A recent study found that people are reluctant to spend money they inherit from relatives. Eric Horowitz argues that this finding strengthens the case for the estate tax:
Even if individuals draw some emotional benefit by saving inheritance money, from a social standpoint it’s better if people—and wealthy people in particular—spend their money on durable goods or semi-risky investments. Buying a blender or funding a start-up does more to stimulate the economy than leaving your money in a low-risk mutual fund.
It seems that the tendency to save inheritance money is another reason to support a higher estate tax. If mental accounting is preventing inheritance money from being spent in the most efficient way, that strengthens the case for raising estate tax revenues to fund welfare programs (and if you lean right and cringe at that word choice, just replace “welfare programs” with “other tax breaks for the wealthy that are more stimulative.”)
The Dish 