6 ms·

If I buy a house, and give the house to my children when they retire (and they either use it or sell it to get one they want to use), they'll never have to pay

by shados 10y ago

If I buy a house, and give the house to my children when they retire (and they either use it or sell it to get one they want to use), they'll never have to pay rent, only taxes and maintenance. They can use that money to invest, to take longer to pick better job, to train and get better at what they do...and eventually they can take all of that, and give it to their children who'll be even richer, and so on. The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit.

peteretep 10y ago
> ban inheritance, which > would be all sorts of > bullshit My only concern about a 100% inheritance tax is enforcement — what other bullshit is there? If there is one thing I can absolutely guarantee you, it's that once you're dead, you won't care what happens to your money. I fail to see any benefit to society of people receiving unearned money for having the right parents. Edit: as always, this is an unfailingly unpopular view. I'd encourage you to comment on what you don't like about it, though.
- dllthomas 10y ago
  People care before they are dead about what is going to happen after, and this changes their behavior. I'm not saying anything about your conclusion, but your reasoning is flawed.
  - peteretep 10y ago
    Sure, although I'd suggest that it's irrational to care about what happens once you're dead.
    - conanbatt 10y ago
      It is, but thats not a bad thing (in the board sense of irrational). A parent is willing to save a lot of money to give a bigger inheritance for his children, even knowing that his children will be much richer than he ever was at any point. That is irrational, but in the end is a huge part of the economic progess of society. Why would we want to deny some people the opportunity to do what they want AND benefit society as a whole at the same time?
      - peteretep 10y ago
        Won't the inheritance stop their children working so hard? Isn't spending better than hoarding for the economy?
        conanbatt 10y ago
        > Won't the inheritance stop their children working so hard? Any evidence of the income from labor of children that came from wealthier family is very likely to point that the highest income jobs go to people with richer parents. That points to the exact opposite: the inherited capital allows them to pursue higher education and more perfectioning of skills, even if they dont need that labor. But even if at some point of inheritance, people developed a significant dissuasive to work well paying jobs, it would be a drop in the bucket. The labor of the people who's inherited capital allows them to never work, and not only that but never for their children to work, is not a significant population and clearly, managing the capital is worth a lot more than their labor. But lets say that even then, we want to squeeze as much as possible. Why stop at life? Lets just confiscate everything at any point in a mans life: someone that IPO'd and made 50 millions by 30y-old is tempted to never work by that same assumption, shouldnt we tax it all away? Of course, we know that taxing in that way is not only not to the liking of many, but it has economic consequences. SAme with the inheritance tax. > Isn't spending better than hoarding for the economy? I need more context for this, im not sure i get it. Spending by itself is not good for the economy, its actually terrible. Frivolous spending is not good for the economy: it creates jobs that have limited use beyond basic wealth transfer. If you spend your money on maids and people to afford luxury to you, once the capital is spent, all that value goes with you when you die. But if that capital goes into something that lasts after you perish, the economy gets richer. For example, if you buy 200 cars, at least after you die ,there are more assets in the overall economy.
        peteretep 10y ago
        > the inherited capital allows > them to pursue higher education I suspect most people's education is complete by the time their parents die. > Why stop at life? Lets just > confiscate everything at any > point in a mans life Because I can assure you that once dead, you will maintain no further interest in your assets. While alive, I suspect you will. >> Isn't spending better than >> hoarding for the economy? > I need more context for this They were teaching it in highschool economics when I was a kid.
    - dllthomas 10y ago
      It is a type error to speak of utility functions as being rational or irrational.
  - charrondev 10y ago
    Many people with children that work incredibly hard do so precisely so that their children can live a better life than they did. Removing this motivation would definitely reduce economic activity.
