estate (or G2 can inherit all of G1’s bequest) tax free, or at least at a substantially reduced rate. This means that both G2 and G3 are likely to gain substantial benefits from G1. G2 is likely to benefit from the general wealth of her parent(s) and the economic cushion that an inheritance will provide, while G3 is likely to be in a position to also benefit from nonfinancial capital that would have had two generations of time to develop. Importantly, as Halliday notes, sociologists have shown that the wealth of a person’s grandparents are better predictors of the person’s lifetime income than the wealth of her parents.

This “grandparent effect” (123) is likely to enhance the position of G4 as well since, even though she will inherit nothing, her grandparent was G2 who did inherit a substantial sum. It could even be surmised that G5 will remain in a privileged socioeconomic position given that his grandparents were G3, who still inherited something of substance. Furthermore, all of the foregoing still assumes that the generations following the initial bequest/inheritance did not use that inheritance to further grow their wealth. If a significant inheritance provides socioeconomic advantages, then it is likely that some of the later generations will have used those advantages to grow their wealth. So, I am not convinced that a Rignano scheme will effectively prevent the type of dynastic succession and economic segregation that Halliday is worried about. In contrast to a robust Rignano scheme, a strong, financially progressive inheritance tax prevents G1 from transferring a large portion of her wealth to G2 in the first place. It therefore prevents the chain of transmission from getting started. Hence, it would likely prove more effective in limiting the development of economic segregation. Moreover, even though the tax is financially progressive, that fact does not mean that G2 cannot inherit enough to help her or her progeny escape poverty, if they were poor. Certainly, a progressive tax could be calibrated to allow persons to inherit moderate amounts of wealth.


Overall, the Inheritance of Wealth presents a robust justification for the taxation of inheritance or bequest; one that easily overcomes the myriad objections that have been levelled at that form of taxation. In that vein, it provides philosophers, policy-makers, as well as the general public, with a clear prescription for a fairer, more effective system of taxation and, indeed, a more just society. And although I am less sympathetic to a Rignano tax scheme than Halliday, he deserves credit for bringing renewed attention to it and demonstrating how the scheme could serve as an important tool for liberal egalitarian theorists. Ultimately, there is little doubt that the book will serve as the foundation for much further normative theorizing on the topic of inherited wealth.

10 Replies to “Daniel Halliday: ‘The Inheritance of Wealth’. Review by Stewart Braun

  1. It’s great to have this book – thanks Dan for writing it! Also, I find the review very helpful. I want to ask you, Dan, what you think about the importance of preventing some downward social mobility, more precisely preventing the falling into poverty from a middle- or upper-class position. Related: do (relatively) rich people whose children lack marketable talents have a moral permission to bequest enough to avoid these children’s future poverty? If not, why not? If yes, will a Rignano scheme always allow them to do so?

  2. Thanks Anca, first a general thought: Any endorsement of ‘social mobility’ risks being dishonest if the possibility of downward mobility goes unrecognised. It’s a separate question, of course, whether it’s right to say that downward mobility should simply be allowed to occur, or whether it’s something that we should try and stop from happening. I take that to be a general question that all views about distributive justice ought to have something to say about.
    Should wealthy parents be allowed to bequeath/transfer to prevent their children from falling into poverty? This question has added significance insofar as wages are now stagnating and intergenerational transfers may be more crucial in holding up a middle class than in recent decades when labour markets offered more return. There’s a very quick comment about this in the book (p13) where I try to register this complication but don’t say anything really committed about it. I think a more committed answer is yes, some freedom of bequest/transfer is defensible if the alternative of high inheritance taxes would in fact erode the private wealth stock. The case for this claim would draw on the more general reasons for why relatively dispersed private wealth is a good thing, and converge with the general intuition that inheritance isn’t bad or unjust if everyone gets some. As your question indicates, nothing follows about whether a right of bequest should endure simply to stop one’s children from being less well off than oneself, which would in effect be a right just to make sure that rich families stay rich as long as inheritance allows that to happen. This would be harder to defend.
    As for the Rignano scheme, the design can vary and end up being quite close to traditional progressive taxation. The basic idea remains that parents would tend to face greater restriction on their bequests if they had themselves inherited from the generation before. But, like any other inheritance tax, a Rignano scheme can coherently make consistent exemptions for the inheritance of relatively small fortunes, such as those that could be regarded merely as achieving protection against poverty.

