Milton Friedman Astutely Critiqued the Inheritance Tax

Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

The Tax Cuts and Jobs Act of 2017 not only reduced the federal corporate income tax rate to 21%, but it also doubled the federal estate and gift tax exemption to about $11.2 million for individuals, or about $22.4 million for married couples. That means that you and your spouse can either give away during your lifetime, or die owning, assets worth a combined $22.4 million and owe zero federal estate or gift tax.

For the vast majority of Americans, this means your estate won’t have to pay any federal estate tax (known as the “death” tax). You may owe state inheritance taxes, however.

Over the decades, economists have cautioned that estate and inheritance taxes distort investment decisions and estate plans.

On the other hand, many political commentators — ranging from John Stuart Mill to Karl Marx — have favored steep estate and inheritance taxes, even up to rates of 100%. Mill and many other pundits argue that a large inheritance is not good for heirs and amounts to a free gift that can discourage hard work, thrift and other virtues.

Warren Buffett and Bill Gates have urged their billionaire friends to take the “Giving Pledge,” in which one donates up to 50% of one’s wealth to charitable causes. Dozens of billionaires have done so already. One major impetus to giving large amounts is that federal taxes upon one’s death are avoided — the rate can amount to 40%, plus applicable state taxes.

Recently, Lanny Ebenstein, a professor of economics and philosophy at the University of California, Santa Barbara, sent me some of his correspondence with the late Milton Friedman.

“I was especially taken with a letter from Milton Friedman arguing against an estate/inheritance tax at any level. He wrote: “We have altogether too many foundations, too many nonprofit institutions, too many groups that are spending somebody else’s money trying to promote their own ideas, which includes our foundation. One of the main reasons for the proliferation of foundations has been the existence of the inheritance tax. It would be much better for the country if the accumulated assets of wealthy people, instead of being converted into museums, foundations and the like, were converted into factories, buildings, things that had real value. It would eliminate harm; it would produce good.” (Letter of June 21, 2005)

Well said! Non-profit organizations have proliferated in the past 50 years, and much of the growth has been the consequence of individuals avoiding estate and inheritance taxes. These charitable organizations and foundations have done much good and employ many workers, but they tend to be far less productive than for-profit companies. It would be better to put your money to work in for-profit companies rather than non-governmental organizations (NGOs).

That’s why my annual conference, FreedomFest, is a “for profit” entity. We focus on what our customers want, not what donors want.



You Blew It! Nike Ad Promotes Political Divisiveness

“Believe in something. Even if it means sacrificing everything.” — ??

Is the quote above from Colin Kaepernick, the former San Francisco 49ers quarterback famous for his protests against racism in America, or is it a quote from Osama bin Laden and other Islamic terrorists, who murdered innocent Americans for their cause?

If you have been following the news lately, then you most likely know that this quote is from Colin Kaepernick, but it could just as well have been from Osama bin Laden.

Nike, the shoe manufacturer, has decided to run with this quote and Kaepernick’s story in a controversial advertising campaign, starting with two-minute ads running this week on NFL football games.

No matter where you stand on Kaepernick’s and Nike’s views about racism, is it a good idea for major corporations to get involved in controversial and divisive social issues? I think it’s a big mistake for actors and corporations to take stands that force their followers to either buy their products or boycott them.

John Mackey, CEO of Whole Foods Market, wrote a Wall Street Journal op-ed on Obamacare and was heavily criticized for it, causing some customers to boycott Whole Foods while others started buying their groceries there. Mackey’s board of directors told him to avoid politics in the future.

Personally, I don’t like when actors get involved in politics, as it keeps me from enjoying their films. I feel the same way about companies that try to make political statements.

What’s the state of racism today? I suggest you listen to Larry Elder’s talk at this year’s FreedomFest on the subject, where he suggests that Americans are less racist than ever. You can watch it here. Alex Green said it was the best talk at this year’s conference.



— Toronto MoneyShow, Sept. 14-15, InterContinental Toronto CentreI will have a main stage appearance on “Everything You Need to Know about the Markets,” as well as a breakout session on “The SWAN Strategy: My Five Low-Risk Ways to Earn High Dividends and Capital Gains.” Other speakers include Kim Githler, Tom Sosnoff and Gene Simmons. To register and attend for free as my subscriber, call 1-800-970-4355 and mention priority code 045972. Or go to

— New Orleans Investment Conference, New Orleans Hilton, Nov. 1-3I’ll be at the granddaddy of hard-money conventions this year to speak on a controversial subject: “Investors, Beware! Why Gold Bugs and Austrian Economists Often Offer Bad Investment Advice.” They are often right in theory, but their timing can be off — and that can hurt your portfolio. Don’t miss other celebrity speakers incuding Mark Steyn, Jim Grant, Jonah Goldberg, Dennis Gartman, Rick Rule, Robert Kiyosaki and Brien Lundin. Be sure to mention you’re a subscriber when you register. For more information, click here, or call toll-free 1-800-648-8411.


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Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen is a professional economist, investment expert, university professor, and author of more than 25 books.

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