Stewardship and the Estate Tax


Andrew Hayashi

Estate taxes interfere with the transfer of private property at death, raising questions about stewardship, property and power, what we owe our children, and the meaning of bodily death. In this short essay, I consider the wisdom of estate taxes in theological terms. I conclude that an estate tax can be good tax policy, particularly if it distinguishes between property with a special relationship to the decedent and her beneficiaries, and other property — such as money — that represents only economic power. 

There are no good dogmas in tax policy. Taxes allocate the responsibility to steward resources between public and private actors. They help us fulfill our support obligations to each other. And, by changing our behavior, they may help nudge us towards being our better selves. Their value is instrumental, like that of private property more generally.1 See, e.g., Compendium of the Social Doctrine of the Church (“Compendium) § 177 (“Private property…is in its essence only an instrument for respecting the principle of the universal destination of goods.”) And, like most institutions justified by their consequences, tax policy involves moral judgments about tradeoffs between competing goals that are contingent on social and economic facts. 

The two most important qualities of a tax are how it distributes the burden of funding the government and how it affects the cost of engaging in the taxed activity. I will bracket the distributional question in order to focus on what is conceptually distinctive about the estate tax: it is a tax on wealth imposed at death. Of course, the distributional question is important. But the distributional effects of a tax should not be evaluated in isolation, since what can be done with one tax can be undone by another tax. For example, the burden imposed by the estate tax becomes partially offset by the fact that income from property appreciation held at death escapes the income tax. 

Moreover, tax policy decisions are inseparable from questions about what government should do through spending and regulation. The state plays an important role in creating financial wealth, and what matters for economic justice is the net effect of government spending and collections. For example, market regulation can engender monopoly profits. Local zoning decisions affect the prices of real estate. And the patent system can consolidate in one person’s hands — or dissipate into the hands of many — the value of intellectual property. Thus, there is a real sense that when we pay wealth taxes at least some of what we are rendering to Caesar is, in fact, Caesar’s — because of the state’s role in wealth creation. Although the importance of the state in determining patterns of property ownership will vary across time and place, recognizing its role in general can help loosen the intuitive grip of an entitlement to private property, and complement scripture’s reminders about God being the origin of all things (1 Chron. 19:14-16).  

Of course, the state does not always act justly in creating financial wealth. Neighborhood redlining, segregation, and discriminatory use of eminent domain are only a few salient examples of unjust state action in the U.S. And private actors also taint the market value of property. Market demand is determined by individual preferences and tastes, which embed our inclinations toward exploitation, violence, and division. And so we have the profitability of pornography, arms trafficking, and the price premium for homes in predominantly white neighborhoods. Each generation inherits cities they did not build, wells they did not dig, and vineyards they did not plant, but not everyone enjoys the same access to these goods (Deut. 6:10-12). We inherit things that were created good but that have a dubious lineage, things that can be used for human flourishing but that derive value in Caesar’s money economy by catering to our tastes — however warped they might be. Given these origins, we must hold our financial wealth loosely. 

The wisdom of an estate tax turns in part on how it allocates stewardship responsibility.

An estate tax is a wealth tax imposed on property held at death, and so it creates a disincentive to die with wealth. Is this disincentive an obstacle to the just use of property, or is it a nudge in the right direction? This depends on why someone would die owning property, rather than disposing of it during their lives.

One reason that people die with wealth is that they have saved to provide for themselves in old age and their savings outlast them. For such persons, any bequest is an accident, and the estate tax is no burden at all. Another reason people die with wealth is because they want to participate in projects that survive their death. This broad category includes support for one’s children, charitable donations, and building a business or family dynasty. Whether funding these projects is a faithful use of property depends on the particulars. Bequests can support institutions that serve the common good, but they can also fund self-aggrandizing vanity projects. We have an obligation to provide for our relatives, (1 Tim 5:8) and scripture contemplates the goodness of an inheritance (Proverbs 13:22; Ecc. 7:11-12), but inheritances may also cause strife within a household (Proverbs 20:21; Luke 15:11-32; Gen. 25:29-34; Matt. 21:33-46). In some cases, an estate tax would discourage imprudent bequests, and in other cases it would interfere with a wise disposition of property.  

Given the complexity of bequests, it’s clear that an estate tax has mixed effects on parents’ ability to provide advantages to their children; on the financial security they provide for themselves; and on their ability to invest in long-term projects. Even a 100% estate tax would not foreclose these goals, but it would compel parents to use their wealth for these purposes during their lifetimes and prevent them from assigning stewardship for their property after death. In the remainder of this essay, I will focus on the power to assign stewardship, which is an underappreciated feature of tax policy.  

