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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 th

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.
- milesvp 6y ago
  Yeah, you may be right about the republican talking point with farmers. I have no direct anecdotes with farmers, and with the one friend I have in the agriculture world, the topic never came up. The main anecdotes I have are with people who have estates that were big enough to have to worry about what would happen to their businesses when they died, since they couldn't just pass on the business to their heir. This is a hard problem even without the threat of a government wanting their cut, since companies don't have a tendency to survive their founders leaving. Also, make no mistake, I'm not trying to apologize for people who are already extremely wealthy, who have to deal with this problem. I would love to have the problem of what to do with a company big enough to need to sell it upon my death. I'm merely trying to point out, that estate taxes do have a consolidating effect that feeds mega corporations. What I don't know is if this effect is as big as I suspect it is, or if it's simply dwarfed by other factors, like the general desire to sell out for a big payday.
tacocataco 6y ago
Sounds like the workers should own the company, not private individuals.
- splintercell 6y ago
  you do understand why private individuals own the company and not the workers themselves right? In order for any productive venture to start that are three components, raw materials, labor and capital. Workers only provide labor. Workers may be able to provide raw materials, but that's ridiculously prohibitive to become a worker. Similarly, you are wishing that the workers must also provide capital, but again it requires workers to have savings. Now obviously I know you don't think of these things like that, you just have a wishful desire that somehow the profits are distributed to the workers and not to some random individual. But the truth is this is the precise reason why the prophets go to the individual who supplied the production process with their savings (just supplying them with savings isn't enough that would only allow you to earn the original money plus interest, but in order to benefit from the profits you must undertake the risk associated with the productive process). By separating the people who work in a company and the people who undertake the risk associated with the productive venture, you benefit everyone.
bedhead 6y ago
Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people. At the end of the day, it's always a person somewhere that is paying the tax, whether it's an employee, supplier, shareholder...and that person is already paying their own income taxes. Also, the tax code favors big companies at the expense of small ones, it's a system that can be gamed in a bunch of ways. I say get rid of it, it's dumb. I would put some limits on estate tax rates at certain thresholds. Like, anything above $50 million, tax at 90%. And hey, the kids will still be rich, just not crazy billionaires. For private companies this gets tricky and for many companies they would be forced sellers, that's one of the big trade offs. Exempt farms if necessary?
- andrekandre 6y ago
  > Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people. but according to law, corporations are "people" arent they?
- karpierz 6y ago
  Your argument is based on corporations existing within a closed system within the country. But you're ignoring the ability of money leaving the country without being taxed.

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.

milesvp 6y ago
Yeah, you may be right about the republican talking point with farmers. I have no direct anecdotes with farmers, and with the one friend I have in the agriculture world, the topic never came up. The main anecdotes I have are with people who have estates that were big enough to have to worry about what would happen to their businesses when they died, since they couldn't just pass on the business to their heir. This is a hard problem even without the threat of a government wanting their cut, since companies don't have a tendency to survive their founders leaving. Also, make no mistake, I'm not trying to apologize for people who are already extremely wealthy, who have to deal with this problem. I would love to have the problem of what to do with a company big enough to need to sell it upon my death. I'm merely trying to point out, that estate taxes do have a consolidating effect that feeds mega corporations. What I don't know is if this effect is as big as I suspect it is, or if it's simply dwarfed by other factors, like the general desire to sell out for a big payday.

tacocataco 6y ago

Sounds like the workers should own the company, not private individuals.

splintercell 6y ago
you do understand why private individuals own the company and not the workers themselves right? In order for any productive venture to start that are three components, raw materials, labor and capital. Workers only provide labor. Workers may be able to provide raw materials, but that's ridiculously prohibitive to become a worker. Similarly, you are wishing that the workers must also provide capital, but again it requires workers to have savings. Now obviously I know you don't think of these things like that, you just have a wishful desire that somehow the profits are distributed to the workers and not to some random individual. But the truth is this is the precise reason why the prophets go to the individual who supplied the production process with their savings (just supplying them with savings isn't enough that would only allow you to earn the original money plus interest, but in order to benefit from the profits you must undertake the risk associated with the productive process). By separating the people who work in a company and the people who undertake the risk associated with the productive venture, you benefit everyone.

bedhead 6y ago

Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people. At the end of the day, it's always a person somewhere that is paying the tax, whether it's an employee, supplier, shareholder...and that person is already paying their own income taxes. Also, the tax code favors big companies at the expense of small ones, it's a system that can be gamed in a bunch of ways. I say get rid of it, it's dumb. I would put some limits on estate tax rates at certain thresholds. Like, anything above $50 million, tax at 90%. And hey, the kids will still be rich, just not crazy billionaires. For private companies this gets tricky and for many companies they would be forced sellers, that's one of the big trade offs. Exempt farms if necessary?

andrekandre 6y ago
> Personally, I hate the idea of corporate income taxes - they're literally stupid. You can't tax corporations, you can only tax people. but according to law, corporations are "people" arent they?
karpierz 6y ago
Your argument is based on corporations existing within a closed system within the country. But you're ignoring the ability of money leaving the country without being taxed.