Death and the State

• In Event: Policy, Taxation and Welfare

Abstract

How do different types of capitalist societies deal with the issue of property transfers upon death? And how can we explain the observed variation?

The definition and management of property rights are at the core of capitalism. Thus, we should observe convergence in state behavior among advanced industrialized democratic countries. Instead, we observe a puzzling and striking variation in how property transfers are dealt with upon death. Succession law governs how private property is transferred at death, and specifically what portion goes to the state, to heirs, and to others. It thereby fundamentally shapes the political economy of a country. Yet – and stunningly - there is very little work on the political economy of succession law at the national level, and no comparative literature on succession law in any social science discipline.

My research in this area focuses on the political debates over succession law in the context of three major legal systems (French, German, and British). Contrasting notions of personal freedom, private property, and community in these legal systems, together with the exigencies dictated by different resource constraints, explain why they gave rise to profoundly different statutes regarding inheritance and taxation.

Three aspects are of special interest. First is the degree to which individual owners have control over their property at death. In some countries the testator has nearly total control over how his or her assets are disposed of at the time of death (e.g. the United States, following the British legal tradition). In other countries, the testator has extremely limited control over the estate (e.g. in Italy and Argentina, following the French legal tradition).

The second aspect concerns inheritance tax, a key tool for states to shape inequality and the economy. In some countries, estate tax rates of about 40 or 50 percent often forced the sale of family estates and thereby facilitated the emergence of corporate economies (as we observe for example in the United States). In other countries, estate tax rates of less than 5 percent instead enabled economies based on family firms (for example in Italy).

The third aspect of interest (which will only marginally be dealt with in the proposed paper) pertains the political, cultural, and economic factors explaining why canonical statutes were adopted (or not) by other nations. Here the analysis examines the role of colonial legacy, postwar American influence, but also specific cultural traits that have driven the adoption and evolution of given legal canons. This project traces in particular how the early (and unsurprising) adoption of the French code in several South American countries was subsequently modified with Anglo-derived variations; and how East Asian countries came to adopt the German canon. Overall, the degree of policy consequence and the notable variation promise a fertile ground for theory building.

Author

• Eleonora Pasotti, University of California, Santa Cruz