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I always wondered, why not a stronger inheritance tax instead of a wealth tax? It would seemingly accomplish the same thing but seems fairer since the heirs did

I always wondered, why not a stronger inheritance tax instead of a wealth tax? It would seemingly accomplish the same thing but seems fairer since the heirs didn’t earn the money in the first place. To head off the main critique. I think either tax could be equally gamed by the rich. I don’t necessarily support either but I’ve been wondering why Inheritance taxes aren’t really being considered.

semiotagonal 7y ago
I would love an inheritance tax. Even a 100% inheritance tax, on anything more than zero dollars. Of course I don't really stand to inherit anything significant, so it's super easy for me to support. Inheritance is one of those areas where people's values and what they'd support in practice tend to diverge, according to their incentives. (Same goes for California Proposition 13, incidentally).
- mrfusion 7y ago
  I guess the fact that you can just call it a “death tax” can easily rally popular opposition even if people would otherwise support it. It’s my theory that the less words you can use to make an argument, the more powerful it is.
  - MiroF 7y ago
    What would really rally popular opposition is the massive massive amounts of spending on propaganda (advertising, etc whatever you want to call it) to galvanize the American public to oppose something like this. We live in a democracy, but elites still have enough say that something like an 100% inheritance tax is effectively off the table.
    - RhysU 7y ago
      A 100% inheritance tax would be a nightmare in practice. Grandma died? Cool, go sell her house now.
      - MiroF 7y ago
        Selling the house of a deceased relative seems to be a common existing ritual, no? This objection might be stronger if it were more fleshed out.
        harimau777 7y ago
        I think the problem could arise in the case of things like heirlooms or homes that have been in the family for years. I think you might also need to write the law so that people could choose to inherit debt on the same terms as their parents. Otherwise, couldn't the bank demand a higher interest rate as a way to force someone off of their property? How does this sort of thing work currently?
        MiroF 7y ago
        Realistically, a law like this (though it would never happen) would be something along the lines of 100% tax on inheritances over 10 million dollars. > I think you might also need to write the law so that people could choose to inherit debt on the same terms as their parents. I assumed that this was already the case. quick e: Yeah, seems like this is already law "Under federal law, lenders must allow family members to take over a mortgage when they inherit residential property" [0] https://www.thebalance.com/what-happens-to-your-mortgage-when-you-die-4158246 https://www.thebalance.com/what-happens-to-your-mortgage-whe...
      - deleted 7y ago
        [deleted]
      - rstupek 7y ago
        Or go sell the family farm, or family business, etc.
- Nursie 7y ago
  It seems a very anti-human thing to say that what you have worked for your whole life, that you've already paid tax on all along the way, cannot be given to your own offspring. It strikes at the heart of what it is to be alive, and the relationship of the individual and the state.
  - deleted 7y ago
    [deleted]
  - chongli 7y ago
    What we need is an inheritance tax on all of the wealth that people didn’t work for. Unearned wealth in the form of real estate and capital appreciation. It’s fine for the hard-working middle class person to pass on their hard-earned home to their child. It’s not so fine if the house has gone up in value 10000% since the time they purchased it.
    - travisoneill1 7y ago
      This would classify the work of all company founders as "unearned"
      - chongli 7y ago
        There's a big difference between putting your money on the line with a startup you founded and just having the house you live in appreciate over several decades.
    - imtringued 7y ago
      I don't get it. If you problem is too low capital gains taxes then just say that outright instead of hiding behind an inheritance tax that doesn't even achieve your goals.
  - sjy 7y ago
    As a human, this doesn’t resonate with me at all. I know that many people disagree with inheritance taxes, but I would prefer if my views weren’t characterised as inhuman, since they are motivated by a desire to help people who inherit nothing.
edanm 7y ago
> To head off the main critique. I think either tax could be equally gamed by the rich. That is not the main critique. The main critique (IMO at least) is that people earn money to, among other things, give it to their children. Taxing that is, in some people's view of the world, a) a disincentive to work and b) morally wrong.
- shantly 7y ago
  To borrow and paraphrase Bertrand Russell's argument on the topic: Why do we see inherited titles as plainly unjust and undemocratic, but entertain inherited fortunes as just and compatible with democratic ideals?
  - imtringued 7y ago
    It is incompatible with our human rights to eliminate inherited fortunes. The only way we can achieve that goal is by separating children from their parents from birth and letting them live in randomly chosen boarding schools until they become adults and even then we must forbid them from ever meeting their parents lest they inherit an unfair advantage. There is also a technical limitation: Children always inherit the DNA of their parents so even with the utmost care it is inherently impossible to correct this injustice. By the way there is a reason why my answer is so extreme: inheritance starts as soon as you are born, not just when your parents die
harimau777 7y ago
There was an interesting example of this when I took a course modern Middle East history in college. I forget the exact time period, but basically in pre-modern times Islamic law said that you weren't allowed to pass wealth onto your children. To get around this, the wealthy would found charities and give their kids cushy jobs running them. Even though a lot of the charity's money was presumably routed to giving the kids a lavish lifestyle, this system still resulted in the Middle East having the best social welfare system of the time period.
sjy 7y ago
Australia is an interesting example of the politics of inheritance taxes. We used to have them until a conservative state government abolished them in 1978, which triggered a race to the bottom – abolition in all other states. It’s easier to move states than countries, especially if you have no job or children in school, and the federal government does not have the constitutional authority to impose an inheritance tax of its own. The abolition campaign was assisted by using the term “death duties” and framing the tax as a punishment for those grieving the loss of a family member. I think the idea is still extremely unpopular as a result.
lmm 7y ago
An inheritance tax feels like heaping extra punishment on those who die young or their families. A wealth tax feels fairer.

