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I don't like estate taxes. Governments are typically terrible financial stewards and bad examples of financial responsibility. Give the government one billion
by DevX101 16y ago
I don't like estate taxes. Governments are typically terrible financial stewards and bad examples of financial responsibility. Give the government one billion and it will find a way to spend two.
But I also don't like the idea of a permanent aristocratic class where generation after generation are born into opulence because your great grandfather created a great company.
The movement towards philanthropy is a great alternative as long there are clearly defined and applied metrics of success. Gates Foundation does a good job at this. If you claim you're going to change the world, but you can't prove it, you won't get funding again.
- sshumaker 16y agoI'd argue one of the points of estate taxes (which are heavily favored by Buffet, Gates, et. al) is to encourage you to will your fortunes to philanthropy - so it doesn't end up in the hands of the government.
- DevX101 16y agoGreat point! High estate taxes gives an incentive to the wealthy not to pay estate taxes. The original intent of my argument was that I don't like the idea of handing over half your estate to the government. I suppose the proponents of the high estate tax wanted avoidance of the tax via philanthropy as an intended side effect. Thanks, I never looked at it that way.
- jacoblyles 16y agoOr buy expensive life insurance policies.
- ramanujan 16y agoThe biggest lobbies for increased estate taxes are life insurance companies: http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-industry-is-spending-millions-lobbying-for-the-estate-tax-afbfs-latest-issue-brief/ http://blogs.forbes.com/hanisarji/2010/12/01/life-insurance-... “The estate tax is a cash cow for the life insurance industry – and the industry’s lobbyists guard it zealously...[o]nly three industries – pharmaceuticals, electric utilities, and oil and gas – spent more over the same period.”
- waterlesscloud 16y agoOf which Buffet owns several. Which may or may not play a role in his support.
- jakarta 16y agoI don't think it does. The life insurance contribution to Berkshire Hathaway results is quite small. The bulk of the income is from reinsurance and P/C activities.
- jbooth 16y agoHow many billions has this guy given away again? I'd wager that he doesn't really care about an extra few million in insurance company profits.
- DevX101 16y agoFor more details on WHY the life insurance lobbies aggressively to support the estate tax, see this link from ramanujan's article: http://www.nodeathtax.org/uploads/view/2313/life_insurance_brief.pdf http://www.nodeathtax.org/uploads/view/2313/life_insurance_b... Excerpt: "Life insurance is the most basic tool for estate planning. Put simply, inheritance is subject to the estate tax, while life insurance benefits are untaxed. This drives up the demand for life insurance, thus driving up the price. The disparate tax treatment distorts the market so much that a wealthy person could buy a policy knowing he will pay more in premiums than the value of the benefit – and it would still make sense financially. For example, if someone bought a $20 million whole life policy at age 60, and paid $25 million over the years in premiums, he would still be giving more to heirs (an untaxed $20 million) than if he just bequeathed that $25 million to his children – because after the estate tax, that could be worth less than $20 million." --This discussion has been really informative. Thanks to all.
- russell_h 16y agoIs there anything to stop a person from investing their estate in a company whose sole purpose is to insure their life?
- ovi256 16y agoAnother one is to avoid the creation of a plutocracy. Of course, somebody more cynical could argue that it is too late for that.
- bertil 16y ago> Governments are typically terrible financial stewards Well, no: many governments are far more responsible than most individuals. That's not true in counties were everyone criticize the government as strongly as you do in the United States, but in countries where government positions are prestigious, the most talented people work there. As recently demonstrated, financial incentives are no where as efficient as job safety and support for creative tasks, this is why a system that promote civic dedication has tremendous impact.
- quadhome 16y agoWhat's a country where government positions are prestigious for reasons other than they're an opportunity to participate in bribery and corruption? (Switzerland?)
- Benjo 16y agoFrom what I understand, the government of Singapore keeps corruption low just by paying their officials a lot. The president makes about $3 million. http://en.wikipedia.org/wiki/President_of_Singapore http://en.wikipedia.org/wiki/President_of_Singapore It may just be an anecdote but it seems like a reasonable system to me. EDIT: had the wrong dollar amount.
- cellshade 16y agoThat wikipedia page says about 3 million, not 300 million.
- Benjo 16y agoMy mistake: fixed.
- dualogy 16y agoGermany had the same "strategy". I'm not sure pre-emptively bribing every official up-front really solves the "cost" issue to Joe Sixpack. Corruption might be more affordable in the end...
- sp332 16y ago> But I also don't like the idea of a permanent aristocratic class where generation after generation are born into opulence because your great grandfather created a great company. If you make a ridiculous amount of money, what's wrong with making sure that your family is financially secure for generations?
- mattmiller 16y agoIt cripples upward mobility for the rest of society. You could make an argument that upward mobility is one of Americas greatest strengths. It keeps people motivated and it allows the entire population the chance to contribute to advancement.
- jacques_chester 16y ago> It cripples upward mobility for the rest of society How?