The Merit of Ascription? Economic Elite Perceptions of Inheritance Taxation.

Inheritance represents a conflict between the individual and society. On one hand, the intergenerational transmission of resources favors the reproduction of privilege. On the other hand, contemporary individualization processes prioritize individual achievement. This paper addresses this conflict through a sociological approach by analyzing perceptions of inheritance taxation based on 32 in-depth interviews with members of the economic elite in Chile. Findings show that the principle of individual freedom in decisions regarding resource use prevails over the redistributive function that controls inheritance and favors personal attainment. In addition, a negative view of inheritance prevails, which is sustained by three major repertoires of evaluation emphasizing its inefficiency, ineffectiveness, economic inconvenience, and lack of foundation, as its purpose or utility is unknown. This last argument is surprising because it does not reject this tax for its design or application; rather, it confronts some crucial ideas with which it is usually linked, namely opportunity levelling at the beginning of a new generation and redistribution of privilege.

Introduction

Inheritance confronts several modern ideas. First, inheritance is one of the main means of wealth accumulation, but unlike others such as labor, it is not based on an individual’s own value creation but on that of others. Second, the control of inheritance and the promotion of education are the two main mechanisms for isolating the individual from his/her family history and making him the owner of his/her work (Rosanvallon, 2012), which is a primary condition for fighting the discrimination that hinders merit and fair competition (Dubet, 2011). Third, inheritance favors the intergenerational reproduction of wealth, preserving inequalities of the past (Piketty, 2014) that have nothing to do with a new generation.

The inheritance of wealth continues to be of great importance in modern societies, with huge amounts of income transferred between generations (Wiktor, 2010). Wealth is more concentrated than income; it benefits the population’s highest percentiles (Beckert, 2013) and therefore accentuates inequality. Inherited wealth, especially when controlled and managed by families in successive generations, can remain longer than an individual’s own earned wealth (Korom et al., 2017). However, inheritance taxation is highly controversial and unpopular in diverse welfare regimes in Europe and North America (e.g., Graetz & Shapiro, 2005; Hammar et al., 2008). Moreover, the expectation that democracy may set out and strengthen this tax is not fulfilled in practice (Scheve & Stasavage, 2012). Thus, the past’s influence persists in modern accumulation practices (Savage, 2014), connecting with the threat of a social order led by an “inherited oligarchy” (Stiglitz, 2012)1 and the risk that economic inequality becomes inherited political inequality (Putnam, 2015:237).

In this article, I seek to contribute to the sociological analysis of inheritance taxation and the justification of wealth concentration by examining the arguments and repertoires that explain the positive or negative evaluation of inheritance in countries with persistent and high economic inequality such as Chile. With this aim, I focus on the economic elite—the group most affected by this tax and with the highest chance of mobilizing opposition to it. Furthermore, the Chilean case reveals the performance of inheritance taxation within a tax system that has followed a different institutional trajectory compared to North American and European countries on which the literature is mostly based. This trajectory shows a regressive tax structure, with low redistribution levels and limited ability to tax the rich, and is part of Latin America’s distinctive fiscal profile (Atria et al., 2019; Mahon, 2018).

Specifically, I attempt in this paper (i) to reconstruct the arguments and justifications for accepting or rejecting the inheritance tax, (ii) to analyze how these arguments relate to the premises of merit and equal opportunity, and (iii) to contribute to understanding the contemporary elite mentalities that legitimize economic inequality across countries.

This article addresses three shortcomings in the existing literature regarding the social meanings of inheritance taxation. First, it offers evidence on the repertoires of evaluation perpetuating intergenerational transmission of advantages and disadvantages in a national context where fiscal policy effectiveness faces greater problems than it does in high-income countries (Torgler & Schaffner, 2007). Second, it provides specific information on the economic elite, a group for which little is known (Khan, 2011), particularly their tax morale and generation and use of wealth related to household savings and investment decisions (Killewald et al., 2017). Third, it links the debate on wealth inheritance with ideas of meritocracy and equality of opportunity, which are frequently used to justify advantaged positions in current society.

In this work I empirically study the perceptions of inheritance from 32 in-depth interviews conducted with members of the economic elite. I selected the individuals based on position and resource criteria, and they answered questions about inheritance taxation, as well as other aspects of tax structure and compliance.

Results show that a negative view of inheritance tax prevails. This is sustained by three major repertoires of evaluation that emphasize its inefficiency, ineffectiveness, economic inconvenience, and lack of foundation, as its purpose or utility is unknown. In particular, the latter suggests that for the Chilean economic elite the inheritance tax is an inappropriate instrument for current societies, responding to obsolete models of society. This last argument is surprising because it does not reject this tax for its design or application; rather, it ignores or denies some crucial ideas with which it is usually linked, namely, opportunity levelling at the beginning of a new generation and redistribution of privilege. By perceiving inheritance taxation as an anachronistic instrument, the bases for its origin are neglected. These bases conceive this tax as a modern mechanism to help value individual achievement over ascriptive status and to reduce the influence of previous generations. Based on these findings, I argue that opposition to inheritance taxation shows that the principle of individual freedom in decisions regarding resource use prevails over the redistributive function that controls inheritance and favors personal attainment. This predominance reveals the particularities of a neoliberal logic, where a widespread discourse favoring merit and equal opportunities is compatible with the defense of inherited wealth. By examining this rationality and its narratives and applications, one may understand how elites underplay the influence of ascriptive factors in limiting or enhancing social mobility as well as how opposition to public policy facing economic concentration is justified.

