Are Death Taxes on the "Rich" Bad for the "Poor"?

Professor Steven Landsburg of the University of Rochester recently published an op-ed in the Wall Street Journal asserting that the estate tax actually hurts the poor.  (How the Death Tax Hurts the Poor, Oct. 29, 2011).  If he is right, it would be a great reason to do away with the estate tax, since the only reason that tax exists is to divest the well-to-do of the right to pass their life savings on to their children, ostensibly for the benefit of the less well-to-do.  It does not exist to raise revenue, as every year it raises a minuscule sum.  See Congressional Budget Office, Economic and Budget Issue Brief, "Federal Estate and Gift Taxes" (Dec. 18, 2009) ("Federal transfer taxes have historically made up a relatively small share of total federal revenues—accounting for 1 percent to 2 percent of total revenues in most of the past 60 years.").  If it actually hurts the poor,* there is no reason it should exist.


Professor Landsburg's theory is that the death tax hurts the poor by encouraging "the rich" to spend their money instead of saving it, since any savings will only be taxed at punitive rates upon death, and by spending their wealth the rich deprive others of material goods:

The death tax sends a powerful message to rich people: "You can't leave everything to your heirs, so spend now, before it's too late. Burn more fuel. Demand more timber for your mansions, more steel for your private planes, and more fiberglass for your yachts.'' 

Then all those resources—the fuel and timber, the steel and fiberglass—become unavailable to build factories, so the rest of us get worse jobs at lower wages. Those resources are unavailable to build farm equipment, so we all pay higher food prices. They're unavailable to build roads and schools and hospitals. 

I don't begrudge anyone the fruits of his labor. But the death tax encourages people to pick extra fruit, leaving the trees a little barer for the rest of us.

Putting aside that Professor Landsburg apparently does not know what airplanes are made of (lots of aluminum, titanium and/or carbon fiber; relatively little steel), he seems to me to be completely right in his thesis, but completely wrong in his theory. In other words, Professor Landsburg is right that the death tax hurts the poor; but not for the reasons he puts forth.