Common wisdom decrees that inheritance taxes are very unpopular among the public (Goodin 2003; Cremer 2010). These are taxes that are placed on transfers of wealth. These taxes can vary depending on whether the tax is imposed on the donor (estate tax), recipient (inheritance tax) or includes gifts as well as inheritances (capital receipts tax). For convenience, this chapter will usually refer to these taxes generally as inheritance taxes (unless referring to a specific tax in a particular country). Cremer writes that: ‘Taxes are rarely popular, but wealth transfer taxes appear to be particularly and increasingly unpopular. A number of countries are already without an inheritance or an estate tax or, as in the case of France, have dramatically reduced its scope. Some others, including the United States, contemplate to phase it out’ (Cremer 2010, p. 815). Bartels (2006) reports results from a 2002 National Election Study survey which asked 1,346 US respondents what they thought about repealing the estate tax. 67.6 % of the sample favoured abolition versus 27.2 % of participants opposed abolition. Majorities for repeal were recorded among those with family incomes of less than $ 50,000 (63.5 % in favour of repeal), those who wanted more government spending (66.3 %) and among those who were concerned about rising income inequality (65.5 %). Hammar et al. (2008) reports the results of a survey in 2004 of 1,774 Swedes aged between 15 and 85 of attitudes to 11 different taxes, including payroll tax, corporation tax and petrol duty. These researchers use an ‘opinion balance’ index (which measures the share of respondents who want to reduce or abolish a tax minus those who want to increase it) to explore attitudes to tax. The three most unpopular taxes were different taxes on wealth, in particular real estate tax, inheritance tax and gift tax with opinion balances of 70, 66 and 63. For the purposes of comparison, corporation tax scored the lowest opinion balance with a figure of eight. There was less hostility to a different wealth tax which imposed a 1.5 % levy on the net wealth of 160,000 € for single people and 215,000 € for couples. This wealth tax had an opinion balance of 24.

This public opposition to inheritance taxes seems surprising given what such taxes raise for the public purse (Beckert 2008; Boadway et al. 2010). Sir James Mirrlees chaired a recent review of taxation at the Institute for Fiscal Studies in the UK. A document from this review notes that: ‘Most major economies raise relatively little from inheritance and gift taxes. None of the G7 economies has raised more than 1.0 % of national income in revenue from Estate, Inheritance, and Gift Taxes in any one year over the last forty years’ (Boadway et al. 2010, p. 741). The public hostility also seems puzzling because inheritance taxes usually apply only to the wealthiest estates. One might expect majority opinion to oppose abolition because this raises the prospect that government will raise the taxes they pay to compensate for the scrapping of inheritance tax. Nevertheless, there seems to be popular support for abolition. In the US in 2001, a repeal of the estate tax was passed which meant that this tax was due to fall to zero in 2010. A sunset clause meant that the repeal had to be renewed. Although President Obama allowed the estate tax to return in 2011, he nevertheless weakened the tax over its pre-repeal level (Graetz and Shapiro 2005; Birney et al. 2006; Graetz 2011).

Studying public opinion is important for reasons of politics and policy. Within politics, taxation marks one of the most significant relationships between government and citizens (Commission on Taxation and Citizenship 2000; Murphy and Nagel 2002). In a representative democracy, politicians should ideally reflect preferences over taxation. Edlund comments: ‘Ideally, in a representative democracy, the preferences of the population work as guidelines for political authorities that are supposed to translate these wishes into specific policies. Although the link between public opinion and political decision making in reality may be less than straightforward, democracy faces a huge problem if only the segment of the population can provide such guidelines’ (Edlund 2003, p. 145).

