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> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth. Is there something virtuous about hoarding wea

> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth. Is there something virtuous about hoarding wealth?

csours 6y ago
I don't have an answer, but to flip that question: If the very wealthy can live on passive income from accumulated wealth, then why can't all of society?
- winston_smith 6y ago
  Because most people in society, across all wealth levels, refuse to live within their means. I was quite disappointed when I discovered this, because I thought that if I made enough money, I'd be able to support all my family. But then I started noticing that the people who were broke generally had newer cars and computers than I did, and that families with multiple six-figure incomes were spending their way into bankruptcy. And the government does it too, accumulating ever more debt.
  - titanomachy 6y ago
    The very highest wealth level does live within their means. It's hard to spend 10 billion dollars on houses and cars.
- mstratman 6y ago
  You need a large amount of capital for it to do enough good for others (e.g. via investments into companies) that the returns you receive are enough to live on.
- akhosravian 6y ago
  Let's liquidate all US billionaires and spread that money to every person in the US. Let's also set aside the question of how one could legally liquidate the billionaires. Per https://www.forbes.com/sites/tommybeer/2020/05/21/the-net-worth-of-americas-600-plus-billionaires-has-increased-by-more-than-400-billion-during-the-pandemic/#5717d90e4a61 https://www.forbes.com/sites/tommybeer/2020/05/21/the-net-wo... the combined net worth of every US billionaire was 3.4 trillion in May of this year. Per https://www.pbs.org/newshour/nation/3-ways-that-the-u-s-population-will-change-over-the-next-decade https://www.pbs.org/newshour/nation/3-ways-that-the-u-s-popu... there were 331 million Americans in January of this year. Dividing that out: $10,271.90 per person. Not enough to live on the passive income even in the cheapest parts of the globe.
  - Jabbles 6y ago
    Not enough to live on the passive income even in the cheapest parts of the globe. Why do you think that is the right metric? 3.4T is obviously a vast amount of money.
    - csours 6y ago
      They were probably just responding to how I framed the question.
    - postingawayonhn 6y ago
      It's not really. That would fund the US Government for about 9 months.
  - rhacker 6y ago
    OR, just parcel out land and give people seeds and allow them to trade with nearby neighbors... There's no longer a need for money and everyone gets to eat - which is all we really need. Beyond that, people can help each other build homes in smallish communities. Money, even on a planet with this many people, isn't necessary, because it's like people driving cars - the system works because everyone is operating to keep themselves alive. HN is not a fan of this take.
    - Dirlewanger 6y ago
      >HN is not a fan of this take. Probably because it sounds like utopian nonsense.
mensetmanusman 6y ago
I guess the counter question is whether there is something virtuous about spending all your money before you die.
- megablast 6y ago
  Well, you are putting your money back into society, creating jobs. So yes. That is better then not doing those things.
  - cabaalis 6y ago
    People with money don't put it all under a mattress. It's active in the economy, creating jobs.
    - modo_mario 6y ago
      I can assure you the vast majority of billionaires did not become that by caring about creating jobs. They cared about the return. A return that does not have to come matched with creating good jobs. Assuming you're American I believe you still have people in gov that got rich because of their family starting a pyramid scheme. I wouldn't call that a benefit to society. Remember those guys in the 90's tanking company stocks and reputations then buying em up under the guise of saving them only to dismantle em and make their profit on the sale of the scraps? yeah they made money removing jobs. The list goes on and on.
