7 ms·

> The founding fathers warned against that, because if one generation offloads its debt to the next, then it effectively enslaves the next against its will (dep

by sjy 7y ago

> The founding fathers warned against that, because if one generation offloads its debt to the next, then it effectively enslaves the next against its will (deprives it of property, and taxes it without representation, among other things). Enslaved to whom? You can’t send your labour into the past. A huge national debt ‘run up’ by a previous generation just means that the next generation becomes more unequal, as the majority are taxed to fund interest payments to the heirs of the original bondholders. I don’t really see how this is more unjust than the existence of any other law or policy established before I was born, which I had no say in. If the solution is to appropriate the wealth of bondholders, the next generation will be equally able to implement that policy.

zackmorris 7y ago
I believe it was Thomas Jefferson who was most opposed to intergenerational debt, because one generation could hoard wealth (mostly land at that time) and then future generations would be indebted to the dead, which goes against the spirit of liberty and justice in the United States: https://jeffersonpapers.princeton.edu/selected-documents/thomas-jefferson-james-madison https://jeffersonpapers.princeton.edu/selected-documents/tho... https://famguardian.org/Subjects/Politics/ThomasJefferson/jeff1340.htm https://famguardian.org/Subjects/Politics/ThomasJefferson/je... It basically comes down to: a child should not assume the debt of its parents in a free society. Some more info on the founding fathers' views: https://www.smithsonianmag.com/sponsored/alexander-hamilton-debt-national-bank-two-parties-1789-american-history-great-courses-plus-180962954/ https://www.smithsonianmag.com/sponsored/alexander-hamilton-... I'm generally left-leaning, but here are some articles from right-leaning publications for anyone fearing "fake news": https://www.heritage.org/political-process/report/americas-debt-through-the-eyes-the-founders https://www.heritage.org/political-process/report/americas-d... https://www.cato.org/publications/commentary/government-debt-jefferson-gallatin-were-right https://www.cato.org/publications/commentary/government-debt... I agree with your sentiment though, that soon we'll have to make a choice as to whether to assume the debt of our parents or raid their assets to pay it down. I also feel rather strongly that if children shouldn't inherit their parents' debt, then they also shouldn't inherit their wealth. The best way to accomplish that is a high inheritance tax. I know that people object to this as an impingement on liberty, but we have to also consider justice for the broader population (as I've written about in my previous comments). And I also see your point that if we inherit infrastructure, we should also be ready to inherit debt (so that's perhaps not inherently unjust). But I'd just like to also point out that I've never seen the federal government vote to raise taxes to pay for the national debt. The debt went down briefly under Bill Clinton, but that was mostly through reducing welfare expenditures (which arguably later backfired, as experienced by people whose benefits ran out during the Great Recession, among other things). So I am also very skeptical that it will ever raid bondholders to pay for the debt, although that could explain the (cruel?) sentiment to destroy social security, medicare and medicaid to pay down the debt by republicans. Again, I am very skeptical that that would work, because prior experience indicates that they'll just give that money to the very wealthy and we'll still be left with a large national debt.
- magduf 7y ago
  >I also feel rather strongly that if children shouldn't inherit their parents' debt, then they also shouldn't inherit their wealth. The best way to accomplish that is a high inheritance tax. There's a slight problem with this idea: how do you deal with people giving each other money? People frequently "inherit" money from their parents before they're dead, sometimes long before. If parents pay for their kids' college tuition, do you want to tax that as "inheritance"? What if they set up a trust fund? What about the money parents pay while their kids are under 18 just for their living expenses? What if parents buy their adult children a house? With today's housing market, a lot of Millennials and GenZers can't afford decent housing right out of college, so sometimes their rich parents will buy a house for them. So assuming you don't want to tax some 40-60 year old parents when they buy their 18-30yo kids a car or house or college, where do you draw the line? What if they're 70+ and they give their 40+ kids a big cash gift? Finally, you're also assuming the parents die at an old age. What if the parents die young? What if the kids are still in college and don't really have any money of their own, and suddenly their middle-class parents die in a car crash? Do the kids now need to drop out of school and get on welfare or try to find a cashier job because all the parents' resources go to the state? The only way I see a high inheritance tax not being really cruel, and also not being rejected by the voters, is if it only targets truly wealthy people. Jeff Bezos's kids don't really need to inherit all his billions if he gets hit by a bus. If an inheritance tax takes 95% of his wealth, leaving his kids with "only" tens or hundreds of millions each, that's far more than enough for them to live on for the rest of their lives. But taking that much from even upper-middle-class people won't really leave much for their kids. But with so much of the nation's wealth concentrated in the hands of a relative handful of people, I don't think it's really necessary to target anyone besides them.
  - zackmorris 7y ago
    All good points, so I'm not really sure. Honestly.. my first instinct would be to reform our tax system so that all income is treated equally by way of tax brackets. So small gifts under about $10,000 wouldn't be taxed much, but the rate would scale pretty quickly so that $100,000 might be taxed at 30% or something. I'd also vote to restore the pre-Reagan top marginal tax rates so that $1 million would be taxed at 50-90%. And actually now that I write this out, that might all be sort of how it works now. Except that tax brackets have only been adjusted for inflation, not things like the wage stagnation since 2000 or the exponential rise in housing costs: https://www.thebalance.com/irs-announces-tax-brackets-and-inflation-adjustments-for-2019-4579822 https://www.thebalance.com/irs-announces-tax-brackets-and-in... Also, capital gains is a flat (regressive) tax, and social security taxes (also flat) top out at an income of $132,900. If those were placed under progressive income tax brackets with no cap, I think many of these problems would go away. At that point I'd be concerned about increased government spending. So we'd probably also need a hiatus on new expenditures for some number of years, or until certain metrics are met, like the national debt being paid down by some amount. Realistically though, the world is too complex for that kind of absolutism to actually work unfortunately. I realize that this would be an inconvenience for middle class families trying to send their kids to college, etc. But if you look at the big picture, an increase in upper class taxes (especially inheritance tax) could pretty drastically lower everyone's tax bill. People would have way more money for gifts, and that money would recirculate more in the economy (the opposite of trickle-down economics).

