4 ms·

> Tax advantages are another reason. The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for th

by polmuz 9y ago

> Tax advantages are another reason. The high taxes on assets in France and the inheritance tax in the U.S. prevent the accumulation of capital necessary for the formation of a strong mid-sized sector. Really? How?

crdoconnor 9y ago
This is basically the same theory as trickle down economics. I thought Harvard wouldn't be pushing that any more.
- ChefDenominator 9y ago
  There is no actual theory of trickle down economics. This is a derogatory term used as a distraction from discussing real economics.
  - darpa_escapee 9y ago
    Colloquial use of theory usually means concept or hypothesis.
    - ChefDenominator 9y ago
      Okay, there is no formal concept or hypothesis of trickle down economics. (However, most PhD economists use the phrase "economic theory," but you may have some insight into this that they have not yet been exposed to.)
      - defterGoose 9y ago
        Sure there is. The concept is that if you allow the richest to keep all their riches, they will spend it on things which will stimulate the rest of the economy. Of course, this has proven to be a seriously misguided theory, with the actual results being a lack of consumer spending and concentration of wealth to the wealthy. Is that succinct enough for you? Now, whether a bonafide economist came up with this, or RR just pulled it out of his butt is another question...
        ChefDenominator 9y ago
        This is not a description of a formalized theory, but thanks for playing.
  - Roboprog 9y ago
    Would it not be... This: https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve + The assertion that the peak of this curve is skewed towards the left (low tax rates), rather than the right (high rates)? That is, that if the "job creators" don't keep enough of the margin on goods produced, they will just get pissed off, take their marbles and go home, rather than actually bothering to hire a few more people to grab additional marginal income? The way the Laffer Curve was usually presented, was to give one the impression that there were marginal tax rates so high that they were somehow greater than 100% and ate into income earned at a lower marginal rate, which would otherwise have been retained had there been less of it. Thus, "trickle down" being the idea that when the rich have more money, they will for some reason voluntarily use it to hire people to produce products and services, regardless of whether or not there is any actual demand, or anticipated demand, for them. Yes, a marginal tax rate of 110% would be bad. Good thing we don't do that :-) (I guess I should be ready for some example from 1880 where combined locality through federal taxes did for some specific dollar amount - but hopefully such freaky exceptions don't really exist, or at least often enough to matter) Edit: I realize that the Laffer Curve was primarily about tax revenues, BUT, a large component of the theory was that as the activity increased to generate the tax revenues, it was due to somebody doing the work that created the additional earnings.
    - ChefDenominator 9y ago
      There is a common misconception of the Laffer curve that is based on trying to interpret the data. However, what the Laffer curve demonstrates is that there is a curve, nothing else. Please note that I do not consider anything from Wikipedia as evidence of anything, so if you are trying to get me to respond to something to do within a Wikipedia article, it just isn't going to happen. The number of times I have discovered serious issues with those articles, especially on political, philosophical, and academic topics is, frankly, disturbing. There is a theory within some economic schools of thought that savings generates production, but this is not directly to do with tax rates or the Laffer curve, nor even rich people.
      - Roboprog 9y ago
pm90 9y ago
Yeah this sounds like a bunch of baloney. Inheritance continues to be the most likely way for people to get rich in both the US and France, and the tax is nowhere near the amount that would cause a serious dent in the assets being inherited.
philiphodgen 9y ago
In fact Germany has an inheritance tax.
- germanier 9y ago
  With significant privileges for family-owned companies.
deleted 9y ago
[deleted]
mbid 9y ago
I've heard the argument that, with high inheritance taxes, the heir of a family-owned company has to sell parts or all of the business in order to pay the tax. I don't know enough about the issue to say whether there is some truth to it.
- ChefDenominator 9y ago
  The one direct exposure I have had to the issue of inheritance tax was with a small Midwest-based distributor. The owner was very old and wanted to pass the company to his daughters, who had actually been running the business for decades (and when I came along, his granddaughters were working the office). His issue was that what the government decided his business to be worth could only be paid with more cash than his business generated in 5 years. This meant that his heirs would have to mortgage their shares to cover the inheritance tax, which places ownership into a different category of investment.
  - dmckeon 9y ago
    The owner could have gifted a small interest in the company to each daughter, grand-daughter, and perhaps their spouses in each year of those decades, letting subsequent value growth and inflation accrue to the surviving family members. And also, perhaps transformed the company ownership structure into a limited partnership as well, claiming a lower market value for the shares owned by limited partners. tl;dr: First rule of US estate planning: Die broke.
    - ChefDenominator 9y ago
      I asked the same question, and his response was, "do you really think the government hasn't thought of that already?"
      - dmckeon 9y ago
        Well, the government has thought of it, and, at this point, appears to think it is legal. Look up "family limited partnership" or see: http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1104&context=elders http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?art... https://www.forbes.com/sites/brianluster/2014/03/18/why-forming-a-family-limited-partnership-means-less-stress-at-tax-time/#8658aa8658aa https://www.forbes.com/sites/brianluster/2014/03/18/why-form... Note especially the discount from fair market value for shares of interest in an FLP. [usual disclaimers - not a lawyer, not legal advice, see a qualified professional in your jurisdiction, etc.] The problem with tax/estate planning is the same problem as insurance - the time when you really want to have done it is often the time when it is too late to get it. (e.g., founder/owner is dying, building is flooding or on fire, etc.).
zackmorris 9y ago
Ya this is propaganda (inheritance taxes affect mainly the very wealthy, not the lower and middle classes). Germany's real secret is that labor still has voting rights within corporations: https://en.wikipedia.org/wiki/Codetermination_in_Germany https://en.wikipedia.org/wiki/Codetermination_in_Germany And actually if you look at the history of the United States, the civil rights movement depended on a strong labor sector. They don’t teach this in schools, but Martin Luther King, Jr was a threat to the establishment more for his emphasis on unifying workers than for breaking down racial barriers: https://www.theatlantic.com/entertainment/archive/2011/02/all-labor-has-dignity-martin-luther-king-jrs-fight-for-economic-justice/71423/ https://www.theatlantic.com/entertainment/archive/2011/02/al... The labor movements between WWII and Ronald Reagan’s election led to the US becoming the largest industrial superpower in the world, with some of the highest per capita incomes. The loss of unions and the decline of worker’s rights in the US (and accompanying stagnation of wages post-2000) coincide exactly with the loss of civil rights as we’ve moved to a more authoritarian society. Things like the loss of habeas corpus under GW Bush and Obama just blow my mind, and I think if the electorate knew what was really going on they would not elect the people they do. But they don’t, that’s why capitalists have traditionally pushed for the privatization of public schools and funding propaganda (infotainment) to preserve the echo chamber. The more striated, divided and polarized a society is, the more wealth can be concentrated in fewer hands. Older nations like Germany have a better handle on this because they’ve seen it repeated in history so many times and are more aware of the dangers of unilateral thinking and monarchy. Inclusivity has paid off handsomely for them.