Examining public attitudes is also significant for policy. One issue for any successful tax system is the degree to which citizens comply with its provisions. Research suggests that public morale is important for understanding whether people comply with taxes (Torgler and Schneider 2007). If people reject a tax, they may seek to avoid or evade paying these taxes. In certain circumstances, this public opposition can spill over into physical protests (Robinson 2003). This suggests the significance of attending to public opinion when designing a tax system. Indeed, public opposition to inheritance taxes is often cited as a key reason why politicians are reluctant to rely on such taxes. Goodin remarks: “Inheritance taxes have long been the ‘third rail’ of tax policy, touch them, and you are dead, politically” (Goodin 2003, p. 70). Exploring public opinion is also significant at the present time as governments across the world seek to rebalance tax and spending following the global financial crisis that started in the late 2000s. Politicians will find it useful to refer to public opinion when exploring options for reform. Hammar et al (2008) write: ‘political difficulties in implementing the tax structure therefore call for optimal taxation theory to be complemented by analyses of tax attitudes’ (Hammar et al 2008, p. 524).

Studying public opposition to inheritance tax in particular is significant because current research has difficulty explaining why a majority seems to oppose such taxes. There is a temptation to see this as a ‘problem’ with public opinion. McCaffery makes a judgement in the 1990s that seems to apply today: ‘The most common answer to the puzzle of popular opposition to the estate tax is that people are making a factual mistake’ (McCaffery 1994, p. 285). This chapter explores an alternative suggestion that the problem may lie more in how researchers understand public opinion. Rather than focusing on attitudes to inheritance tax in isolation from other taxes it is important to see inheritance tax as part of the wider tax system. This is important because the issue then is not so much providing more facts or more compelling moral arguments about inheritance tax. The issue instead is providing people with choices over different taxes.

This chapter is organised as follows. The first three sections outline three main ways that tax attitudes have been analysed, that is rational choice theory, framing and institutions. This part of the chapter suggests that existing approaches have difficulty in explaining why the majority of opinion seems to be against inheritance taxes. The fourth part suggests that the problem with existing research is that they tend to split off the study of inheritance tax from other taxes. However, it is important to see inheritance taxes as part of the wider tax system, and this helps understand the nature of public attitudes to inheritance taxes. The final section considers some implications for research.

Rational choice theory is used in standard economic analyses of tax attitudes (Gemmell et al. 2004; Slemrod 2006; Hammar et al. 2008). Rational choice theory assumes people are rational self-interested utility maximisers. Rational choice means that people satisfy axioms of consistent choice, such as not being swayed by irrelevant alternatives in the choices they make. Self-interest means that people satisfy their own preferences, although these preferences can be either selfish or altruistic. People also choose those actions that maximise their utility. However, they need the appropriate information to pick the actions that maximise their utility. If this information is unavailable then people can make errors over the choices that maximise utility. Rational agents will make the maximising choices once the proper information becomes available (Sen 1990; Hammar et al. 2008). Rational choice theory also suggests that people consider benefits as well as costs when thinking about taxation. For example, people get benefits through tax-funded public services such as health and education and this should shape attitudes to taxation.

A second approach to understanding public attitudes to taxation draws on themes from behavioural economics in understanding attitudes to taxation (McCaffery and Baron 2003, 2004; Löfgren and Nordblom 2009). Behavioural economics shares with the rational choice approach an emphasis upon self-interest. However, more attention is placed on the limits on rational choice. This has roots in earlier ideas such as bounded rationality. This literature highlights the importance of framing for understanding attitudes to taxation. This takes its cue from the point that people’s choices over options can vary depending on how these options are presented or framed (Kahneman and Tversky 1979; Thaler and Sunstein 2008). Löfgren and Nordblom (2009) report that a study of economics students shows that support for environmental taxes tend to increase if it is referred to as a CO₂ tax rather than a gasoline tax. Lakoff (2004) argues that each person’s mind contains a set of assumptions and values that forms a ‘frame’. People are often unaware of their frames but use these to put their experiences in order. People can combine assumptions and values in varying ways and so yield different frames. Lakoff says that invoking a particular frame can help win public support for a policy. Language can nudge people to view policies in particular ways. For example, the term ‘tax burden’ tends to associate taxation with negative images, that is, being a burden to the individual that ideally should not exist. Moral stories or arguments are one way of trying to frame the debate. For instance, the term ‘death tax’ for inheritance tax is intended to invoke the idea that death comes to everyone as well the notion that government is interested in taxing people at a time of personal or family tragedy. This label then is intended to dispose people against accepting inheritance tax (Birney et al. 2006).