by sjy 7y ago

zackmorris 7y ago

I believe it was Thomas Jefferson who was most opposed to intergenerational debt, because one generation could hoard wealth (mostly land at that time) and then future generations would be indebted to the dead, which goes against the spirit of liberty and justice in the United States: https://jeffersonpapers.princeton.edu/selected-documents/thomas-jefferson-james-madison https://jeffersonpapers.princeton.edu/selected-documents/tho... https://famguardian.org/Subjects/Politics/ThomasJefferson/jeff1340.htm https://famguardian.org/Subjects/Politics/ThomasJefferson/je... It basically comes down to: a child should not assume the debt of its parents in a free society. Some more info on the founding fathers' views: https://www.smithsonianmag.com/sponsored/alexander-hamilton-debt-national-bank-two-parties-1789-american-history-great-courses-plus-180962954/ https://www.smithsonianmag.com/sponsored/alexander-hamilton-... I'm generally left-leaning, but here are some articles from right-leaning publications for anyone fearing "fake news": https://www.heritage.org/political-process/report/americas-debt-through-the-eyes-the-founders https://www.heritage.org/political-process/report/americas-d... https://www.cato.org/publications/commentary/government-debt-jefferson-gallatin-were-right https://www.cato.org/publications/commentary/government-debt... I agree with your sentiment though, that soon we'll have to make a choice as to whether to assume the debt of our parents or raid their assets to pay it down. I also feel rather strongly that if children shouldn't inherit their parents' debt, then they also shouldn't inherit their wealth. The best way to accomplish that is a high inheritance tax. I know that people object to this as an impingement on liberty, but we have to also consider justice for the broader population (as I've written about in my previous comments). And I also see your point that if we inherit infrastructure, we should also be ready to inherit debt (so that's perhaps not inherently unjust). But I'd just like to also point out that I've never seen the federal government vote to raise taxes to pay for the national debt. The debt went down briefly under Bill Clinton, but that was mostly through reducing welfare expenditures (which arguably later backfired, as experienced by people whose benefits ran out during the Great Recession, among other things). So I am also very skeptical that it will ever raid bondholders to pay for the debt, although that could explain the (cruel?) sentiment to destroy social security, medicare and medicaid to pay down the debt by republicans. Again, I am very skeptical that that would work, because prior experience indicates that they'll just give that money to the very wealthy and we'll still be left with a large national debt.