by polmuz 9y ago

crdoconnor 9y ago

This is basically the same theory as trickle down economics. I thought Harvard wouldn't be pushing that any more.

ChefDenominator 9y ago
There is no actual theory of trickle down economics. This is a derogatory term used as a distraction from discussing real economics.
- darpa_escapee 9y ago
  Colloquial use of theory usually means concept or hypothesis.
  - ChefDenominator 9y ago
    Okay, there is no formal concept or hypothesis of trickle down economics. (However, most PhD economists use the phrase "economic theory," but you may have some insight into this that they have not yet been exposed to.)
    - defterGoose 9y ago
      Sure there is. The concept is that if you allow the richest to keep all their riches, they will spend it on things which will stimulate the rest of the economy. Of course, this has proven to be a seriously misguided theory, with the actual results being a lack of consumer spending and concentration of wealth to the wealthy. Is that succinct enough for you? Now, whether a bonafide economist came up with this, or RR just pulled it out of his butt is another question...
      - ChefDenominator 9y ago
        This is not a description of a formalized theory, but thanks for playing.
- Roboprog 9y ago
  Would it not be... This: https://en.wikipedia.org/wiki/Laffer_curve https://en.wikipedia.org/wiki/Laffer_curve + The assertion that the peak of this curve is skewed towards the left (low tax rates), rather than the right (high rates)? That is, that if the "job creators" don't keep enough of the margin on goods produced, they will just get pissed off, take their marbles and go home, rather than actually bothering to hire a few more people to grab additional marginal income? The way the Laffer Curve was usually presented, was to give one the impression that there were marginal tax rates so high that they were somehow greater than 100% and ate into income earned at a lower marginal rate, which would otherwise have been retained had there been less of it. Thus, "trickle down" being the idea that when the rich have more money, they will for some reason voluntarily use it to hire people to produce products and services, regardless of whether or not there is any actual demand, or anticipated demand, for them. Yes, a marginal tax rate of 110% would be bad. Good thing we don't do that :-) (I guess I should be ready for some example from 1880 where combined locality through federal taxes did for some specific dollar amount - but hopefully such freaky exceptions don't really exist, or at least often enough to matter) Edit: I realize that the Laffer Curve was primarily about tax revenues, BUT, a large component of the theory was that as the activity increased to generate the tax revenues, it was due to somebody doing the work that created the additional earnings.
  - ChefDenominator 9y ago
    There is a common misconception of the Laffer curve that is based on trying to interpret the data. However, what the Laffer curve demonstrates is that there is a curve, nothing else. Please note that I do not consider anything from Wikipedia as evidence of anything, so if you are trying to get me to respond to something to do within a Wikipedia article, it just isn't going to happen. The number of times I have discovered serious issues with those articles, especially on political, philosophical, and academic topics is, frankly, disturbing. There is a theory within some economic schools of thought that savings generates production, but this is not directly to do with tax rates or the Laffer curve, nor even rich people.
    - Roboprog 9y ago

