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If only there were some way for rich people to give away their money while they were still alive! To be a little less snarky, this kind of simple prescription
by aetherson 7y ago
If only there were some way for rich people to give away their money while they were still alive!
To be a little less snarky, this kind of simple prescription gets very, very complicated in practice. You really want to make it so that a lower-middle-class family whose primary breadwinner dies has to lose 100% of their assets? No? Okay, now we have exceptions to the 100% estate tax. What about spouses who outlive their partner? If I die, should my wife get kicked out of the house that we own jointly? If not, what happens when Joe Billionaire marries someone who he never gives any indication of regarding as a spouse right after his terminal cancer diagnosis, and she marries his son right after Joe's death? What if she marries Joe, immediately divorces him, his divorce settlement gives her the overwhelming majority of his assets, and the she marries his son and they immediately divorce and the settlement gives him the overwhelming majority of their assets?
What if Joe Billionaire starts foundations and those foundations employ his children? What if he starts a for-profit company that he owns 100% of the stock of, the company employs all his children and pays them $100M a year until the company runs out of money? At the end of his life, the government can take all the stock of the now-worthless company.
What if Joe Billionaire locates his assets in a different jurisdiction?
People (mostly) don't go to these extremes right now because they don't stand to lose hundreds of millions of dollars if they don't.
- minikites 7y ago>You really want to make it so that a lower-middle-class family whose primary breadwinner dies has to lose 100% of their assets? I'm talking about the estate tax we already have, where that family is already exempt: >Because of these exemptions, it is estimated that only the largest 0.2% of estates in the U.S. will pay the tax.[7] For 2017, the exemption increased to $5.5 million. In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017. The rest of your examples aren't especially meaningful, the existence of loopholes doesn't mean we can't start with something simple and adjust it later. Those methods already exist and are used to dodge existing taxes, that doesn't mean taxes are a flawed concept.
- aetherson 7y agoSure it does. It means taxes that are high enough that it becomes vastly rewarding for large numbers of people to dodge them are flawed.
- minikites 7y agoThe evidence is not on your side: https://www.latimes.com/politics/la-pol-sac-skelton-income-tax-california-wealthy-20190311-story.html https://www.latimes.com/politics/la-pol-sac-skelton-income-t... >Sure, there are anecdotes galore. Everyone seems to know someone who has fled California to dodge its high taxes. But there’s no wholesale bolting of the rich. >“Substantially more rich people are moving into California than moving out,” says Cristobal Young https://www.courant.com/politics/hc-pol-millionaires-leaving-ct-1226-20181226-dy2bmxno7fdpnbeeojoowcuwyi-story.html https://www.courant.com/politics/hc-pol-millionaires-leaving... >Florida, which ranked 39th in per capita income in 2017 according to the U.S. Census Bureau, gained the most income through migration. But Florida generally is considered an outlier, given its extremely attractive climate. >“When Florida is excluded, there is virtually no tax migration,” the report states.
- aetherson 7y agoCalifornia's tax rates turn out to be much lower than 100%.
- mrep 7y agoFrance tried a 75% tax on income over 1 million and it caused so many people and capital to flee that their economy stagnated and they actually lost tax revenue [0]. [0]: https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/#2bf634d55df2 https://www.forbes.com/sites/jonhartley/2015/02/02/frances-7...