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I've long argued for massive estate taxes on the very rich that forces a partial reset on wealth and avoid medieval times when land ownership was just passed do

I've long argued for massive estate taxes on the very rich that forces a partial reset on wealth and avoid medieval times when land ownership was just passed down generation to generation. It's the only fair and practical wealth tax I can think of. I have no problem at all with Bezos being filthy rich, however, I have a giant problem with his kids and all descendants being billionaires. A huge estate tax would also massively incentivize charitable giving as wealthy people donated money to avoid the government taking it all. I'm sure consumption would rise some also, but the more money you have the harder it gets to spend on consumption, hence many of today's problems. The point is, knowing it will mostly go to the government upon death, the extremely wealthy would be motivated to do stuff with the capital. I'm still baffled why no one has seriously floated this idea though.

Sargos 6y ago
>I'm still baffled why no one has seriously floated this idea though. It's not even a fringe idea that government policy is dictated by the wealthy class. What incentive do they have to do this? The only way that it will happen is by regular people making it policy, and our current system doesn't give us a voice on what happens.
markus_zhang 6y ago
There are tons of loop holes. In the end, if said legislation passes both floors the only ones got hit are the middle class people who don't have the knowledge and means to use those loopholes.
- dlp211 6y ago
  Estate taxes on the Federal level have never even come close to being applicable to middle-class estates.
milesvp 6y ago
The bigger problem with estate taxes (and btw estate taxes often imply death taxes in US law) that you may not see is how they effect smaller players. One of the things fueling corporate consolidation is asset liquidation upon death. If I start and own a small company that’s worth $10million, when I die, there is likely a strong desire to liquidate that company in order to allow for some inheritance to multiple people. This likely means selling the business to another player. If there’s an estate tax, then you must sell. My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes. I suspect the bigger problem isn’t the Bezos’s of the world consolidating money and power generationally, it’s the big corporations getting bigger, with corporate taxation disproportionately hurting the smaller players rather than the bigger players. We would have a much healthier economy if the incentive structures hurt companies more the bigger they get to discourage things like vertical integration. A company doesn’t have to pay taxes on the intermediary steps of production but might have to (sales or B&O tax) if they were to purchase the same goods from a third party. This tends to distort markets away from lots of smaller players to a few big players.
- imtringued 6y ago
  Why not just split the estate? A single person should not inherit more than 50% of the value of the estate.
  - s1artibartfast 6y ago
    I think a large portion of people would not bother building an estate if it could not be passed on to teir children. Most people work hard and build businesses for the benifit of their family.
  - ip26 6y ago
    In businesses, including farming, splitting it wholesale can kill the business while diluting control can paralyze it.
  - splintercell 6y ago
    Puerto Rico has constraints like that. It is also the poorest part of the Union.
- dlp211 6y ago
  > My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes. Your understanding is a talking point created by the Republican party and has no real basis in reality. https://www.factcheck.org/2017/09/death-tax-talking-point-wont-die/ https://www.factcheck.org/2017/09/death-tax-talking-point-wo... https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threatens-small-farms https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa... https://money.cnn.com/2017/10/10/news/economy/farmers-estate-tax/index.html https://money.cnn.com/2017/10/10/news/economy/farmers-estate... https://www.chicagotribune.com/opinion/commentary/ct-perspec-taxes-farmers-estate-tax-family-farms-1116-story.html https://www.chicagotribune.com/opinion/commentary/ct-perspec... https://www.tampabay.com/archive/2001/04/09/debunking-the-myth-estate-tax-doesn-t-kill-family-farm/ https://www.tampabay.com/archive/2001/04/09/debunking-the-my... I will also point out that estates benefit from step-up basis which avoids Capital Gains taxes on unrealized gains, which is hugely beneficial to most estates. This way of taxing is meant as a compromise to allow fairly large estates to pass tax exempt --currently up to $11MM if held by a single person, $22MM for a married couple-- while applying taxes to estates that all but guarantee that you could retire instantly collecting an income that puts you in the top 1% of household earnings in the US with highly favorable capital gains tax treatment. Also, the IRS will work with anyone that has a large illiquid estate and allow taxes to be paid over a decade after an initial grace period, with an appropriate interest rate.
tathougies 6y ago
Frankly, this wouldn't do much. Most familial wealth in america ends up getting lost. https://www.marketwatch.com/story/heres-why-90-of-rich-people-squander-their-fortunes-2017-04-23#:~:text=About%20seven%20in%2010%20wealthy,number%20has%20jumped%20to%2090%25 https://www.marketwatch.com/story/heres-why-90-of-rich-peopl....
- dlp211 6y ago
  Three things. First, this is only true of the past and doesn't saying anything about the future. Second, this "study" isn't weighted based on the size of the estate. Third, that 10% matters far more than you could imagine.
  - tathougies 6y ago
    > First, this is only true of the past and doesn't saying anything about the future. Well, I can say that about anything. Oh... the rate of return on capital is higher than the rate of return on labor? Well that's only true of the past, no study has studied the concrete data of what is going to happen in the future (Hint: it's because there is none).

