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> Which is not the same as estate/inheritance/death tax at all. Which is double-taxing what a given person already paid for. Being a (grand)son of someone ain't

• mantas 9y ago
  Your examples are not double taxes, but rather colliding taxes. Sales tax is great to be put incentives for purchases. E.g. lower sales tax for healthy food. Or to make sure tourists are taxed as well. Corporation profit tax ensures foreign shareholders are taxed. While shareholders tax ensures people having businesses in other countries pay their share too. Meanwhile heritage tax involves no additional action and taxes exactly what was already taxed. > Property must not pass generation to generation unscathed. Too much concentration of wealth is good for nobody, even for the 0.0001% There's no way to tax all generational wealth transfer. Parents will keep buying their kids houses and cars and paying for their education. I doubt you want to tax a regular family paying for kids' university. Meanwhile those who you want to tax already figured out all sorts of workarounds. Trust funds etc. > As with peering, I am sure there are knowledgeable people in positions whose job it is to ensure that we get something out of these double-tax agreements. If these entities become a nuisance, there are many ways (preferably peaceful) to deal with them. They do help everybody who do legitimate business across borders. There's nothing stopping for someone to move to another country and do business in their old country in such manner. It'd be 100% legitimate. Unless you'd ban your own ex-citizens/residents from such scheme :) Which would be a huge PITA to keep track of. Taxing any cross-borders business would mean other countries taxing your own businesses as well. Which would mean companies moving out their HQs and developing elaborate schemes to work around this. All in all, what you want to do would hurt middle class and small businesses. While the ultra-rich couldn't care less. In fact, they'd just hide away even more assets. Effectively widening the gap.
  • dragonwriter 9y ago
    > There's no way to tax all generational wealth transfer. Yes, there is; tax all receipts as income to the recipient. > I doubt you want to tax a regular family paying for kids' university That's not a matter of not being able to tax all generational wealth transfer, but not wanting to do so. Creating exceptions to cover things like that is simple enough, though. > Meanwhile those who you want to tax already figured out all sorts of workarounds. Trust funds etc. But there's no reason trust funds have to be a viable work around; even if gains in the fund are tax free, there's no fundamental reason individual receipts of disbursements from the fund must be.
    • mantas 9y ago
      > Yes, there is; tax all receipts as income to the recipient. What receipt is there if dad buys a house or car and gives to his son? Or lets him to build a house on his own land? Use decades old original purchase price? Or "market value" which is pretty hard to calculate without actually selling the property on the market. Another scenario - never cashes out money from his company and gives a super-well-paid position to his son? > Creating exceptions to cover things like that is simple enough, though. Yes. And exceptions lead to loopholes. > But there's no reason trust funds have to be a viable work around; even if gains in the fund are tax free, there's no fundamental reason individual receipts of disbursements from the fund must be. You're missing core bit in this scheme. Let's say trust fund payouts are taxed regular incomes tax. So wether you cash out directly from a company or via trust fund, tax rate is ~ the same. I know in reality it's more complicated, but let's stick to this for the sake of clarity. If you tax inheritance - you tax both original incomes and generational transfer. With trust fund, the recipient does pay incomes tax when receiving the money. But inheritance tax is avoided. Original incomes tax wasn't paid either since the fund itself doesn't pay. Thus outcome is the same as taxing original incomes, but not taxing inheritance. But with added penalty for everybody who're not ultra wealthy to afford trust funds, but still fit into taxable bracket.
      • dragonwriter 9y ago
        > What receipt is there if dad buys a house or car and gives to his son? There's the receipt of the house or car; taxing in-kind transfers at fair market value is already done in other contexts. > Another scenario - never cashes out money from his company and gives a super-well-paid position to his son? Uh, that's easy, you are taxing the income from the position. The existing tax code, in fact, already covers this fairly completely. > If you tax inheritance - you tax both original incomes and generational transfer. The distinction is artificial; there is just income. > With trust fund, the recipient does pay incomes tax when receiving the money. But inheritance tax is avoided. Inheritances aren't taxed as income, so you aren't avoiding a tax event that you would otherwise hit by swapping one for the other. Historically the top estate tax rate was pretty similar top income tax rate; you could get a rate advantage by structuring choices that move from estate to income tax since estate tax is driven by the size of the estate and income tax by the individuals annual income, but that's a reason to just have one (income) system rather than two separate systems that you can choose between by structuring. > Original incomes tax wasn't paid either since the fund itself doesn't pay. Sure, but that just makes a trust fund work like a tax-deferred transfer at the time money goes into the fund. That is something of a structuring opportunity, and I'd have no problem not having private benefit trusts be tax exempt entities (and they certainly a trivial fix if that is your concern), but it's a fairly minor issue.