Republican legislators have only a few weeks left to finalize the specifics of their long-awaited tax reform plan. Initially, the plan's outline included language that would repeal the estate tax—a legislative reform that President Trump promised while campaigning. However, as the deadline nears, Republicans are considering ditching the repeal in the interest of compromise. Before they make their final decision, they should bear in mind the estate tax is as economically inefficient as it is socially indefensible.

The federal estate tax (often called the "death tax" by its detractors) has existed in its modern form since 1916. Essentially, it's a tax on the right to transfer property at one's death and applies to the market value of everything owned at that time including cash, stocks, bonds, buildings, trusts, vehicles, and even books. Fortunately, Americans with estates less than $5,490,000 (as of 2017) are exempted from the tax, while the rest, depending on how much larger their estate is than that exemption, are forced to pay between 18 and 40 percent.

While it may seem like a reasonable means of raising revenue at the expense of folks who no longer need their money, it isn't.

The estate tax typically totals less than 1 percent of annual federal tax revenue, largely because many Americans, through clever estate planning, are able to sidestep its grasp. However, these evasion tactics are costly and siphon away funds from production and investment. Likewise, some Americans who lack the foresight or means to evade the tax are beleaguered by unproductive and exorbitant compliance costs. According to a report from the Tax Foundation, the collective compliance burden is roughly equal to the amount of revenue raised. Worse, however, than the costs of evasion or compliance, is the tax's tendency to curb people's income as they enter their golden years.

According to a working paper from the National Bureau of Economic Research, an analysis of tax data from 1916 to 1996 shows a robust inverse relationship between estate tax rates and the size of taxable estates. The authors suggest that this is because the elderly account for the amount of assets their heirs will inherit and don't seek as many lucrative opportunities when they know that the rate of taxation on their estate will be higher. However, the economic data regarding the efficiency of the estate tax as a revenue source don't address the more enchanting social dimension of arguments often made in favor of the tax's endurance.

Supporters of the estate tax, such as Columbia professor Michael J. Graetz, aside from touting revenue benefits, laud its qualities as a means to check the possession of unearned wealth. For example, in The Wall Street Journal, Graetz argues, "Is it fair for Paris Hilton to inherit her great-grandfather Conrad's fortune without paying any tax on it?... that's what the case for the estate tax boils down to: basic fairness."

Rhetoric like this has a pedigree in American politics visible in the abortive ambitions of former Louisiana Gov. Huey Long's Depression Era "Share the Wealth" plan, which would have capped inheritances, as well as Sen. Bernie Sanders' more surreptitiously named Responsible Estate Tax Act, which would raise the top rate to 65 percent. However, this line of argumentation—that by stemming the growth of multigenerational wealth, policymakers can ensure that fewer folks have access to unearned advantages and thus promote the cause of fairness—is thoroughly misguided.

Living parents who've earned their wealth, not blue-blooded ancestors, generally provide the financial benefits of extreme wealth to the undeserving young—meaning that even an inescapable estate tax would do little to check their privilege, unless they're born into families that have been loaded for more than two generations, which is unlikely. About 70 percent of wealthy families exhaust their wealth by the second generation and a stunning 90 percent by the third, even with the aid of estate tax loopholes and evasion tactics at their disposal.

Yet, even when familial wealth persists past the third generation and is bestowed on entirely "unworthy" young people, the results are not necessarily detrimental to the public good.

The inheritance of multigenerational wealth allows people, especially young people, to comfortably pursue callings that, despite their vital importance to human flourishing, are typically uncompensated by the market.

For example, an early inheritance allowed luminaries such as Lord Byron, Ludwig Wittgenstein, and Thomas Jefferson, respectively, to pursue the unprofitable yet enduringly valuable aims of poetry, philosophy, and political reform. Essentially, multigenerational wealth ensures there can be at least some people who can disregard the costs of living and focus on generating public goods that are universally enjoyed but rarely paid for.

On that note, the pursuit and support of those public goods by families with multigenerational wealth isn't merely an inconsequential variable in the tradeoffs involved in permitting the growth of multigenerational wealth—it's a cornerstone of American culture.

For example, whereas in Europe museums, theaters, symphony halls, and other cultural institutions are typically government-subsidized, here they gain the bulk of their funding from the generosity of philanthropic foundations founded and sustained by the stewards of multigenerational wealth, such as the Rockefeller, Ford, and Andrew W. Mellon Foundations. Consequently, American culture is less an expression of the whims of bureaucrats and more a manifestation of the will of its citizenry.

Ultimately, the estate tax compels Americans to waste their money on evasive estate planning and compliance costs, discourages them from pursuing profits in old age, and stymies America's unique cultural dynamic—all in order to satisfy the urges of egalitarian idealists. It is a costly injustice and Republicans should keep that fact in mind while considering whether to barter its repeal for political ease.

Michael Shindler (@MichaelShindler) is an advocate with Young Voices.

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