The myth of the "idle rich"

In reality, inherited assets and gifts make up a tiny share of the wealth owned by the richest Americans — about 15 percent for the top wealth quintile and 13 percent for the top income quintile, as the Bureau of Labor Statistics runs the numbers. By contrast, inherited assets account for about 43 percent of the wealth of the lowest-income group and 31 percent of the wealth of the second-lowest. (There’s a reason for that: Low-income people don’t have much in the way of assets at all, but many of them inherit a house from their parents or grandparents.) Of course it is the case that 13 percent of $1 billion is a lot more than 43 percent of $150,000. But the proportions suggest very strongly that, by and large, the very wealthy do not get that way by inheriting money but by earning it.

A cleverer class-war columnist might derive a useful insight from that: Rich people have all sorts of ways of helping their children to grow wealthy rather than just leaving them money or giving it to them. (E.g., getting them into Princeton.) It is the case that people with rich parents are a lot more likely to end up rich than are people with poor parents, but enacting a larger estate tax probably will not have much effect on that, given that people who inherit large estates typically already are wealthy and are in most cases well into middle age and well into their careers, if not into their retirement, at the time they inherit.

It’s all good and fun to sneer at them as “passive,” but there are two sides to an inheritance: Those fortunes do not build themselves, and they generally are not the result of “passive” anything.