Don't Excessively Tax Paris Hilton

Jason Furman writes that we should shift tax burdens to impose greater taxes on people like Paris Hilton than Britney Spears. His argument is that Paris Hilton inherited her wealth while Britney Spears earned hers. But a tax on Paris Hilton is really a tax on her high earning Hilton ancestors.

Britney Spears has a lot of ways of spending her wealth. One of them is to give it to her children after she dies. If we place a high tax on inheritances we are really taxing people like Britney Spears who decide to bequest money to their kids. All taxes are really taxes on earned income. And perhaps Britney and other high-income individuals work hard in part to leave a large fortune to their children. If we place a high tax on estates we will therefore reduce the incentives of these highly productive people to work.