Stewardship rhetoric is fraught. The idea that we merely manage property that belongs to God is intended to separate us from illusions of power and control, as well as make clear that we are God’s agents in the world, using property for His purposes. But agents are often unfaithful, and our capacity for self-justification is great. Scripture teaches us that wealth is dangerous (Matt. 12:23). We should not be too sanguine about our ability to faithfully accumulate property for the purpose of leaving it to worthy beneficiaries. An emphasis on stewardship can also avoid scrutiny about the unjust provenance of property. Kelly Johnson shows that the language of property as a trust — similar to stewardship — appears in defenses of chattel slavery, providing a stark example of how a focus on “wise management” can coexist with blindness about underlying property injustice.

But the stewardship concept remains useful. Since we are not owners of property, then all we can bequeath is the stewardship responsibility. Catholic Social Teaching provides that there is a duty for property owners “not to let the goods in their possession go idle and to channel them to productive activity, even entrusting them to others who are desirous and capable of putting them to use in production.”2 Compendium at § 178. When will the current steward be especially well-suited to choose who next assumes managerial responsibility? Even if individuals sometimes err in making this choice, the state may do worse. Both individuals and the state are imperfect stewards. Rather than rely on contested assertions about the general effect of politics on the use of property, perhaps we can make headway in how an estate tax should assign stewardship by observing that for certain kinds of property the decedent has better information about who is in the best position to use the property for the common good and for whom the property has the greatest value. 

Certain kinds of property gifts — think family homes and heirlooms — connect generations and embed personal histories in ways that only matter to acquaintances of the giver. We need not go so far as to say that the giver’s personhood is bound up in that property, but we can recognize that the recipient of such a gift will value the property for things in addition to its exchange value in the marketplace. Second, there are kinds of property about which the giver, by virtue of having managed it herself, may have practical wisdom that she has shared with friends or family. Consider certain kinds of real estate, such as agricultural land, or a closely held business. Again, the decedent is likely to know better than the state who can manage the property best. In striking a balance between competing tax policy objectives, the estate tax should generally favor the bequeathing of such property.

In contrast are things like publicly-traded stocks and securities and cash. The current owners of such property are not generally in a better position than anyone else to identify the people who value them the most or who can manage them most effectively. In fact, in the case of money and money-like property, there is not much management required at all. When people bequeath these kinds of property they are transferring raw economic power, and without any stewardship justification for inheritance the estate tax can be more vigorous in taxing this kind of wealth.  

There is a contemporary tendency to strip property of its distinctive qualities and treat all property as commensurable, in dollar terms. But Christians have not always ignored these distinctions.

In our money economy, where markets proliferate and property rights and money can cheaply be exchanged, sustaining a regulatory distinction between money and other property is difficult. Taxpayers will respond to this distinction by contributing cash to their family business and purchasing larger homes. Enforcement costs need to be accounted for. And yet, the distinction matters. There is a contemporary tendency to strip property of its distinctive qualities and treat all property as commensurable, in dollar terms. But Christians have not always ignored these distinctions. For example, St. Francis’s aversion to money was well known: Franciscan friars were only permitted to receive wages or alms in kind, but not in money. This is because, as Professor Johnson puts it, money is not wealth itself, but the “concrete, portable form of the right to command wealth,” and an “effective symbol of the right to command property.”3 Johnson, note 2 at 58. Francis disfavored rights, which he thought of as the assertion of one’s self-interest against others and therefore an obstacle to charity. 

The Old Testament includes 201 references to inheritance, many of which relate to the land given to the Israelites in fulfillment of the Abrahamic covenant, which was to be an inheritance for succeeding generations (Numbers 27; Deut. 15:4). For the Israelites, land served an economic function, but it also represented the fulfillment of a promise between God and His people, connecting them as an inheritance does between parents and children. The importance of the land to the Israelites’ identity was reflected in the Jubilee requirement that it be returned to its original owners every 50 years (Lev. 25). The land was not permanently alienable and not fungible with other forms of property. The distinction I propose for estate tax purposes tracks a very old intuition.

Although the barrier between money and other forms of property is permeable, we should not entirely collapse the distinction when choosing the tax base. The wisdom of an estate tax turns in part on how it allocates stewardship responsibility. Whereas the best next steward of a business or family home may be known by its current owner, money and money-like property generally have no properties that require special management — they only represent economic power. An estate tax should therefore favor bequests of personal property over money. The same logic might extend to taxes on inter vivos gifts too, but the case for taxing money bequests is even stronger. An estate tax is an encouragement to lay down our economic power now, rather than hold it until we no longer have any use for it; to transfer it during our lives when we can learn from the practice of gift-giving and participate in the Kingdom work of peacemaking. ♦


Andrew Hayashi is the Class of 1948 Professor of Scholarly Research in Law at the University of Virginia and serves as director of the Virginia Center for Tax Law. Hayashi is also a McDonald Distinguished Fellow at the Center for the Study of Law and Religion at Emory University.


Recommended Citation

Hayashi, Andrew. “Stewardship and the Estate Tax.” Canopy Forum, June 2, 2021. https://canopyforum.org/2021/06/02/stewardship-and-the-estate-tax/.