magduf 7y ago
>I also feel rather strongly that if children shouldn't inherit their parents' debt, then they also shouldn't inherit their wealth. The best way to accomplish that is a high inheritance tax. There's a slight problem with this idea: how do you deal with people giving each other money? People frequently "inherit" money from their parents before they're dead, sometimes long before. If parents pay for their kids' college tuition, do you want to tax that as "inheritance"? What if they set up a trust fund? What about the money parents pay while their kids are under 18 just for their living expenses? What if parents buy their adult children a house? With today's housing market, a lot of Millennials and GenZers can't afford decent housing right out of college, so sometimes their rich parents will buy a house for them. So assuming you don't want to tax some 40-60 year old parents when they buy their 18-30yo kids a car or house or college, where do you draw the line? What if they're 70+ and they give their 40+ kids a big cash gift? Finally, you're also assuming the parents die at an old age. What if the parents die young? What if the kids are still in college and don't really have any money of their own, and suddenly their middle-class parents die in a car crash? Do the kids now need to drop out of school and get on welfare or try to find a cashier job because all the parents' resources go to the state? The only way I see a high inheritance tax not being really cruel, and also not being rejected by the voters, is if it only targets truly wealthy people. Jeff Bezos's kids don't really need to inherit all his billions if he gets hit by a bus. If an inheritance tax takes 95% of his wealth, leaving his kids with "only" tens or hundreds of millions each, that's far more than enough for them to live on for the rest of their lives. But taking that much from even upper-middle-class people won't really leave much for their kids. But with so much of the nation's wealth concentrated in the hands of a relative handful of people, I don't think it's really necessary to target anyone besides them.
- zackmorris 7y ago
  All good points, so I'm not really sure. Honestly.. my first instinct would be to reform our tax system so that all income is treated equally by way of tax brackets. So small gifts under about $10,000 wouldn't be taxed much, but the rate would scale pretty quickly so that $100,000 might be taxed at 30% or something. I'd also vote to restore the pre-Reagan top marginal tax rates so that $1 million would be taxed at 50-90%. And actually now that I write this out, that might all be sort of how it works now. Except that tax brackets have only been adjusted for inflation, not things like the wage stagnation since 2000 or the exponential rise in housing costs: https://www.thebalance.com/irs-announces-tax-brackets-and-inflation-adjustments-for-2019-4579822 https://www.thebalance.com/irs-announces-tax-brackets-and-in... Also, capital gains is a flat (regressive) tax, and social security taxes (also flat) top out at an income of $132,900. If those were placed under progressive income tax brackets with no cap, I think many of these problems would go away. At that point I'd be concerned about increased government spending. So we'd probably also need a hiatus on new expenditures for some number of years, or until certain metrics are met, like the national debt being paid down by some amount. Realistically though, the world is too complex for that kind of absolutism to actually work unfortunately. I realize that this would be an inconvenience for middle class families trying to send their kids to college, etc. But if you look at the big picture, an increase in upper class taxes (especially inheritance tax) could pretty drastically lower everyone's tax bill. People would have way more money for gifts, and that money would recirculate more in the economy (the opposite of trickle-down economics).