This article is organized as follows. First, I discuss elite justification of inequalities, the foundations of inheritance taxation, arguments to oppose its application, and the Chilean tax policy with a focus on elites. Second, I describe the methodology followed in the empirical work. Third, I present the results, highlighting the main arguments and justifications of the economic elite for evaluating inheritance tax and the main repertoires of evaluation with which these views are analyzed. Finally, I highlight the main contributions of this work, future research, and policy implications.

Inheritance and Taxation: An Analytical Framework

Elite Justification of Inequalities

The reproduction of economic concentration is supported by a series of institutions, discourses, and practices that allow inequalities to be sustained and legitimized in social life. To analyze these dynamics, one must consider not only institutions, dominant actors, or ecological effects but also cultural processes that allow for the understanding of how people make sense of inequalities (Lamont et al., 2014).

Given that the possession of social resources is substantially different from the rest of the population, it is of particular interest how elites justify economic concentration, opportunity hoarding and low redistribution while defending equal opportunity and democracy (Khan, 2011; López et al., 2020). The analysis of arguments and justifications in speech and in action (Boltanski & Thévenot, 2006) helps to understand what collective normative repertoires are used to explain economic disparities, and what political grammars are utilized in a pluralistic and democratic public sphere, among others (Lamont & Thévenot, 2000; Sachweh, 2012). By referring to concrete policies or instruments, such as the inheritance tax, elites must also account for their relations and differences with other groups, shedding light on the moralities of the wealthy about personal value and success and the measures deemed appropriate to address economic concentration (Hecht, 2021; Kantola & Kuusela, 2019).

Recent research shows that the economic elite tends to neglect or approve inequalities to justify their own positions (Hecht, 2021). In addition, the cultural norms and repertoires of its members relate more directly to material resources than those of other groups, as their positions of power and distinctive influence allow them to mediate between material conditions and cultural frames by intervening in salaries and labor conditions, thus shaping the distribution within firms and organizations (Kuusela, 2020:5). Arguments based on hard work and merit show the relevance of these attributes in narratives explaining individual position and defending the possibilities of upward social mobility (Kantola & Kuusela, 2018), even in societies with significant and persistent achievement gaps (Atria et al., 2020; Krozer, 2020).

Social scientists have also highlighted the family’s role in everyday practices that sustain the intergenerational transmission of wealth (Gilding, 2005) and therefore nurture opposition narratives to inheritance taxation. Arguments and normative repertoires reveal that sharing wealth is desirable but “in a familistic and dynastic manner” (Kuusela, 2018:8). Furthermore, several studies show that inequality can favor a greater distance between elites and the rest of the population and neglects the consequences of socially relevant resource accumulation, generating “empathy gulfs” (Shapiro, 2002), “hyperopia of wealth” (Kuusela, 2020), and a “poor sociological imagination,” which emphasizes the resilience of individual agents in front of structural constraints (Edmiston, 2018:11).

A Critique of Inheritance in Modern Society and Arguments to Oppose Inheritance Taxation

Although there are several types of intergenerational transfers, inheritance is distinctive due to its political and socioeconomic dimensions because it affects how the notion of economic equality is made concrete, the social valuation of individual achievement—by giving economic relevance to resources generated by others—and the realization of the common good (Beckert, 2005).

For Durkheim (1957), inheritance may create inequalities between individuals from birth. It also undermines the moral dimension of property, as the heir acquires goods that are a result not of his/her own creation but of family circumstances that did not involve his/her effort. For Durkheim, inheritance was linked to archaic concepts and practices that have no place in the ethics of the present (Durkheim, 1957:174). The problem of inheritance is strengthened as individualism arises as a basic feature that structures social life, transforming the organization of institutions and prioritizing the individual over the collective (Giddens, 1991; Lechner, 2002; Raddon & Ciupa, 2011).

Wealth inheritance also problematizes the composition of elites by favoring the persistence of diffuse and less specialized elites instead of strategic elites based on talent and effort, a normative assumption suggested by literature in the middle of the twentieth century. The view of strategic elites was conceived in the context of differentiation processes resulting in the growth and complexity of advanced industrial societies (Keller, 1963:57). However, the continuity of economic elites based on social origin and familial organization of economic resources has been largely documented in current societies, particularly in Chile and other Latin American countries (e.g., Zeitlin & Ratcliff, 1989; Zimmerman, 2019). Given that the exercise of economic and political power by elites is key to allowing or blocking social change, that their values and preferences are often different from the rest of the population (Page et al., 2013), and that their opinions are more influential in public debate (Khan, 2012), access to the top based on the influence of the past or on individual merit has drastically different implications in terms of social legitimacy.

