Table of Contents

The Elgar Companion to Law and Economics

The Elgar Companion to Law and Economics

Elgar original reference

Edited by Jürgen G. Backhaus

This authoritative and comprehensive reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant areas and breaks new ground by bringing together widely dispersed but theoretically congruent ideas for the first time.

Chapter 5: Inheritance

Richard E. Wagner

Subjects: economics and finance, law and economics, public choice theory, law - academic, law and economics, politics and public policy, public choice


Richard E. Wagner Private property, freedom of contract and personal liability provide the central legal framework for a market economy, as Walter Eucken (1952) explains in his well-known statement of Ordnungstheorie. While there is little dispute about the principal features of this framework, there is much dispute about the status of property when the owner dies. There are two polar regimes in this regard, free inheritance and collective inheritance. Under free inheritance, an owner of assets would have the same right to dispose of his assets upon death as he had during life. Any state involvement would be minimal, as illustrated by such things as the usual recordation fees charged when certain asset titles are transferred. Under collective inheritance, an owner of assets would have the full use of his assets only during his lifetime, and those assets would become state property upon his death. Collective inheritance would entail the imposition of a 100 per cent tax on all assets that were held by a decedent at his time of death. A pure regime of collective inheritance is almost certainly impossible in modern societies. There are several related reasons why any effort to tax estates at 100 per cent would collect little, if any, revenue. The effort to impose such a tax would induce people who had accumulated wealth during their lifetimes to consume it before their deaths, by doing such things as converting that wealth into annuities. It would also induce such people to transfer more of their wealth...

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