  3. Some thoughts now about Stewart’s review. (Thanks, Stewart, for writing this.)
    In effect, Stewart’s worry is that a Rignano scheme, by being soft on first-generation inheritance, intervenes too late to stop inheritance from doing much of its work in promoting economic segregation. This is to grant the empirical/sociological story about how wealth transfers gradually help non-financial capital concentrate into families that have inheritance – a story some might want to question. Progressive taxation, which merely responds to the size of a transfer (estate tax), or the size of the income already enjoyed by the beneficiary (receipts tax) promises to get in sooner.
    One concessive reply is to just suggest that a Rignano scheme is merely any scheme on which whether a transfer counts as first or second-generation inheritance should make *some* difference to that transfer’s liability to taxation. This difference may end up being quite small, resulting in a Rignano scheme that is quite close to progressive taxation.
    Whether a strong Rignano scheme should still be preferred will depend on the finer points about how much effect is had by first-generation transfers, and how strongly this effect lingers through G4, G5, etc. The book does not do enough to show why Stewart isn’t right about this, so far as the facts about the effects of transfer on segregation are concerned.
    A final suggestion for preferring a strong Rignano scheme (no tax G1 to G2) is that it may enjoy greater political feasibility than a standard progressive tax on inheritances. We live in an era in which political narrative successfully demonize inheritance taxes by framing them as a tax on newly produced wealth, when in fact much of the inheritance flow is nth generation rather than first generation transfers (see the books closing remarks at pp209-210). The prominence of such narratives suggests that electorates may find a Rignano scheme quite palatable, and that the successful suppression of inheritance taxes in political campaigning owes much to reinforcing the assumption that first-generation transfers would be targeted by the tax, rather than exempted by it.

  4. Hi Dan,
    As you know I think this is a really important book, especially given the current situation regarding economic inequality. It’s great to have a further chance to discuss it, and I have two additional questions that I thought might be worth exploring.
    1) The strongest argument for the Rignano scheme seems to come from the side of incentive effects–if you want to pass on wealth, you are going to be required to generate some new wealth yourself. With that in mind, it seems to me that a robust Rignano scheme is to be strongly preferred because it forces inheritors to generate significant new wealth if they do not want the ‘principal’ to be reduced when they go to pass it on, i.e. they can bequeath the same amount or more wealth than they received. Without a strong Rignano tax, I would worry that an inheritor could simply deposit the wealth in an interest-bearing account or some other financial vehicle and generate enough wealth to avoid any meaningful reduction in the wealth passed on. On a related note, should the Rignano tax have any sensitivity to the way the new wealth is generated? Normatively speaking, should the tax privilege labor income over capital gains or interest income etc.?
    2) A second question I wanted to broach was around the issue of ‘economic segregation’. I think this is a really important part of the book because it shows why the dynastic succession of wealth is harmful. As you rightly contend, economic segregation can damage fair equality of opportunity. My question is whether you would be open to justifying an inheritance tax on the grounds of social solidarity or ensuring a community ethos? It seems to me that another reason that economic segregation is so bad is that divides society, leading to a situation where community and solidarity are lacking. G.A. Cohen in his discussion of equality in Why Not Socialism?, says that inequality should be constrained by a principle of community that enables members of society to recognize, understand and commensurate with the situation of all other members. In such a society, the bonds of community are deep and that enables citizens to connect with and care for one another. I would interpret unregulated or ineffectively taxed inheritance as violating that principle because it leads to economic segregation. Is that an argument that you would be willing to accept?

  5. Thanks for adding these extra questions, Stewart.
    Re (1), Yes, an apparent shortcoming of a Rignano scheme is that pays no attention to what happens to an inherited fortune during the time between transfers, which can obviously take a long time. Critics like Wedgwood drew some attention to this in the early 20th century, when criticising Rignano. In today’s world the worry likely has more force, as people live longer and can do more to accumulate income ‘passively’ between transfers. It would be an open question, I think, whether to try and address this directly (e.g. by taxing income from savings, as some jurisdictions already do), or indirectly by simply having higher rates of taxation at the point of transfer, again departing perhaps from Rignano’s suggestion of zero taxation on first generation transfers.
    On the matter of distinguishing between different methods of wealth generation, I don’t recall anything in Rignano’s own writings addressing this explicitly. That being said, he did seem to presuppose a focus on wealth that came about through creative activity rather than appreciation such as capital gains: I say this because he believed that states should eventually nationalise and control capital via eventual inheritance tax but were not good at creating it in the first place (compared with individuals). This is supposed to count in favour of his scheme but the argument is not developed in any great detail.
    Rignano’s own views aside, I imagine a case could be made for making such a distinction without committing to a view on inheritance. Some jurisdictions already tax income from labour at a higher effective rate than income from capital gains, so the question you ask already has much motivation outside of the scope of any conversation about inheritance.
    Re (2), I think much might depend on what sort of factors strengthen an ethos in the first place. One possibility is that shared exposure to hardship, such as the experience of the population during world war 2, did something to create a more egalitarian ethos in (for example) the UK. Cohen gestures at this possibility, if I remember correctly (he accuses Margaret Thatcher’s policies as contributing to the erosion of a more egalitarian ethos). I’m unsure of whether taxation can play a role in ethos-construction, though perhaps it can. Cohen’s views idea of the principle of community are, I think, not identical with what views he gestures at regarding what causes an ethos to rise or fall. The idea of communal reciprocity in ‘Why Not Socialism’ is, if I’ve understood correctly, about wanting to produce for the sake of benefitting fellow citizens, as opposed to market reward. Unclear how to tease out implications for things like wealth transfer or inheritance as opposed to first-order productive activity. Indeed, one of the more striking features of Cohen’s egalitarianism is his more or less complete silence on what to say about inheritance.