    - peteretep 10y ago
      Or they'd simply spend more, which would increase economic activity. And one assumes their children will need to work harder without inheritance, so that work isn't going anywhere.
  - verbify 10y ago
    There should at least be a decay function built in. People care before they're dead about the immediate future - but they won't care as much about 150 years into the future. Yet intergenerational wealth can last more than 150 years.
    - shados 10y ago
      So, I'm in my 30s right now. I own a home, have quite a bit of investments and valuables. My parents did not give me a dime (it has been the other way around, really). Now, if i decided to give all of this to my hypothetical kids -right now-, potentially decades before I'm dead. They could grow up with it, invest it, make money, and be reasonably "rich" (not 1%, but better off than most) by the time they are in their 30s. And then they could give THAT right away to their kids, again, decades before they are dead. Repeat the cycle. So my grand-grand-grand-etc childrens could be absurdly rich, technically thanks to me, but where do you draw the line between whats inheritance and what is not? I gave the money while I was alive (taxed and stuff, but still), they were the one who invested it and made that additional money through their own action (though it was super easy, it was still them clicking the buttons on their investment account's website, and according to taxes, they made it). So how to you stop that from happening? I can't give money to my kids while I'm in my 30s? Now ok, let say I can't give money. Instead I take my money and I spend it on private school, tutors, private college, etc. Even if living in a place where education is free, you can certainly have a lot of influence through money. No matter how you spin it, somewhere down the road, this effect will compound. Starting from scratch in a videogame means you'll take longer to catch up than someone who's been playing the game for a while and twinked their subsequent characters. No way is it going to be different in a system as complicated as real life.
      - peteretep 10y ago
        Investing in your children so they will be successful feels like a net win for society in a way that simply giving them assets does not.
        shados 10y ago
onlyrealcuzzo 10y ago
Taxing wealth instead of income solves this, but creates many different problems.
- shados 10y ago
  More taxed money is still more money than no money though.
paulddraper 10y ago
> ban inheritance, which would be all sorts of bullshit Well we already have a partial ban, in the form of the estate tax. We could make it a full ban.
Eridrus 10y ago
There's not a whole lot of benefit to society of inheritances. Inheritances mostly just distorts society and encourages a "fuck you, got mine" attitude We should certainly be more aggressive about taxing inheritances since we are very far from the point where people will stop working because they have no desire for money.
- twblalock 10y ago
  The inheritance tax is a tax on people who were too stupid to put their money in a family trust or similar arrangement before they died. It's trivial to avoid if you are the kind of person who has enough money to be subject to such a tax. Increase the tax, and avoidance will increase as well.
  - hadfgdasf 10y ago
    You would be wrong, because you do not understand the estate tax system in the USA. There are things like the generation skipping tax. All the significant loopholes are covered, in terms of passing on wealth and avoiding any estate tax. That said, the estate tax is very low. The exemption is huge. The vast majority of people who die in this country are just folks and they bury their dead and they don't go through probate or have trusts. Maybe they have a little life insurance if they are lucky.
    - pg314 10y ago
      Has anything changed on that front since 2013? Has the GRAT loophole been closed? [1] https://www.bloomberg.com/news/articles/2013-12-17/accidental-tax-break-saves-wealthiest-americans-100-billion https://www.bloomberg.com/news/articles/2013-12-17/accidenta...
      - hadfgdasf 10y ago
        GRAT loophole is not just a "family trust," and it doesn't make estate/gift tax trivial to avoid. It is ridiculous that it persists though.
crdoconnor 10y ago
>The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit. Shifting the tax and legal system to favor earned rather than unearned income would easily prevent it. One example of this would be a land value tax. Another would be watering down patent enforcement. Another would be strengthening bankruptcy protections. Another would be strong enforcement of anti-trust law.

