Lao Gu: Why You Should Never Introduce an Inheritance Tax

An Austrian-school writer in China on why an inheritance tax is never just a tax on the rich: it raises almost nothing, and enforcing it means monitoring everyone’s gifts, trusts, and transactions for life.

Lao Gu points out that in the OECD countries that levy them, estate and gift taxes bring in about 0.14% of GDP on average; even high-rate Korea manages only around 0.7%. But to collect even that pittance, the state has to track gifts, insurance policies, trusts, valuables, and transfers across the whole population, not just the wealthy, and every avoidance strategy (insurance structures, trusts, exemptions for art) prompts another layer of reporting rules. The result is a lifetime on trial: when you die, your past financial dealings are reopened and second-guessed, as in his example of a small restaurant owner in Seoul. Add the damage to family businesses and investment (Sweden, he notes, repealed its inheritance tax), plus the risk that the reporting machinery, once built, gets turned to other uses, and the conclusion follows: never introduce one in the first place.

From Austrian School Lao Gu, “Never Introduce an Inheritance Tax,” Ludwig von Mises Substack (Nov. 13, 2026), translated from the Chinese original at WeChat:

Written by Austrian School Lao Gu in Guangdong Province, China at 9:17 a.m. on 13 November 2026.

Someone is floating the idea of bringing in an inheritance tax. Make no mistake — this is a monumental blunder. Most people think it only concerns the rich. They’re wrong. If an inheritance tax were ever introduced, it would set off a convulsion that reshapes the whole of society.

You’ll say I’m crying wolf. That it’s just a handful of wealthy people paying up.

Hear me out.

Take Korea, where inheritance tax already exists. Suppose you run a small restaurant in Seoul. Over a lifetime you’ve scraped together a flat, a little savings, and a few old bits of furniture you rather prize. Then you die. Your child goes to sort out the estate and discovers the taxman isn’t merely looking at your bank balance on the day you died. He’s reaching ten years back: did you quietly transfer 50,000,000 won to your daughter one afternoon? Did you buy your grandson an annuity for his birthday? Did you spend 3,000,000 won on a Joseon white-porcelain brush pot at the antique market?

None of this is to catch some master criminal. It’s simply to collect a tax.

And in Korea — the OECD country with the highest rates and the most aggressive collection — that tax raises all of 0.7% of GDP a year.

0.7%. You turn a person’s entire financial life inside out, and what the state scrapes off the whole economy is less than seven-tenths of one per cent.

That is the dirty secret of inheritance tax. It looks like a levy on the rich. In reality, it extracts something far dearer from society as a whole: a permanent excuse to monitor everyone.

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• Hans-Hermann Hoppe, “Natural Elites, Intellectuals, and the State,” Mises Daily (July 21, 2006): heads of wealthy, long-established families once acted as society’s judges and peacemakers, independent of kings, until democratization destroyed them: “The fortunes of the great families have dissipated through confiscatory taxes, during life and at the time of death.”
• Kinsella, “Constitutional Structures in Defense of Freedom: Are They Possible?” (Austrian Scholars Conference, Auburn, Ala., Apr. 3, 1998), StephanKinsella.com (June 25, 2021): structural limits on government matter more than enumerated rights; surveys federalism, enumerated powers, separation of powers, and bicameralism, and proposes new limits such as supermajority requirements and tax limits.
• Kinsella, “Structural Safeguards to Limit Legislation and State Power,” StephanKinsella.com (Jan. 23, 2015): a catalog of vertical checks (federalism, enumerated powers, the Ninth and Tenth Amendments) and horizontal ones (separation of powers, bicameralism, concurrent review), plus newer safeguards like sunset provisions and jury nullification.
• Kinsella, “The Unique American Federal Government,” StephanKinsella.com (Oct. 26, 2009): enumerated powers were the main restraint on federal power, the Bill of Rights a redundant backup, and state nullification the remedy for federal overreach.
• Hans-Hermann Hoppe, “Small is Beautiful,” Property and Freedom Society (June 7, 2026; originally in Schweizer Monat, June 4, 2026): Europe’s political fragmentation let productive people escape excessive taxation by voting with their feet, and centralization threatens that check.
• Kinsella, “Say No To Tax Reform,” StephanKinsella.com (Aug. 7, 2009): tax “reform” and replacement taxes only grow the state; and in defense of loopholes, “A loophole is nothing more or less than a chance to keep your own money.”
• Kinsella, ““Tax Reform” is UNlibertarian,” StephanKinsella.com (Sept. 26, 2009): libertarians should back cutting or repealing taxes, never swapping one tax for another; includes Rockwell’s warning that a new tax like a VAT starts low and climbs.
• Alessandro Fusillo, “What Is a Dictatorship? The Historical Evolution of VAT and Personal Income Tax in Spain and Italy, and of Public Spending as a Share of GDP,” Property and Freedom Society (Aug. 6, 2026): Franco’s Spain and Fascist Italy left their subjects more fiscal freedom than today’s democracies do.
• Kinsella, “Slavery Still Exists,” Property and Freedom Society (June 21, 2026): the Thirteenth Amendment’s punishment exception lets legislatures create crimes like tax evasion and then imprison people for them.