The literature shows five types of arguments mobilized to reject inheritance taxation. First, self-interest suggests that those most affected by inheritance taxation are more likely to oppose it for their own convenience (Gemmell et al., 2004). Second, on one hand, efficiency is associated with the testator’s interests to perpetuate family wealth against any fiscal pretension (Clignet, 1995) and, on the other hand, it highlights the inefficiency of giving those resources to the state, discouraging individual savings because a portion will be given away in the future (Beckert, 2008). Third, trust is understood either as political trust that affects support for tax reduction (Rudolph, 2009) or as a negative evaluation of the government’s ability to spend (Lewis & White, 2006). A fourth argument is reciprocity, which conceives of inheritance as a tool for intergenerational solidarity within families, facilitating their continuity by rewarding family loyalty and care for the elderly (Bawin-Legros & Stassen, 2002; Clignet, 1995; McNamee & Miller, 1998). The fifth argument refers to tax design and implementation, questioning whether it entails a double taxation and creates difficulties to pay the tax due to lack of liquidity (Rowlingson, 2008).2

Dilemmas related to inheritance-based wealth transfers range from purely individual aspects—testamentary choices based on the testator’s preferences—to the social influence of the family or community (Schwartz, 1993). This allows thinking in three major domains: individual, familial, and societal (Beckert, 2008). Thus, part of this paper’s contribution is to study the extent to which the discourses of the economic elite correspond to those arguments and take place in these domains.

Taxes and the Economic Elite in Chile

According to the Gini coefficient, Chile ranks among the 15 most unequal countries in the world and has levels of income concentration in the top 1% by international comparison (Flores et al., 2020).

The Chilean tax system’s design has historically shown the reluctance of the wealthy to pay taxes and the organized action of business groups to block progressive and redistributive reforms. Such reticence is especially shown in payment of wealth and direct taxes, and thus, perceptions and beliefs against these taxes seem to converge. On the one hand, unwillingness to pay has been justified on the basis of anti-statist attitudes that show distrust in the efficiency and effectiveness of public policies and antipathy toward the state’s leading role in the economy (Undurraga, 2014). On the other hand, Chile’s fiscal capacity, although among the strongest in Latin America, is insufficient to tax the wealthy, which is a similar feature when compared to most countries in the region (Atria et al., 2019; Ondetti, 2021). As a result, indirect taxes have always been the main revenue source. Even when the income tax rose and reached rates similar to those of European countries in the 1950s and 1960s—which should indicate increased progressivity—social scientists of the time noted that the rich had a lower tax burden than other groups because of numerous exemptions (Ffrench-Davis, 1973) and weak enforcement (Ahumada, 1958).

The opposition of elites and right-wing parties to tax reforms, as well as the preference of center and left-wing parties to exclude the middle and lower classes from the income tax using solidarity arguments, have configured a political system that fails to make explicit the distribution of sacrifices necessary to finance public services (Labarca & Biehl, 2021). The fiscal pact is invisible, as only the richest pay the income tax (Biehl et al., 2019), but exemptions and tax planning mechanisms generate an equivalent tax burden at both ends of the population (Castelletti, 2013). Historically, tax increases were justified only due to international crises, falling commodity prices, or covering carryover deficits and not as contributions of the citizenry to finance public goods. In addition, inheritance and wealth taxes introduced in some governments were discarded because of high evasion and a lack of political agreement. Without wars that demand greater resources for military spending by activating patriotic attitudes and national pride (Rosanvallon, 2012; Scheve & Stasavage, 2012), the pressure for a greater contribution from the richest for reasons of solidarity and patriotism has only been exercised to finance reconstruction after major earthquakes but with modest collection and progressivity effects (Gil & Atria, 2021).

Negative views of the state persisted after the return to democracy following the Pinochet dictatorship (1973–1989), which shaped the Chilean capitalist project from a profound institutional and cultural transformation motivated by neoliberal principles (Gárate, 2016). Although critics in much of the twentieth century believed that fiscal actions hindered development, the backlash against Salvador Allende’s Unidad Popular government (1970–1973) has been the main argument to oppose higher taxes and an expanded role of state in the last 30 years. In that government, the public sector expanded, anti-inequality policies were promoted, and the power of workers increased. This strengthened the cohesion of the economic elite to defend themselves against a project perceived as the transition to a socialist system in a context of economic crisis and extreme political polarization (Ondetti, 2021). Although the return to democracy has only allowed small tax increases for the purpose of educational reform and greater social spending focused on the poorest, business groups have blocked higher taxes by criticizing them for the damage to the middle class, entrepreneurship, and economic growth (Fairfield, 2015). In a largely unregulated free market system, where each individual’s resources mediates access to social services, the economic elite are mostly inclined to private services, reinforcing their opposition to higher taxes by arguing that too little is received in return for what is paid.

The Chilean inheritance tax has a progressive design, and the majority of the population is exempt because a significant amount must be inherited to be taxed (more than US $68,000). The maximum tax rate is 25%, which is middle–low when compared to other OECD countries. Wealth taxes are represented between 5.9 and 7.3% of total tax revenue during the period from 2010 to 2019, within which inheritance tax was represented between 0.1 and 0.6% (Jorratt & Martner, 2020). These figures do not differ much from those of 50 years ago, although they do in relative terms: between 1965 and 1973, wealth taxes were represented between 3 and 13% of total collection, and the inheritance tax accounted for between 0.5 and 1.8% (Foxley et al., 1980).