semiotagonal 7y ago

I would love an inheritance tax. Even a 100% inheritance tax, on anything more than zero dollars. Of course I don't really stand to inherit anything significant, so it's super easy for me to support. Inheritance is one of those areas where people's values and what they'd support in practice tend to diverge, according to their incentives. (Same goes for California Proposition 13, incidentally).

mrfusion 7y ago
I guess the fact that you can just call it a “death tax” can easily rally popular opposition even if people would otherwise support it. It’s my theory that the less words you can use to make an argument, the more powerful it is.
- MiroF 7y ago
  What would really rally popular opposition is the massive massive amounts of spending on propaganda (advertising, etc whatever you want to call it) to galvanize the American public to oppose something like this. We live in a democracy, but elites still have enough say that something like an 100% inheritance tax is effectively off the table.
  - RhysU 7y ago
    A 100% inheritance tax would be a nightmare in practice. Grandma died? Cool, go sell her house now.
    - MiroF 7y ago
      Selling the house of a deceased relative seems to be a common existing ritual, no? This objection might be stronger if it were more fleshed out.
      - harimau777 7y ago
        I think the problem could arise in the case of things like heirlooms or homes that have been in the family for years. I think you might also need to write the law so that people could choose to inherit debt on the same terms as their parents. Otherwise, couldn't the bank demand a higher interest rate as a way to force someone off of their property? How does this sort of thing work currently?
        MiroF 7y ago
        Realistically, a law like this (though it would never happen) would be something along the lines of 100% tax on inheritances over 10 million dollars. > I think you might also need to write the law so that people could choose to inherit debt on the same terms as their parents. I assumed that this was already the case. quick e: Yeah, seems like this is already law "Under federal law, lenders must allow family members to take over a mortgage when they inherit residential property" [0] https://www.thebalance.com/what-happens-to-your-mortgage-when-you-die-4158246 https://www.thebalance.com/what-happens-to-your-mortgage-whe...
    - deleted 7y ago
      [deleted]
    - rstupek 7y ago
      Or go sell the family farm, or family business, etc.
Nursie 7y ago
It seems a very anti-human thing to say that what you have worked for your whole life, that you've already paid tax on all along the way, cannot be given to your own offspring. It strikes at the heart of what it is to be alive, and the relationship of the individual and the state.
- deleted 7y ago
  [deleted]
- chongli 7y ago
  What we need is an inheritance tax on all of the wealth that people didn’t work for. Unearned wealth in the form of real estate and capital appreciation. It’s fine for the hard-working middle class person to pass on their hard-earned home to their child. It’s not so fine if the house has gone up in value 10000% since the time they purchased it.
  - travisoneill1 7y ago
    This would classify the work of all company founders as "unearned"
    - chongli 7y ago
      There's a big difference between putting your money on the line with a startup you founded and just having the house you live in appreciate over several decades.
  - imtringued 7y ago
    I don't get it. If you problem is too low capital gains taxes then just say that outright instead of hiding behind an inheritance tax that doesn't even achieve your goals.
- sjy 7y ago
  As a human, this doesn’t resonate with me at all. I know that many people disagree with inheritance taxes, but I would prefer if my views weren’t characterised as inhuman, since they are motivated by a desire to help people who inherit nothing.

edanm 7y ago

> To head off the main critique. I think either tax could be equally gamed by the rich. That is not the main critique. The main critique (IMO at least) is that people earn money to, among other things, give it to their children. Taxing that is, in some people's view of the world, a) a disincentive to work and b) morally wrong.

shantly 7y ago
To borrow and paraphrase Bertrand Russell's argument on the topic: Why do we see inherited titles as plainly unjust and undemocratic, but entertain inherited fortunes as just and compatible with democratic ideals?
- imtringued 7y ago
  It is incompatible with our human rights to eliminate inherited fortunes. The only way we can achieve that goal is by separating children from their parents from birth and letting them live in randomly chosen boarding schools until they become adults and even then we must forbid them from ever meeting their parents lest they inherit an unfair advantage. There is also a technical limitation: Children always inherit the DNA of their parents so even with the utmost care it is inherently impossible to correct this injustice. By the way there is a reason why my answer is so extreme: inheritance starts as soon as you are born, not just when your parents die

harimau777 7y ago

There was an interesting example of this when I took a course modern Middle East history in college. I forget the exact time period, but basically in pre-modern times Islamic law said that you weren't allowed to pass wealth onto your children. To get around this, the wealthy would found charities and give their kids cushy jobs running them. Even though a lot of the charity's money was presumably routed to giving the kids a lavish lifestyle, this system still resulted in the Middle East having the best social welfare system of the time period.

sjy 7y ago

Australia is an interesting example of the politics of inheritance taxes. We used to have them until a conservative state government abolished them in 1978, which triggered a race to the bottom – abolition in all other states. It’s easier to move states than countries, especially if you have no job or children in school, and the federal government does not have the constitutional authority to impose an inheritance tax of its own. The abolition campaign was assisted by using the term “death duties” and framing the tax as a punishment for those grieving the loss of a family member. I think the idea is still extremely unpopular as a result.

lmm 7y ago

An inheritance tax feels like heaping extra punishment on those who die young or their families. A wealth tax feels fairer.