by shados 10y ago

peteretep 10y ago

> ban inheritance, which > would be all sorts of > bullshit My only concern about a 100% inheritance tax is enforcement — what other bullshit is there? If there is one thing I can absolutely guarantee you, it's that once you're dead, you won't care what happens to your money. I fail to see any benefit to society of people receiving unearned money for having the right parents. Edit: as always, this is an unfailingly unpopular view. I'd encourage you to comment on what you don't like about it, though.

dllthomas 10y ago
People care before they are dead about what is going to happen after, and this changes their behavior. I'm not saying anything about your conclusion, but your reasoning is flawed.
- peteretep 10y ago
  Sure, although I'd suggest that it's irrational to care about what happens once you're dead.
  - conanbatt 10y ago
    It is, but thats not a bad thing (in the board sense of irrational). A parent is willing to save a lot of money to give a bigger inheritance for his children, even knowing that his children will be much richer than he ever was at any point. That is irrational, but in the end is a huge part of the economic progess of society. Why would we want to deny some people the opportunity to do what they want AND benefit society as a whole at the same time?
    - peteretep 10y ago
      Won't the inheritance stop their children working so hard? Isn't spending better than hoarding for the economy?
      - conanbatt 10y ago
        > Won't the inheritance stop their children working so hard? Any evidence of the income from labor of children that came from wealthier family is very likely to point that the highest income jobs go to people with richer parents. That points to the exact opposite: the inherited capital allows them to pursue higher education and more perfectioning of skills, even if they dont need that labor. But even if at some point of inheritance, people developed a significant dissuasive to work well paying jobs, it would be a drop in the bucket. The labor of the people who's inherited capital allows them to never work, and not only that but never for their children to work, is not a significant population and clearly, managing the capital is worth a lot more than their labor. But lets say that even then, we want to squeeze as much as possible. Why stop at life? Lets just confiscate everything at any point in a mans life: someone that IPO'd and made 50 millions by 30y-old is tempted to never work by that same assumption, shouldnt we tax it all away? Of course, we know that taxing in that way is not only not to the liking of many, but it has economic consequences. SAme with the inheritance tax. > Isn't spending better than hoarding for the economy? I need more context for this, im not sure i get it. Spending by itself is not good for the economy, its actually terrible. Frivolous spending is not good for the economy: it creates jobs that have limited use beyond basic wealth transfer. If you spend your money on maids and people to afford luxury to you, once the capital is spent, all that value goes with you when you die. But if that capital goes into something that lasts after you perish, the economy gets richer. For example, if you buy 200 cars, at least after you die ,there are more assets in the overall economy.
        peteretep 10y ago
        > the inherited capital allows > them to pursue higher education I suspect most people's education is complete by the time their parents die. > Why stop at life? Lets just > confiscate everything at any > point in a mans life Because I can assure you that once dead, you will maintain no further interest in your assets. While alive, I suspect you will. >> Isn't spending better than >> hoarding for the economy? > I need more context for this They were teaching it in highschool economics when I was a kid.
  - dllthomas 10y ago
    It is a type error to speak of utility functions as being rational or irrational.
- charrondev 10y ago
  Many people with children that work incredibly hard do so precisely so that their children can live a better life than they did. Removing this motivation would definitely reduce economic activity.
  - peteretep 10y ago
    Or they'd simply spend more, which would increase economic activity. And one assumes their children will need to work harder without inheritance, so that work isn't going anywhere.
- verbify 10y ago
  There should at least be a decay function built in. People care before they're dead about the immediate future - but they won't care as much about 150 years into the future. Yet intergenerational wealth can last more than 150 years.
  - shados 10y ago
    So, I'm in my 30s right now. I own a home, have quite a bit of investments and valuables. My parents did not give me a dime (it has been the other way around, really). Now, if i decided to give all of this to my hypothetical kids -right now-, potentially decades before I'm dead. They could grow up with it, invest it, make money, and be reasonably "rich" (not 1%, but better off than most) by the time they are in their 30s. And then they could give THAT right away to their kids, again, decades before they are dead. Repeat the cycle. So my grand-grand-grand-etc childrens could be absurdly rich, technically thanks to me, but where do you draw the line between whats inheritance and what is not? I gave the money while I was alive (taxed and stuff, but still), they were the one who invested it and made that additional money through their own action (though it was super easy, it was still them clicking the buttons on their investment account's website, and according to taxes, they made it). So how to you stop that from happening? I can't give money to my kids while I'm in my 30s? Now ok, let say I can't give money. Instead I take my money and I spend it on private school, tutors, private college, etc. Even if living in a place where education is free, you can certainly have a lot of influence through money. No matter how you spin it, somewhere down the road, this effect will compound. Starting from scratch in a videogame means you'll take longer to catch up than someone who's been playing the game for a while and twinked their subsequent characters. No way is it going to be different in a system as complicated as real life.
    - peteretep 10y ago
      Investing in your children so they will be successful feels like a net win for society in a way that simply giving them assets does not.
      - shados 10y ago

onlyrealcuzzo 10y ago

Taxing wealth instead of income solves this, but creates many different problems.

shados 10y ago
More taxed money is still more money than no money though.

paulddraper 10y ago

> ban inheritance, which would be all sorts of bullshit Well we already have a partial ban, in the form of the estate tax. We could make it a full ban.

Eridrus 10y ago

There's not a whole lot of benefit to society of inheritances. Inheritances mostly just distorts society and encourages a "fuck you, got mine" attitude We should certainly be more aggressive about taxing inheritances since we are very far from the point where people will stop working because they have no desire for money.

twblalock 10y ago
The inheritance tax is a tax on people who were too stupid to put their money in a family trust or similar arrangement before they died. It's trivial to avoid if you are the kind of person who has enough money to be subject to such a tax. Increase the tax, and avoidance will increase as well.
- hadfgdasf 10y ago
  You would be wrong, because you do not understand the estate tax system in the USA. There are things like the generation skipping tax. All the significant loopholes are covered, in terms of passing on wealth and avoiding any estate tax. That said, the estate tax is very low. The exemption is huge. The vast majority of people who die in this country are just folks and they bury their dead and they don't go through probate or have trusts. Maybe they have a little life insurance if they are lucky.
  - pg314 10y ago
    Has anything changed on that front since 2013? Has the GRAT loophole been closed? [1] https://www.bloomberg.com/news/articles/2013-12-17/accidental-tax-break-saves-wealthiest-americans-100-billion https://www.bloomberg.com/news/articles/2013-12-17/accidenta...
    - hadfgdasf 10y ago
      GRAT loophole is not just a "family trust," and it doesn't make estate/gift tax trivial to avoid. It is ridiculous that it persists though.

crdoconnor 10y ago

>The only way to prevent this from happening is to ban inheritance, which would be all sorts of bullshit. Shifting the tax and legal system to favor earned rather than unearned income would easily prevent it. One example of this would be a land value tax. Another would be watering down patent enforcement. Another would be strengthening bankruptcy protections. Another would be strong enforcement of anti-trust law.