While more suspicious of government intervention than Paine, Andrew Carnegie heartily endorsed estate taxes. The greater part of this steel magnate’s little magnum opus, The Gospel of Wealth, is devoted to a discussion of the three possible ways to dispose of wealth: (1) leave it to the families of decedents, (2) bequeath it for public purposes, and (3) administer it during one’s life. Carnegie abhorred the first, tolerated the second, and encouraged the third.
He asks his reader: “Why should men leave great fortunes to their children?” If it is from affection, then it is a misguided affection because “great sums bequeathed often work more for the injury than the good of the recipients.” The instances of public servants that live off their wealth in order to devote themselves to community service are rare. “It is not the welfare of the children, but family pride, which inspires these legacies.”
Carnegie sharply distinguishes between the intended consequence of the inheritance tax (to create funds for public purposes) and its unintended consequence (private philanthropy). The unintended effect of the tax is “to induce the rich man to attend to the administration of wealth during his life.” Wealth is a trust fund for the community that helps the rich “dignify their own lives.”
According to Carnegie, philanthropy in a capitalist economy solves the problem of rich and poor alike. “The laws of accumulation will be left free, the laws of distribution free. Individualism will continue, but the millionaire will be but a trustee for the poor.” Carnegie concludes his famous tract with the words: “The man who dies rich dies disgraced.”
Carnegie practiced what he preached and gave away more than 90 percent of his estate before his death, leaving a modest trust fund for his family. He included a trust fund for Theodore Roosevelt’s widow because the government at the time made no provision for the wives of former presidents.
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