The intergenerational reproduction of social positions is strong in Chile; this weak social mobility is associated with high inequality (Corak, 2016; Espinoza et al., 2013). Although compared to other OECD countries, Chile has the lowest rate of persistence in the poorest quintile during a 4-year period, it has the highest rate of return from middle to lower positions (OECD, 2018). Nonetheless, several studies reveal a high valuation of merit. In the middle and lower classes, merit is perceived as a social mobility strategy based on effort, which is not always verified in everyday life, but in the economic elite, talent prevails over effort—mainly based on leadership skills and business success—which is verified in ascending careers within private companies for the elite (Atria et al., 2020). Contrarily, studies have shown that access to top positions is closely related to ascriptive factors. Family ties and social organizations prove to be important for the development of specific relationships and the cultivation of shared interests that influence how the Chilean economy operates (Zeitlin & Ratcliff, 1989; Zimmerman, 2019).

Methodology

Following a qualitative methodology, 32 semi-structured interviews with members of the economic elite were conducted as part of a broader investigation into the Chilean elite’s perception of taxes. The interviews were triangulated with information from institutions, political discourses and media columns to obtain a robust approach to repertoires of evaluation and arguments that the elite uses to think about taxes. The interview guidelines were organized into six modules: Tax Perceptions, Structure, Compliance, Reform, Institutions, and Inequality. The evaluation of inheritance tax was included in the Compliance section, although it was also a topic arising in discussions on Tax Perceptions.

To select members of the economic elite, two main criteria were used: resources and influential positions in society. To meet the former, individuals had to belong to the top 5% (according to average per capita household income, Casen survey 2011). According to the data, the average income per capita of the sample falls slightly below the 99th percentile. For the latter, individuals had to have a high position in a company (e.g., owner, partner, or manager), business foundation, consulting firm, or business association. These criteria did not lead to discussions about the company’s ownership in the interview; rather, the questions referred to private wealth. To ensure that the first criterion was met, participants answered a characterization sheet at the end of the interview, through which information on income, household members, and education was obtained.

As a hard-to-reach group, the literature suggests looking for insiders to enter into specific networks (Atkinson & Flint, 2001). Nine initial contacts were identified, and later, a chain-referral method was used to access other individuals with similar criteria, until 32 interviewees were carried out, reaching saturation of common themes. Research employing qualitative methods to study tax perceptions or elite attitudes have used similar sample sizes (e.g., Kantola, 2020; Lewis & White, 2006; Prabhakar, 2012). In addition, I looked for individuals representing different productive sectors of the economic elite to increase the sample’s diversity, totaling eight different groups: electricity and gas, transportation, mining, financial and insurance activities, the food industry, consulting, business associations, and private foundations. The interviews were conducted between February and May of 2013. The sample is unbalanced in terms of gender (87% were men, and 13% were women), coinciding with the low proportion of women in Chilean business hierarchies.

The interviews, which lasted between 35 and 100 min, were recorded and transcribed before being coded and analyzed with the software Dedoose. The code analysis was based on different coding stages that considered descriptive, interpretive, and causal aspects (King & Horrocks, 2010). By combining inductive reasoning and previous knowledge, I aimed to replace the traditional coding with “flexible coding” (Deterding & Waters, 2018:13) to obtain a set of cross-sectional narratives that became a safeguard to overcome contradictions inherent to individual discourses (Sølvberg & Jarness, 2019).

Results

Positive and Neutral Perceptions of Inheritance Tax

Only five of 32 interviewees expressed positive or neutral opinions about inheritance taxation. Unlike other taxes for which narratives are rather ambivalent—for instance VAT—this tax did not make the participants indifferent, so its approval or rejection was easy to determine. There are two supporting arguments: first, a political–economic argument that posits that this tax is one of the few opportunities to tax extreme wealth and, second, a philosophical argument that defends inheritance taxation because it prevents wealth from being undeservedly reproduced by controlling the heir’s wealth growth. My interviewees associated these arguments with consequences on inequality reduction and social mobility: those holding the first argument claim that this tax enables wealth reduction for high-income groups and higher tax collection with public transfers to the poorest, while those holding the latter underscore that inheritance control facilitates meritocracy.

For this group, the tax foundations are true. However, there is a conflict between what is acquired by one’s own merit and the individual’s freedom to manage their own resources and plan their recipients (Raddon & Ciupa, 2011). This relates to a normative context that has characterized Chilean society in the last few decades, in which neoliberal policies have intensified discourses about individual responsibility and the freedom to rule one’s own destiny while neglecting structural factors that are evidenced by persistent income concentration and low mobility to top positions (Araujo & Martuccelli, 2012; Espinoza et al., 2013). In this sense, only one interviewee was explicit in positively evaluating the reduction in income differences to increase social mobility into the top percentiles.

The barrier to becoming a rich person is really hard in this country, it is almost like the tax system here was set up by the truly rich ones just to protect their space, because those with potential to enter, all professionals—that is, those who earn good money—must face very tough effective rates throughout the capital accumulation period in order to break through that barrier and become rich. If you tax harder on inheritance while you make easier accumulation of wealth for people doing well, then, you may find a bigger rotation in the segment that … it isn’t higher income anymore (…) it is wealth. (EE28).