      - smaryjerry 6y ago
        Organizing is difficult. Wealth is created because they are able to appropriately organize people into the jobs they are most efficient. They are able to get people to work harder, produce more, and more efficiently use resources. You might not think efficiency is moral but it does result in a higher quality of life across the board. Why are tech companies currently the darlings? Because each was able to find efficient ways to do things, communicate, search, or combine or improve existing technologies. Instead of printing every book they can just be downloaded and on the same device you make calls. It isn’t a natural process, it requires leaders to make things efficient in order to make money. No one should care about “jobs” because they mean nothing. If one person could produce all the food needed to feed the world then we don’t need jobs. That is the progress these people bring and that is the only reason they are able to make money, by improving efficiency. If you are saying their are ways to make money that don’t improve efficiency, obviously that is true but rare, and even if the case where someone tanking company reputations, the owners of the company are not required to sell, look at Tesla which had the most short sellers of any company and a constant barrage of negative articles but that was all able to be overcome by Tesla’s owner Elon Musk.
lucaspm98 6y ago
Virtuous is subjective, but there is the age old goal of leaving the next generation better off than yours. It seems like a personal choice of whether to spend money responsibly, spend frivolously, give it away, or pass it on to whoever you want at any time to do any of those options. I'm not sure where I stand on a wealth tax, but I would always be hesitant to tax money that in theory was already taxed when earned. I could certainly see the idea becoming more acceptable if the importance of community and a traditional, tight-knit family structure continues to erode.
- strbean 6y ago
  > but there is the age old goal of leaving the next generation better off than yours Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off. > I would always be hesitant to tax money that in theory was already taxed when earned This is incompatible with having an income tax and any other tax. Although, income tax isn't exactly well loved by economists, so maybe there is something to that.
  - imtringued 6y ago
    >Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off. You're thinking that taxing the wealth of a billionaire is guaranteed upon death. Therefore from your perspective there are two options: taxing the wealth or not taxing the wealth. Except taxation is the exception, not the rule. If you know your wealth will disappear then you will try to get rid of it before it can disappear. With the estate tax there is a strong incentive to just hand over your wealth to your children before you die or by spending it all on donations so the government can't take it.
    - strbean 6y ago
      I was just thinking in terms of the morality / virtuosity discussion there. In practical terms, there are of course massive problems with enforcement and the flight of wealth, for both estate taxes and wealth taxes.
sokoloff 6y ago
IMO: There's something virtuous about living beneath your means and ensuring that you can be self-sufficient in your retirement. There's something virtuous about living beneath your means and ensuring that, at a minimum, you are not a burden to your family, but that ideally you provide them support rather than siphoning support from them. In order to do that, it's almost a given that you will die with money left over. (The alternative being feeding the bloodsuckers who sell annuities.) One person's "hoarding of wealth" is another person's "natural outcome of frugal living and appropriate planning".
- newsclues 6y ago
  You speak of frugal living, but why live frugally amassing great wealth? There is a difference between having money to be self sufficient and sitting on billions of dollars
  - jimbobimbo 6y ago
    My money, my choice. As long as taxes are paid, it's nobody's business what I do with my money, as long as what I do is not illegal.
    - newsclues 6y ago
      But you don’t decide how much tax to pay. Obviously many poor people will decide that few rich people must pay more.
      - NegativeLatency 6y ago
        > many poor people will decide that few rich people must pay more I fail to see the problem, if you have more money than you could possibly use in a lifetime, why shouldn't that be redistributed through programs that benefit all of society, instead of whatever pet projects the rich person favors.
        sokoloff 6y ago
rcpt 6y ago
Yeah what am I missing here?
mattmanser 6y ago
Turning greed into a virtue, feels like something only an American economist could do!
- niij 6y ago
  The same could be said about people who want to take other's money away. People are spend-thrifts enough as it is, a wealth tax just dis-incentivizes being fiscally responsible.
  - Mandatum 6y ago
    How about a wealth tax on everything above $10MM? Suddenly 99% of the world is no longer discouraged from being fiscally responsible. Do I really care if a billionaire is fiscally irresponsible? Maybe for a single generation. After that, we're good.
    - andersonvom 6y ago
      This is already how things work in the US: you only need to file if your estate is greater than 11.5MM as of 2020 [1]. "As a result, only about 2,000 estates per year in the US are currently liable for federal estate tax." [2] The argument that it "discourages living frugally" is just complete nonsense. [1]: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax https://www.irs.gov/businesses/small-businesses-self-employe... [2]: https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_Sta...