  6. Hi Daniel,

    Thanks for participating in this. I wanted to ask a very naive question since this is outside my wheelhouse. How should we think about the scope of ‘inheritance’? Does it track the legal use of the term, meaning roughly the receipt of money or property from the estate of a deceased person? If so, I’m not quite sure how effective a Rignano tax scheme would be, since presumably one could avoid it by transferring wealth to one’s beneficiaries shortly prior to death. Or even a long time prior to death: to take a topical example, giving your kid millions of dollars in interest free loans to kick-start their career can do a lot to allow your kid to generate a huge quantity of wealth by starting fairly inept businesses.

    I guess the broader two-part question is: (a) if we tax inheritance more onerously from other wealth transfers, should we expect to see wealth be transferred across generations via different wealth transfers, and (b) can we use anything like a Rignano scheme to tax these other wealth transfers?

  7. Daniel Wodak’s question about inter vivos gifting put me in mind of the libertarian objection to inheritance taxation. Per their argument, a bequest is just another form of a gift. It does not really matter whether the donor is alive or dead because in either case, taxing or blocking that gift amounts to unacceptable interference. Loren Lomasky makes this type of argument in his Persons Rights and the Moral Community where he claims that persons are project-pursuers and that a bequest is simply a way for a person to effectively pursue their projects, especially those that may extend past the person’s natural life span. Hence, taxing bequest interferes with an agent’s ability to pursue certain projects. Do you think your invocation of the Rignano tax could be used to respond to this type of objection? I am thinking that you might be able to argue that because according to the Rignano scheme any newly created wealth can be passed on tax free, a person still possesses substantial freedom to pursue projects through bequest. I am wondering if you thought something along those lines would be possible?

  8. Daniel: The orthodoxy regarding terminology is to treat ‘inheritance’ as something roughly equivalent to ‘intergenerational wealth transfers’. This would exclude ‘horizontal bequests’, which is most commonly a transfer to a surviving spouse. It would also exclude bequests to other entities, like charities, though the independent moral significance of how to define and regulate the charity sector means there are questions about these sorts of bequests/transfers.
    As to your substantive question, a Rignano scheme (or any other scheme) construed as a receipts tax will simply treat pre-death transfers much the same as posthumous transfers. There are various problems with receipts taxes versus estates taxes but I don’t think these bear much on whether the liability is calculated Rignano style or not. It’s also unclear, empirically, how strongly people would transfer pre-death to avoid an estate tax on posthumous transfers. Overall, the motivation for transferring wealth has been hard to figure out as an empirical matter. Some discussion of this in chapter 8.

    Stewart: Yes I see how Lomasky’s view might favour a Rignano scheme: It may be that passing on wealth you (merely) received by way of an earlier inheritance is not really a ‘project’, as there is no creating work going on, merely whatever effort is required to not squander the fortune. It’s a further question whether we should view bequest as ‘simply’ a way to pursue a project compared with an inter-vivos transfer, which will often require greater sacrifice on the part of the donating party. Overall, I would like to see libertarians spend more time discussing inheritance, as I think they may end up going different ways on this issue.

  9. Dear Daniel,
    Thanks a lot for this very complete book on inheritance. I would like to challenge the argument saying that one advantage of a Rignano-scheme is that it gives “everyone an incentive to be more productive” (p. 183). In a context of ecological crisis, I am wondering if the incentive to produce more at each generation remains legitimate. If we agree on the fact that an inheritance taxation should give some incentive to save and preserve the wealth received from the previous generation without destroying it, but not to increase the production (in particular because of undesirable ecological sides effect of the production), could a Rignano-scheme be designed to achieve this goal?

  10. Hi Marie,
    Yes, I see what you mean: There has always been an interesting view on which production should slow down once the wealth stock has become substantial enough for us to live well off, partly for ecological reasons though also so we don’t need to have such busy lives. Obviously this would require some arrangement to allow intergenerational transfers in such a way as to keep the wealth stock dispersed – ideally, perhaps, something like large but equally distributed inheritances. Could a Rignano scheme help with this? I doubt it, though it could prove compatible with what other efforts we put in place to reduce ecological damage.

    One remote possibility would be to somehow distinguish between newly produced wealth that had come about with bad ecological side effects, and put extra restrictions on the subsequent transfer of that wealth (this is not an extension of the Rignano idea, however). I can’t see this being easy to do, and in any case this would be better incentivized by other means (perhaps a carbon tax) than an inheritance tax.

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