As previously mentioned, narratives defending this tax also explicitly address the issue of merit and deservingness of those occupying positions at the socioeconomic ladder’s highest rungs. In general, several interviewees acknowledged that talent and hard work could not fully explain wealth concentration. However, undeserved wealth is deemed neither problematic for social interactions among different groups nor a public policy issue that requires institutional responses (Atria, 2019; Thumala, 2007). One interviewee referred to the trade-off between taxing undeserved wealth and the risks of a higher tax burden:

The first big issue is whether you perpetuate an economic power of people who did nothing to deserve it (…)tax planning has to do with the fact that an individual can really dispose of their assets, rather than with evasion and avoidance (…) it is that thing of sublimation of individual freedom against the imposition of a state. What is the limit? I think that, of course, extremes are undesirable, because an excessive tax burden makes people naturally think about evasion. (EE9).

Negative Perceptions of Inheritance Tax

Negative evaluations, which account for 27 of 32 participants, reflect disagreements with either the foundations or the performance of this tax. The evaluation often includes concrete examples because several interviewees are currently dealing with the tax or must do so in the future. Table 1 systematizes the main arguments. Unlike positive perceptions, which are too few, negative arguments can be analyzed with three repertoires of evaluation that shed light on the elementary grammars available across situations when criticizing inheritance taxation (Lamont & Thévenot, 2000). In addition, variables highlighted by the literature review are identified when they are similar to the arguments of the Chilean elite.

Table 1

Negative perceptions of inheritance tax.

Source: Own elaboration

Repertoires of evaluation	Argument	Consequence	Variables in the literature
Inefficient/Ineffective	Richest people do not pay it because they perform tax planning	It is ineffective	Design and Implementation; Efficiency
	It collects too little	It is inefficient	Efficiency
	It produces a planning industry of tax planning. Resources are disputed between the state and taxpayers. Society gains nothing	It is inefficient, and it does not add value	Design and Implementation; Efficiency
	If wealth is a problem, this tax will not make it better. Something should be done before	It is ineffective	Design and Implementation; Efficiency
It does not have a clear justification	This tax belongs to the past, and there is no point in using it nowadays	As a tax, there is no basis for it	Trust
	There is a natural wish to leave resources for the children to have a better future	It is unnatural	Reciprocity
	The heir did not buy anything at all; he just received a type of gift	Inheritance is not subject to taxation	Reciprocity; Trust
	It is money for which taxes have already been paid	It is double taxation	Self-interest; Trust
Economic shortcomings	It destroys small and family businesses, and it makes it harder to reach the third generation	It destroys value	Efficiency; Trust
	Rates are too high	It discourages and distorts entrepreneurial activity	Self-interest; Design and Implementation
	It damages the middle class because they cannot perform tax planning	It is regressive	Self-interest

Although the variables identified in the literature appear explicitly or implicitly in the arguments, they are combined and exchanged in the interviewees’ explanations. Thus, the analysis is organized based on the three major repertoires of evaluation.

Inefficiency and Ineffectiveness

My interviewees are highly concerned about state inefficiency, which they deem to be the main barrier to progress against inequality. Narratives on inefficiency highlight that the management of public resources has scarcely improved in the last few decades, and consequently, much of the tax revenue is either squandered or used for political favors. These narratives shed light on the abovementioned anti-statist attitudes and express concerns about greater government responsibility for social services and economic coordination. Some participants argue that the Chilean state already has sufficient resources to fulfill its functions, and that therefore new resources can only be given if an efficiency increase is demonstrated, or some expenditure or public program is reduced.

In the same vein, the inheritance tax’s low yield and an industry’s proliferation to take aggressive planning strategies are questioned. In these cases, both public and private actors would have influence on poor performance, which leads to inadequate enforcement, “irrelevant” collection levels, and unproductive application. Furthermore, the temporality of the tax is negatively evaluated. As an interviewee comments, this tax is too late to achieve its objectives and too easy to avoid. Nonetheless, neither the tax’s nature nor its progressive design is at stake. In light of these arguments, some interviewees pointed out that the tax did not affect the dynamics of wealth accumulation.

It sounds like a minor tax collection, like the stamp duty, some sort of errand, some sort of check, the kind that at the end of the day is minimum. (EE5).

All these people are getting ready to die (…) they deposit their money abroad—in an account in Miami, they plan their money first (…) and people like me, who have just a house, a big house, what am I going to give my children as inheritance?

But the house, for example.

Yes, but…they must divide it into four or five. They won’t get much of anything (…)what I could do before I die is to sell them the house, transfer it as a donation … I don’t know, make simple tax planning. (EE2).

These narratives suggest that interviewees are unaware of the fiscal performance and that they tend not to consider the role played by private actors in inefficient enforcement. On one hand, these perceptions disregard or minimize the fact that the government’s fiscal agencies have not only shown clear improvements after the return to democracy but are also at a positive level in international comparison, as most indicators of governance, corruption and efficiency illustrate (Atria et al., 2021). On the other hand, narratives do not problematize the consequences of more severe enforcement and the mobilization of business groups against reforms that increase the tax administration’s capacity.

