Article: Taxing Old Money: Considerations in Crafting a Rignano Tax

Miranda Perry Fleischer (University of San Diego School of Law) recently published, Taxing Old Money: Considerations in Crafting a Riganano Tax, Law, Ethics and Philosophy, 2020, January 2024. Provided below is an Abstract:

This article explores whether it is possible to tax “old money” differently than “new money.” In The Inheritance of Wealth, Daniel Halliday proposes that we tax wealth more heavily the second time it is transferred than the first, and even more heavily the third time. He envisions something like the following: Grandfather builds a business from the ground up and bequeaths $10,000,000 to Mother. No tax is imposed, but if Mother does not create any wealth of her own and simply retransfers $10,000,000 to Daughter, all of Mother’s estate is taxed. In contrast, if Mother creates new wealth, different portions of her estate are treated differently. The inherited $10,000,000 that Mother re-transfers is taxed, while any newly-earned wealth is not. Although Halliday offers a few broad structural suggestions, he does not detail how such a tax—referred to as a Rignano tax—would work. This article explores what implementing a Rignano tax requires. Crafting one is complex but feasible and requires six key design decisions. Drawing on experience with existing transfer taxes and Halliday’s ethical premises, this article offers specific recommendations for each.