Carl Menger, Die Erbsteuer (1875)

Carl Menger’s review of H. v. Scheel’s Die Erbschaftssteuer examines inheritance taxation as both a fiscal instrument and a question of social policy. He supports a moderate inheritance tax while challenging Scheel’s justification of it. The central issue is not simply whether the state may tax inheritances, but which principle establishes the levy’s legitimate place within the fiscal system.

Der bisherige Standpunkt der Finanzwissenschaft ist rücksichtlich der Erbsteuer ein wenig geklärter.

English translation: The position hitherto taken by the science of public finance with regard to the inheritance tax is a little-clarified one.

This diagnosis frames Menger’s distinction between inherited capital and income. A transfer at death generally places portions of national capital in new hands without changing their economic character. Treating inheritance as extraordinary income therefore cannot establish an adequate justification for taxing it. Menger agrees with Scheel’s rejection of that approach, but their agreement makes the search for an alternative principle more pressing.

Scheel advances three grounds: inheritance rights depend on the state; inheritance perpetuates unequal wealth and familial power; and accumulated fortunes owe much to favorable circumstances and the institution of private property. Menger challenges both the coherence and the implications of these arguments.

Wie man sieht, ist es kein einheitliches Princip, welches der Verfasser bietet, sondern eine Reihe von Gründen, welche für die Erbsteuer sprechen, — Gründe, welche nebenbei bemerkt, im hohen Grade den Standpunkt des Verfassers präjudiciren.

English translation: As one sees, it is not a unified principle that the author offers, but a series of grounds which speak in favour of the inheritance tax, grounds which, be it remarked in passing, prejudge the author's standpoint to a high degree.

For Menger, Scheel supplies several reasons favorable to the tax without demonstrating a distinct fiscal principle. More importantly, these reasons would authorize taxation of capital generally, rather than explain why succession should be the occasion for the levy. This conflicts with Menger’s position that ordinary public expenditure should be financed from income. If inheritance taxation is instead understood as capital taxation, its timing introduces a further difficulty.

Ueberdies wäre — was gleichfalls zu beachten ist — die Erbsteuer im Sinne Scheels sogar nicht einmal eine rationelle Vermögenssteuer.

English translation: Moreover, which is likewise to be noted, the inheritance tax in Scheel's sense would not even be a rational property tax.

The unequal intervals between successions would expose comparable fortunes to unequal burdens. Scheel’s justification thus fails, in Menger’s account, even to establish a consistent form of the broader tax it implicitly supports.

Menger also contests the conception of property behind Scheel’s reasoning. Citizens already contribute to the state through taxation; charging separately for the institutional existence of property treats it as merely tolerated by public authority. Nor do favorable economic circumstances establish a special state claim on wealth. Recognizing and exploiting opportunities requires foresight and productive effort. Although effortless gains occur, so do losses through inactivity, and neither warrants treating accumulated wealth generally as unearned.

The constructive argument addresses the danger that inheritance taxation will consume capital, impoverishing a stationary economy or slowing accumulation in a growing one. Menger’s answer depends on moderation and on heirs’ subsequent conduct. A modest levy can commonly be paid or replaced from the estate’s income during the first years after succession. Heirs may preserve the capital by postponing an increase in consumption. Children and spouses require particularly low rates because they already participated in the deceased’s standard of living. The defense therefore rests on practical economic effects, not merely on the legal object of the tax.

Menger presents inheritance taxation as convenient, productive, and, under these conditions, economically harmless. He extends this reasoning to revenues beyond ordinary income taxation, including certain fiscal monopolies and fees exceeding payment for particular public services. Their justification concerns the possibility of obtaining public revenue without economic injury or impairment of private rights.

The conclusion turns this comparison into a methodological demand. Fiscal theory should investigate analogous revenues inductively, identify the principles governing them, and ultimately seek a unifying principle. Scheel’s concentration on inheritance taxation leaves that wider task incomplete. Menger nevertheless recognizes the study’s care and intellectual interest, while locating its principal contribution within Katheder-Socialismus. His review combines acceptance of moderate inheritance taxation with rejection of Scheel’s social-reformist rationale, grounding his alternative in capital preservation, adjustment by heirs, and comparative fiscal analysis.