Sargos 6y ago

>I'm still baffled why no one has seriously floated this idea though. It's not even a fringe idea that government policy is dictated by the wealthy class. What incentive do they have to do this? The only way that it will happen is by regular people making it policy, and our current system doesn't give us a voice on what happens.

markus_zhang 6y ago

There are tons of loop holes. In the end, if said legislation passes both floors the only ones got hit are the middle class people who don't have the knowledge and means to use those loopholes.

dlp211 6y ago
Estate taxes on the Federal level have never even come close to being applicable to middle-class estates.

milesvp 6y ago

The bigger problem with estate taxes (and btw estate taxes often imply death taxes in US law) that you may not see is how they effect smaller players. One of the things fueling corporate consolidation is asset liquidation upon death. If I start and own a small company that’s worth $10million, when I die, there is likely a strong desire to liquidate that company in order to allow for some inheritance to multiple people. This likely means selling the business to another player. If there’s an estate tax, then you must sell. My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes. I suspect the bigger problem isn’t the Bezos’s of the world consolidating money and power generationally, it’s the big corporations getting bigger, with corporate taxation disproportionately hurting the smaller players rather than the bigger players. We would have a much healthier economy if the incentive structures hurt companies more the bigger they get to discourage things like vertical integration. A company doesn’t have to pay taxes on the intermediary steps of production but might have to (sales or B&O tax) if they were to purchase the same goods from a third party. This tends to distort markets away from lots of smaller players to a few big players.

imtringued 6y ago
Why not just split the estate? A single person should not inherit more than 50% of the value of the estate.
- s1artibartfast 6y ago
  I think a large portion of people would not bother building an estate if it could not be passed on to teir children. Most people work hard and build businesses for the benifit of their family.
- ip26 6y ago
  In businesses, including farming, splitting it wholesale can kill the business while diluting control can paralyze it.
- splintercell 6y ago
  Puerto Rico has constraints like that. It is also the poorest part of the Union.
dlp211 6y ago
> My understanding is this has been a very real problem for farmers for many generations, and they have been the largest opponents for estate taxes. Your understanding is a talking point created by the Republican party and has no real basis in reality. https://www.factcheck.org/2017/09/death-tax-talking-point-wont-die/ https://www.factcheck.org/2017/09/death-tax-talking-point-wo... https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threatens-small-farms https://www.cbpp.org/blog/the-myth-that-the-estate-tax-threa... https://money.cnn.com/2017/10/10/news/economy/farmers-estate-tax/index.html https://money.cnn.com/2017/10/10/news/economy/farmers-estate... https://www.chicagotribune.com/opinion/commentary/ct-perspec-taxes-farmers-estate-tax-family-farms-1116-story.html https://www.chicagotribune.com/opinion/commentary/ct-perspec... https://www.tampabay.com/archive/2001/04/09/debunking-the-myth-estate-tax-doesn-t-kill-family-farm/ https://www.tampabay.com/archive/2001/04/09/debunking-the-my... I will also point out that estates benefit from step-up basis which avoids Capital Gains taxes on unrealized gains, which is hugely beneficial to most estates. This way of taxing is meant as a compromise to allow fairly large estates to pass tax exempt --currently up to $11MM if held by a single person, $22MM for a married couple-- while applying taxes to estates that all but guarantee that you could retire instantly collecting an income that puts you in the top 1% of household earnings in the US with highly favorable capital gains tax treatment. Also, the IRS will work with anyone that has a large illiquid estate and allow taxes to be paid over a decade after an initial grace period, with an appropriate interest rate.

tathougies 6y ago

Frankly, this wouldn't do much. Most familial wealth in america ends up getting lost. https://www.marketwatch.com/story/heres-why-90-of-rich-people-squander-their-fortunes-2017-04-23#:~:text=About%20seven%20in%2010%20wealthy,number%20has%20jumped%20to%2090%25 https://www.marketwatch.com/story/heres-why-90-of-rich-peopl....

dlp211 6y ago
Three things. First, this is only true of the past and doesn't saying anything about the future. Second, this "study" isn't weighted based on the size of the estate. Third, that 10% matters far more than you could imagine.
- tathougies 6y ago
  > First, this is only true of the past and doesn't saying anything about the future. Well, I can say that about anything. Oh... the rate of return on capital is higher than the rate of return on labor? Well that's only true of the past, no study has studied the concrete data of what is going to happen in the future (Hint: it's because there is none).