Here’s a hint. Real Estate taxes are not meant to keep people from owning their own homes.
Is it to stop wealth from accumulating? A 40 % percent tax once every 30 years, with the first $5,000,000 free? No. It wouldn’t take a genius to pick a bunch of assets that will return better than inflation plus 1.33%. Like property for rental to those who can’t afford a down payment. It takes money to make money, and for those who have it, wealth begets wealth.
The hypothetical 84-year old billionaire who shuffles off this mortal coil in 2014 was born in 1930. He was 34, and probably well ensconced in a multigenerational line of privilege, when the Civil Rights Act of 1964 officially banned discrimination based on race, color, sex, religion, and national origin. Hard-earned wealth? Certainly, at least in part. From an entirely level playing field? Not so much. When the final reckoning comes, a little social engineering might be tempting. But that turns out to be totally not the point.
The answer is:
The purpose of the estate tax is to keep all other taxes as low a possible. It’s so we can have roads, and courts, and a patent office, and science, and food safety, and mine inspectors, and air traffic controllers, and earned benefits in retirement, and national defense, and so we don’t have to tax milk.
And for those who have followed me over the fold, here is your bonus question.
What is the most important different between rich people and everyone else?
Other than "Rich people usually get this one wrong?"
The answer, of course, is that rich people have a lot more money.