Income inequality and wealth concentration are more than just media headlines describing the latest protest movement. These terms are seemingly everywhere today: from the work of economist Thomas Pikkety, to the Occupy Wall Street Movement, to every speech given by Senator Bernie Sanders and even to the pages of The Economist.
A study conducted in the United Kingdom was recently reported in The Independent article titled "Inherited wealth will decide how rich young people will become, a study warns." The findings suggest that changing economic forces – including rising home prices, stagnant wages and diminishing pensions -- are limiting opportunities for the younger generations. According to this study, the wealth of Great Britain’s young people will not come from their own hard work, but will instead be primarily determined by the inheritance provided by their parents.
As a result, many young people are protesting the repeal or cuts in the inheritance tax as a matter of social justice. As one liberal Democrat was quoted as saying, “It cannot be right that the wealthiest families amass vast fortunes, while millions of young people see their incomes fall and home ownership slip out of reach.”
While this study focused on the United Kingdom, it may also strike a cautionary note for us in the United States. As the new Congress and President Trump contemplate the future of our estate tax, don’t be surprised if the debate turns at some point to discussions of income inequality, wealth concentration and the social justice of estate taxation.
Reference: The Independent (January 5, 2017) "Inherited wealth will decide how rich young people will become, a study warns."