In addition, although the arguments for rejecting the inheritance tax tend to be general and not focused on the wealthier—as for example in the United States with the “death tax” narrative (Graetz, 2016; Graetz & Shapiro, 2005)—this repertoire resembles what Lewis and White (2006:22) consider “fatalistic attitudes,” which involve perceptions of society and government and carry little expectation of major changes in social relations and public policies. Changes seem futile, leading to a sort of conformism or tolerance toward current social arrangements, regardless of whether their modification or better enforcement is justified by distributive justice.

A Tax Without Clear Justification and Unsuitable for Modern Societies

The inheritance tax has existed for approximately a century in several high-income countries, such as Japan, France, the United Kingdom, the USA, and Germany. Therefore, political debates tend to focus on the conditions of its application rather than on the foundations of its existence (but see Beckert, 2008). On the contrary, in Chile and other middle- and low-income countries, inheritance taxation has been rather discontinuous, as it has been introduced, abolished, and reintroduced throughout history. Grounds for introducing or abolishing this tax were not affected to the same extent by democratic ideas and the notion of the state “as institutionalizer of the social” (Rosanvallon, 2012:172), which was disseminated at the beginning of the twentieth century in Europe and North America. Rather, these grounds relate to a pragmatic design of the tax system, whose tax rates and tax burden have been conditioned by the availability of other resources that are easier to obtain, such as those derived from the extraction of natural resources or export taxes. Thus, although implemented in some governments, inheritance taxes were discarded because of high evasion and a lack of political agreement.

These factors do explain the striking criticism of the inheritance tax based on its inadequacy in current societies. Philosophical, legal or political arguments are used over economic ones in discussing its design, objectives, and those who are affected. These arguments are linked to individual, family, and societal domains, discrediting the tax’s application from any perspective. Although criticism of double taxation and the claim that there is a natural motivation to bequeath resources to new generations are common arguments in other countries, it is remarkable how other ideas are mobilized, particularly perceptions of inheritance as an heir’s unsought gift and critiques of this tax’s implementation because it is perceived as an anachronistic fiscal tool. These arguments are illustrated by the following three quotations:

I see it as a very appropriate tax on a feudal society, so the question is, do we still live in a feudal society? (EE14).

I have always imagined inheritance tax as belonging to a feudal system—where feudal lords, precisely to recover their wealth from people, created these taxes which are meant to expropriate…and modern societies considered that this was a good way to expropriate, so they kept it. Indeed, I have never understood the inheritance tax (…) I believe it is related with expropriation and the fact that you start off in life in a different economic place; that your children start off in a different economic place. The truth is, it is at the heart of what you do as a human being. (EE23).

I disagree with the inheritance tax, because in the end, if the system works, if the system is designed in such a way as to provide opportunities, the one who is not born with an inheritance will have the opportunity to bequeath something. (EE11).

My interviewees reaffirm the critique of the state’s role in the development and promotion of equality of opportunity by arguing that the continuity of the inheritance tax results from ideology and political interests, and as such, it is a strategy “reminiscent of the past” (EE26), in line with neoliberal narratives that are broadly extended within the economic elite. On the one hand, views linking inheritance taxation to expropriation contend that this tool is not suitable to modern society because entrepreneurship and innovation policies require flexibility and dynamic ecosystems to produce economic growth and benefit for all. Inheritance control would somehow affect diversity by pretending to constrain the development of individual projects. Thus, some interviewees perceive that inheritance taxation would lead to a forced and artificial equality, instead of aiming at a broader social organization that provides prospects for each individual to develop freely, which would depict the preference for equality of opportunity and defense of inequalities justified by choices, effort or ability. On the other hand, some claim that this tax punishes the heir for receiving a benefit that was not intended, and in the best of cases, he/she did contribute to creation as a relative of an entrepreneur who sacrificed time and dedication with the entrepreneur to produce that wealth.

These arguments show that inheritance tax is not linked with modern ideas of meritocracy and equal opportunity. By perceiving this tax as a tool with no clear foundations that is anachronistic for a modern state, the primacy of individual achievement over ascribed factors is not recognized. Thus, Durkheim’s (1957) argument—wealth acquired through family circumstances did not involve an individual’s own effort and undermines the property’s moral condition—is fully contradicted. Inheritance taxation, rather than inheritance, is considered archaic. In addition, by justifying a view of social and economic development where inheritance taxation limits the potential of individual freedom to get ahead, interviewees tend to underestimate the implications of created inequalities between individuals from birth, a point that is also underscored by Durkheim. Last, the alleged lack of foundation may reveal the use and cultivation of ignorance as a resource of power (McGoey, 2012), which might be more advantageous than admitting contradictions with a meritocratic view.

Economic Shortcomings

Criticism of the inheritance tax is also based on economic arguments about its incompatibility with growth and development. Inheritance taxation is considered to have high rates, which harms the middle class and destroys small- and medium-sized companies by imposing a heavy tax burden, similar to what Sachweh and Lepthien (2018) found in Germany. As a result, the tax discourages and distorts business activity, destroys value, and performs regressively.