pm90 9y ago

Yeah this sounds like a bunch of baloney. Inheritance continues to be the most likely way for people to get rich in both the US and France, and the tax is nowhere near the amount that would cause a serious dent in the assets being inherited.

philiphodgen 9y ago

In fact Germany has an inheritance tax.

germanier 9y ago
With significant privileges for family-owned companies.

deleted 9y ago

[deleted]

mbid 9y ago

I've heard the argument that, with high inheritance taxes, the heir of a family-owned company has to sell parts or all of the business in order to pay the tax. I don't know enough about the issue to say whether there is some truth to it.

ChefDenominator 9y ago
The one direct exposure I have had to the issue of inheritance tax was with a small Midwest-based distributor. The owner was very old and wanted to pass the company to his daughters, who had actually been running the business for decades (and when I came along, his granddaughters were working the office). His issue was that what the government decided his business to be worth could only be paid with more cash than his business generated in 5 years. This meant that his heirs would have to mortgage their shares to cover the inheritance tax, which places ownership into a different category of investment.
- dmckeon 9y ago
  The owner could have gifted a small interest in the company to each daughter, grand-daughter, and perhaps their spouses in each year of those decades, letting subsequent value growth and inflation accrue to the surviving family members. And also, perhaps transformed the company ownership structure into a limited partnership as well, claiming a lower market value for the shares owned by limited partners. tl;dr: First rule of US estate planning: Die broke.
  - ChefDenominator 9y ago
    I asked the same question, and his response was, "do you really think the government hasn't thought of that already?"
    - dmckeon 9y ago
      Well, the government has thought of it, and, at this point, appears to think it is legal. Look up "family limited partnership" or see: http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1104&context=elders http://scholarship.law.marquette.edu/cgi/viewcontent.cgi?art... https://www.forbes.com/sites/brianluster/2014/03/18/why-forming-a-family-limited-partnership-means-less-stress-at-tax-time/#8658aa8658aa https://www.forbes.com/sites/brianluster/2014/03/18/why-form... Note especially the discount from fair market value for shares of interest in an FLP. [usual disclaimers - not a lawyer, not legal advice, see a qualified professional in your jurisdiction, etc.] The problem with tax/estate planning is the same problem as insurance - the time when you really want to have done it is often the time when it is too late to get it. (e.g., founder/owner is dying, building is flooding or on fire, etc.).

zackmorris 9y ago

Ya this is propaganda (inheritance taxes affect mainly the very wealthy, not the lower and middle classes). Germany's real secret is that labor still has voting rights within corporations: https://en.wikipedia.org/wiki/Codetermination_in_Germany https://en.wikipedia.org/wiki/Codetermination_in_Germany And actually if you look at the history of the United States, the civil rights movement depended on a strong labor sector. They don’t teach this in schools, but Martin Luther King, Jr was a threat to the establishment more for his emphasis on unifying workers than for breaking down racial barriers: https://www.theatlantic.com/entertainment/archive/2011/02/all-labor-has-dignity-martin-luther-king-jrs-fight-for-economic-justice/71423/ https://www.theatlantic.com/entertainment/archive/2011/02/al... The labor movements between WWII and Ronald Reagan’s election led to the US becoming the largest industrial superpower in the world, with some of the highest per capita incomes. The loss of unions and the decline of worker’s rights in the US (and accompanying stagnation of wages post-2000) coincide exactly with the loss of civil rights as we’ve moved to a more authoritarian society. Things like the loss of habeas corpus under GW Bush and Obama just blow my mind, and I think if the electorate knew what was really going on they would not elect the people they do. But they don’t, that’s why capitalists have traditionally pushed for the privatization of public schools and funding propaganda (infotainment) to preserve the echo chamber. The more striated, divided and polarized a society is, the more wealth can be concentrated in fewer hands. Older nations like Germany have a better handle on this because they’ve seen it repeated in history so many times and are more aware of the dangers of unilateral thinking and monarchy. Inclusivity has paid off handsomely for them.