4 ms·

No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. The purpose is to prevent a class of non-working super ri

No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. The purpose is to prevent a class of non-working super rich that live for generations off of the estate. So you can be rich and have lots of fancy toys and swim in pools of money while you're alive, but once you die that's it. Your children benefit by starting with a (very large) head start relative to their peers, but they shouldn't necessarily be set-for-life. It's economically bad to have a vast pile of money sitting in one place for a long time, you want to get that back into circulation. And success should be earned, not granted at birth. The only alternative would be something like actively taxing net worths that exceed some amount, which is less palpable.

caf 11y ago
And of course practically speaking, death is a great thing to tax, because one of the problems with taxation is that it can be distortionary - when you tax something, people tend to do less of it. That's obviously not a problem with estate taxes.
- robfig 11y ago
  Plenty other discussion about the lengths people go to avoid the estate tax, so I think it is distortionary
hinkley 11y ago
That head start can extend into adulthood of you let them live rent free in a house you own, use your vacation house, etc. Hell, if your forty year old son hasn't been able to mooch at least a couple million off of you tax free, you're just not doing it right.
refurb 11y ago
No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. Yet a lot of countries with low inequity don't have them. Canada, Sweden, etc.
- knorker 11y ago
  Sweden used to have it. I know this is not contradicting what you said, it's complementing.
- kllrnohj 11y ago
  Canada doesn't have an estate tax, but it has something largely equivalent: http://www.investopedia.com/articles/retirement/08/estate-planning-canadians-canada.asp http://www.investopedia.com/articles/retirement/08/estate-pl... Sweden only very recently (2005) repealed its inheritance tax after centuries of having one. So the current inequity levels in sweden occurred under inheritance tax. Prior to 2005 the inheritance tax rate in sweden was 60%, higher than the estate tax in the US. And vastly more people hit the tax in sweden as the exemption was a mere $8600 USD. So if anything Sweden is evidence that a stiff estate/inheritance tax helps prevent inequity. We'll see if that changes.
nhangen 11y ago
Regardless of its purpose, it is extremely unfair, at least from a purely pragmatic perspective. The money was earned, and the government has no right to take it away just because you die.
- cmyr 11y ago
  would you describe it as being more or less unfair then being born into poverty?
  - nhangen 11y ago
    Apples and oranges.
- tarsinge 11y ago
  Pragmatically when you are dead you own nothing. Who inherit what you owned is arbitrary (childs? cousins? community? state?)
- kllrnohj 11y ago
  No, it isn't taken away. The person that owned it is dead. If you decided to give it to your children or whatever, it'll get taxed just like if you tried to give them that much money before you died. If in your will you decide to give it to a non-profit charity instead, it's not taxed. You aren't taxed for dying. The person who died isn't taxed at all. It's the people that are still alive that are now receiving money that are taxed. How is any of this unfair? Your children didn't do anything to earn that money. Why should they get it at all?
  - nhangen 11y ago
    That's not true. Families build wealth together. My children don't do my work, but they work with mom to keep the house in order while I do. It's a family effort. Without the support of my wife and children, I would not be able to produce nearly as much as I do (note: I'm not wealthy, I just happen to value the money I make).
andyjdavis 11y ago
>It's economically bad to have a vast pile of money sitting in one place for a long time, you want to get that back into circulation. Although I agree with your point overall this point specific point is flawed unless someone is literally storing physical cash in large volumes. If I have a big bag of assets that is passed from generation to generation it is not sitting in one place or in any way out of circulation. Businesses do their thing regardless of whether a family member or someone else owns them. Real estate portfolios are similarly unaffected by who happens to own it. Even money sitting in a bank account is not actually just sitting there.

caf 11y ago

And of course practically speaking, death is a great thing to tax, because one of the problems with taxation is that it can be distortionary - when you tax something, people tend to do less of it. That's obviously not a problem with estate taxes.

robfig 11y ago
Plenty other discussion about the lengths people go to avoid the estate tax, so I think it is distortionary

hinkley 11y ago

That head start can extend into adulthood of you let them live rent free in a house you own, use your vacation house, etc. Hell, if your forty year old son hasn't been able to mooch at least a couple million off of you tax free, you're just not doing it right.

refurb 11y ago

No, the point of estate tax is to prevent generational inheritance, not to re-coupe failed cap gains. Yet a lot of countries with low inequity don't have them. Canada, Sweden, etc.

knorker 11y ago
Sweden used to have it. I know this is not contradicting what you said, it's complementing.
kllrnohj 11y ago
Canada doesn't have an estate tax, but it has something largely equivalent: http://www.investopedia.com/articles/retirement/08/estate-planning-canadians-canada.asp http://www.investopedia.com/articles/retirement/08/estate-pl... Sweden only very recently (2005) repealed its inheritance tax after centuries of having one. So the current inequity levels in sweden occurred under inheritance tax. Prior to 2005 the inheritance tax rate in sweden was 60%, higher than the estate tax in the US. And vastly more people hit the tax in sweden as the exemption was a mere $8600 USD. So if anything Sweden is evidence that a stiff estate/inheritance tax helps prevent inequity. We'll see if that changes.

nhangen 11y ago

Regardless of its purpose, it is extremely unfair, at least from a purely pragmatic perspective. The money was earned, and the government has no right to take it away just because you die.

cmyr 11y ago
would you describe it as being more or less unfair then being born into poverty?
- nhangen 11y ago
  Apples and oranges.
tarsinge 11y ago
Pragmatically when you are dead you own nothing. Who inherit what you owned is arbitrary (childs? cousins? community? state?)
kllrnohj 11y ago
No, it isn't taken away. The person that owned it is dead. If you decided to give it to your children or whatever, it'll get taxed just like if you tried to give them that much money before you died. If in your will you decide to give it to a non-profit charity instead, it's not taxed. You aren't taxed for dying. The person who died isn't taxed at all. It's the people that are still alive that are now receiving money that are taxed. How is any of this unfair? Your children didn't do anything to earn that money. Why should they get it at all?
- nhangen 11y ago
  That's not true. Families build wealth together. My children don't do my work, but they work with mom to keep the house in order while I do. It's a family effort. Without the support of my wife and children, I would not be able to produce nearly as much as I do (note: I'm not wealthy, I just happen to value the money I make).

andyjdavis 11y ago

>It's economically bad to have a vast pile of money sitting in one place for a long time, you want to get that back into circulation. Although I agree with your point overall this point specific point is flawed unless someone is literally storing physical cash in large volumes. If I have a big bag of assets that is passed from generation to generation it is not sitting in one place or in any way out of circulation. Businesses do their thing regardless of whether a family member or someone else owns them. Real estate portfolios are similarly unaffected by who happens to own it. Even money sitting in a bank account is not actually just sitting there.