There are many [family] businesses that, if they are forced to pay the tax, will have to close down, with all the destruction of value that this means. (EE25).

I don’t mind that a millionaire transfers his/her millions to his/her children—that’s fine. There are ten of them in this country, but I have seen cases where five people inherit a house, and the inheritance tax forces them to sell the house to pay the tax … and I find that shocking (…)so, again, this issue is how do I control the millionaire? Don’t worry about the millionaire, just make it easy for the rest. (EE10).

However, my interviewees seem not to be aware of the real rates of this tax. Several participants mentioned higher rates—frequently between 30 and 40%—to underscore that inheritance tax design does not correspond with Chilean reality. The overestimation of tax rates by the wealthy has also been found in Mexico, as part of a deterrence strategy (Campos-Vásquez et al., 2020). Although the 25% rate at the top is among the higher ones in Latin America, it is similar to countries such as Nicaragua, Greece, or Ireland and less than 50% of that in Japan or France, depending on the degree of the heir’s proximity or whether the tax includes donations. In addition, Chile has one of the highest wealth concentration levels in Latin America.

Although the economic shortcomings of this tax are debatable depending on the point of reference, it is significant that other tax issues related to development are not mentioned, such as the regressive tax structure, the low effective tax rates for high-income groups, or the asymmetries created by tax expenditures—a number of tax incentives and special regimes that mostly benefit wealthy taxpayers (Atria et al., 2021). Moreover, these views differ from international recommendations on fiscal policy to increase tax justice and economic development in Chile (OECD, 2015).

Naturalization of Inheritance Tax Noncompliance

Findings reveal that the noncompliance of the elite with inheritance tax is normalized. Although Chile is considered a legalistic country with a tax culture of respect for the law and high tax compliance (Bergman, 2009), data from the last decade show that aggressive tax planning reduces substantial fiscal resources, so that the clear criminalization of evasion in Chilean society does not prevent the use of avoidance strategies to lower the tax burden (Atria, 2019; Fairfield, 2015). The results of this research show that, in inheritance tax, the economic elite’s willingness to seek dodging strategies is particularly illustrative.

Even those who evaluate the inheritance tax neutrally or positively admit that they avoided it or would be willing to do so in the future. Such views reflect a clearer avoidance behavior than for other taxes. Nonetheless, such behavior seemed not to be subject to social sanction. Three interviewees referred to inheritance tax avoidance.

Here is where avoidance probes to work better … it is a matter of transferring assets early and progressively(…) I have said that I wasn’t in favor of avoidance, except in this one! I don’t have anything, personally I don’t have anything at all, and everything belongs to an investment company on behalf of my children, everything belongs to them and I die happily… I don’t think I’m committing a felony. (EE16).

I would agree if the inheritance tax is distributed directly to those children who are born, do not have parents, I have no idea, and an inheritance is generated from … that is to say that it is a direct distribution, but otherwise…no, I do not agree. Why harm someone who received an inheritance? (EE 11).

In the way I designed my model, my children will not inherit anything. I mean, they will inherit everything, but they won’t inherit anything—do you get it? They will be owners of an investment company that I can transfer to them during my lifetime(…) it has to do with a philosophy of society. In the end, this society is made for the rich to be richer, so this model is like that. So as long as we have this model….(EE2).

Naturalization of inheritance tax noncompliance among my interviewees was strongly associated with individual and family motives. The continuity of family welfare in future generations is perceived as a priority that justifies one’s own effort. Participants’ narratives combine an interest in retaining capital and preservation of the family line, exhibiting a familistic responsibility toward future generations (Kuusela, 2018:9; Glucksberg & Burrows, 2016:17). However, the emphasis on distrust of the state represents a distinctive finding—even among those who posit a strong commitment to vulnerable groups or disadvantaged families, efficient alternatives to benefit them outside of individual or family charitable initiatives are scarcely mentioned. Thus, a significant number of family and corporate foundations have proliferated in recent decades, making solidarity with the less fortunate a matter of private rather than public concern (Thumala, 2007).

Discussion and Conclusion

This article examined the Chilean economic elite’s arguments and justifications on inheritance tax in a context where a meritocratic order, based on equal opportunities and personal effort, is highly valued. Unlike European and North American countries, where tensions between inheritance and merit are analyzed in the context of rising inequalities, Chile exhibits a distinct pattern. On one hand, meritocracy represents a challenge to persistent and intergenerational dynamics of privilege and wealth concentration, similar to several Latin American countries. On the other hand, neoliberal reforms helped link achievement expectations to individual responsibility and place the private sector at the center of economic elite ideas of success and development while criticizing and distrusting the state’s involvement in the economy. Consequently, Chilean elites tend to neglect the role of taxes and other redistributive policies by underplaying the social consequences of economic concentration and opportunity hoarding associated with inequality. Elite attitudes toward inheritance taxation somehow reflect these views.

