There is no part of any fiscal system which has had so many and diverse arguments advanced in its favor as a tax upon the transfer of property at death. These range all the way from arguments of a purely social nature to those justifying the principle as a part of the fiscal machinery. The social arguments, for the most part, look to the limitation of fortunes, and follow closely the ideas of Bentham and Carnegie.

Extension of Escheat. - One common argument for the inheritance tax is known as the extension of escheat. This is based upon the ground that there is no natural right of inheritance - that the state has gone a long way in allowing an individual to have control over property while alive, but would be going entirely too far to allow him to have control over it after death. The disposition of property after death, then, is really a state function, and it is a matter for the state to decide to what extent property shall be inherited. Under this theory there is little basis for the justification of collateral inheritance1 while it becomes the duty of the state to decide to what extent, and under what conditions, direct inheritance shall be permitted.

Diffusion of Wealth. - The argument which has branded the inheritance tax as "Socialistic" has been what is usually known as the diffusion of wealth argument - that is, the use of the principle to break up large fortunes. Many proposals have been made, and some laws have been enacted with this idea in mind. It has been proposed, for example, to fix a maximum amount beyond which inheritance would not be permitted, while the rate of progression which has been used more or less reflects the limitation which is intended to be put upon inherited fortunes. The use of the tax for this purpose need not, however, be condemned as a Socialistic measure, for it may be desirable to limit the size of fortunes for other reasons than the mere diffusion or equalization of wealth.

If, as Mr. Carnegie contended, the moral, social, and economic efficiency of the state is impaired because the succession of large fortunes destroys the initiative of the recipient, then it becomes the duty of the state to impose regulation. Inheritance taxes, from this viewpoint, would properly come under the jurisdiction of the police power when levied by the commonwealths. Since, moreover, the right of inheritance is not considered a natural right, but one granted by the state, any limitation which the state may see fit to impose must be considered justifiable, and not an encroachment on the right of private property.

1 By a collateral inheritance is meant the devolution of property to non-relatives and distant relatives, as cousins, nephews, and nieces. A direct inheritance refers to one in the immediate family, as between husband, wife, son, daughter, and sometimes brother and sister.