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Human Capital and Transfer Taxation

50 Pages Posted: 5 Mar 2010 Last revised: 14 Mar 2010

Kerry A. Ryan

Saint Louis University School of Law

Date Written: March 2, 2010


This article addresses the question of whether education and healthcare transfers should be included in the federal gift tax base. It initially frames the issue in two ways: (1) through the lens of a proposal by the American Law Institute to exempt all “transfers for consumption” from gift taxation, and (2) within the context of a debate among economists about whether such expenditures should be included in the definition of “intergenerational transfers” for purposes of determining the total share of such transfers in U.S. accumulated wealth. Finding the first lens unsatisfactory on its own doctrinal terms and the second lens inconclusive, the article shifts the focus of analysis to the normative first principles implicated by this inquiry: equality of opportunity and family autonomy. The main claim of this article is that the current exclusion of education and healthcare transfers from the gift tax base is indefensible under an equal opportunity framework, but that outright repeal of the exclusion is neither desirable (because of the competing value of family autonomy) nor politically possible (because of strong taxpayer opposition to the full gift taxation of these transfers). Accordingly, this article proposes an alternative that appropriately balances these competing norms in a politically feasible manner: Congress should convert the existing gift tax exclusion for tuition and medical care payments into a tax credit available after application of the gift tax unified credit.

Keywords: tax, gift tax, transfer tax, federal wealth transfer tax, education, medical, health, gift tax exclusion, equality of opportunity, family autonomy

JEL Classification: H2

Suggested Citation

Ryan, Kerry A., Human Capital and Transfer Taxation (March 2, 2010). Oklahoma Law Review, Vol. 62, p. 223, 2010; Saint Louis U. Legal Studies Research Paper No. 2010-2. Available at SSRN:

Kerry A. Ryan (Contact Author)

Saint Louis University School of Law ( email )

100 N. Tucker Blvd.
St. Louis, MO 63101
United States
3149777237 (Phone)
3149773332 (Fax)


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