The results suggest that payment of inheritance taxation is the result of a decision and not an obligation. This is, as a Financial Times article described, a “wholly voluntary tax” (Agyemang, 2019). The three main repertoires of evaluation shed light on this general perception. Inefficiency and ineffectiveness allow for criticism of collection problems and aggressive planning that facilitates avoidance; beliefs that this tax belongs to the past lead to arguments of a lack of clear justification; and risks of value destruction and damage to the middle class and family businesses are emphasized to argue that the tax has several economic shortcomings. Moreover, a general critique of state inefficiency leads to distrust of fiscal administration. In this sense, following Graetz (2016), high opposition to this tax seems to reflect a rejection of the more general principle of tax progressivity. Considering these findings and previous literature, I argue that inheritance tax evaluations somehow converge into broader repertoires, revealing elite opposition to direct taxation, although those referring to the former seem to be more homogeneous and critical of its justification as a tax. Future research should analyze how the economic elite makes sense of tax progressivity, particularly in examining the attitudes toward the income tax and the VAT—the two most important taxes in contemporary societies.

Findings also show that, when confronting ideas of individual freedom in decisions to use resources with a redistributive function that limits inheritance and favors personal attainment, the former clearly prevails. This predominance reveals a neoliberal logic, where a widespread discourse favoring merit and equal opportunities is compatible with the defense of inherited wealth. This does not mean that the economic elite is unaware of the problems of inequality in Chile. Most of its members are concerned about the differences in quality of life and access to social services and some are aware of reports on economic inequality. However, negative views of the state and antipathy toward taxation lead them to propose alternatives to address inequality, making solidarity with the less fortunate a matter of private rather than public concern.

Although there is no empirical evidence for Chile, based on other countries, it is possible to hypothesize that the neoliberal logic sustaining negative perceptions if inheritance taxation does not take place only in elite discourses—the middle and lower classes resort to meritocratic discourses for rejecting inheritance tax as well. Nonetheless, the economic elite is distinctive in their advantageous position in the social hierarchy. The meritocratic narrative, the high valuation of effort, and the ability to take advantage of opportunities are driven by an active promotion of elites to present their biographies as stories of innovation, entrepreneurship, and successful individual achievement. By neglecting the role the ascribed factors play and rejecting the taxation of inherited wealth, an inability to visualize such privileges is identified or, in the worst of cases, is an active defense of them. In both cases, and given that the lack of foundation is one of the repertoires used by my interviewees to deny the importance of inheritance taxation, one should consider the issue of ignorance. Findings suggest that there are several misunderstandings about the design and application of taxes, but ignorance may also be a useful strategy which enables profitable tax planning strategies to endure despite concerns about their consequences. In addition, ignorance may allow one to absolve blame and avoid liability for these actions (McGoey, 2012:12). Future studies could explore the meanings of other wealth taxes for the economic elite, particularly the property tax and the wealth tax. This could help deepen the understanding of elite justification of economic accumulation and the role of family in the reproduction of dynastic wealth (Glucksberg & Burrows, 2016).

These findings have two policy implications. First, at the level of civic education, a tax culture that informs about inheritance taxation, its principles, and its social relevance should be promoted. Beyond increasing the willingness to pay taxes in general, inheritance taxation’s aims and purpose should be highlighted, particularly in societies where institutional solidarity schemes are weak. (i) It is neither an obsolete tax, nor one developed in other times, but one that represents properly modern ideas to reduce differences associated with undeserved privilege; (ii) it is not a death tax, but a tax imposed on heirs to hinder intergenerational reproduction of advantages and disadvantages; and (iii) equality of opportunity requires combined public policies—as well as education or labor initiatives—and inheritance taxation contributes by means of the social control of large fortunes.

Second, new arguments should be introduced, or existing ones should be reinforced in the public debate. Although previous evidence suggests that compensatory arguments within the context of war and military expenditure raised inheritance taxation (Scheve & Stasavage, 2012), it is true that general ideas about progressivity and their materialization in tax policies were disseminated at the beginning of the nineteenth century, which was in the context of high inequality and social deficits. Then, many countries’ political debates developed the idea that there is no strict individual wealth creation, which underlines the influence of the social environment and the state’s role in promoting collective progress and redistributing resources to regulate interdependence between individuals (Rosanvallon, 2012). Rethinking these arguments today also means laying the groundwork for renewing the resources of negotiation with the economic elite particularly in the Global South (UNRISD, 2016). This could also include a compensatory argument (Scheve & Stasavage, 2012): whether it applies to the taxpayers who paid the most during the COVID-19 pandemic, as one could argue that high-income taxpayers had to sacrifice the least in this context.

This paper’s results also suggest that the public debate should be reformulated if the inheritance tax is to be revitalized. (i) Inheritance is only partly limited because of its progressive design—applied to high amounts of accumulated wealth—and the maximum rates generally reach between 10 and 40% of what is inherited. (ii) Inheritance tax, together with income and property taxes, is the primary progressive tool that modern tax systems have. To defend their existence and strict implementation is to claim that common goods should be financed by unequal contributions from taxpayers with unequal income (Murphy & Nagel, 2002:185). This implies challenging pragmatic visions concentrated on efficiency or progressive spending. Finally, (iii) the influence of traditional arguments, such as double taxation, should be dismantled. For instance, the VAT also involves double taxation because it pays with resources that, in general, were already affected by income tax. As Murphy and Nagel (2002:143) suggested, discrediting the argument that double taxation is an exclusive problem of inheritance taxation means focusing on its consequences for justice and equity.