      - deleted 6y ago
        [deleted]
      - niij 6y ago
        What GP proposed was a Wealth Tax which is an additional tax on _living_ people who have a net worth over a certain amount. What you linked is an Estate Tax (aka death/inheritance tax) which only applies when someone passes wealth on after death. If they decide to give all their money away to charity or otherwise spend it while they're alive it does not apply.
clinta 6y ago
Those who "hoard" wealth do not do so by filling a swimming pool with gold coins like Scrooge McDuck. They invest in companies that provide jobs and the goods and services that the rest of us enjoy. Yes that is virtuous.
- MichaelGlass 6y ago
  Those who "invest in companies" need somewhere to put their excess money. That demand for credit is likely responsible for downstream financial crises. https://link.springer.com/article/10.1186/s40854-019-0136-2 https://link.springer.com/article/10.1186/s40854-019-0136-2 I like Milton Friedman too, he had a cool show on PBS, but history isn't going to be good for that guy.
  - clinta 6y ago
    Do you mean supply of credit? Because additional money wouldn't drive demand for credit, it would drive supply as those with money look for places to lend it. If you are saying an excess supply of credit leads to financial crises, I agree with you. But the federal reserve that intentionally pumps money into the big banks to make credit easy is a far bigger contributor. I agree that Milton Friedman had his flaws, one of which is this very topic, he never properly connected the federal reserve, money expansion and easy credit to economic instability.
- asdasfasdfasdf 6y ago
  Jeff Bezos' employees could also invest in those companies if the wealth were better distributed. With the current model yes, Bezos invests in companies that pay wages, but he's the one seeing compounding returns... by comparison the workers who do the majority of the work get peanuts. I'd be interested to see what an alternative reality America would look like if Amazon were employee-owned. You do also have situations where companies like Alphabet and Apple are absurdly cash-rich to the point that it's actually problematic for everyone involved.
- mactrey 6y ago
  Sitting on billions of dollars in stock in a publicly traded company isn't really all that different from having a swimming pool full of gold coins. The day-to-day functioning of that company is not going to be affected if the billionaire sells shares to pay taxes rather than giving the shares to their children. An initial investment in a company is virtuous but once you have billions keeping that money in the family isn't really virtuous given that the alternative is contributing to the society that made the initial investment possible.
georgeecollins 6y ago
I think it is virtuous to plan and prepare for your own security and the security of those who depend on you. But beyond that (like if you are rich enough for financial security to not matter much) I don't think it is inherently virtuous to save. People used to argue that saving (investing) is better for the economy than spending (consumption). That's an argument for a lower capital gains tax. But you could argue the US has gone too far in favor of investors, at the expense of consumption. Presumably more $ in the hands of the 1% = more investment, more $ in the hands of the lower 50% = more consumption.
cscurmudgeon 6y ago
Is there something virtuous about not creating wealth?
Ericson2314 6y ago
Virtue should be paying your goddamn taxes, and donating the rest to the government (i.e. destroying it, to offset other inflationary measures the people elect to enact). Anything else is either an affront to democracy, or at best is is morally neutral. E.g. what this guy did is morally neutral, and only good relative to the Carnegie knockoffs trying to launder their reputation.
maerF0x0 6y ago
There is lots of virtue in giving far more to society (remember that rational free markets are value exchanges, each party thinks they got a good deal). Someone who has a lot of stored up value has given lots to society without receipt of anything but some electronic digits (yet). Plus if the government's rules were working they'd also have paid at least some taxes on all that stored wealth, leading to additional societal value. in rational free markets sone does not need to give twice because the contribution to society is in the provision of things people want. IMO most of the debate is missing that America doesnt have free markets and keeps trying to duct tape around it without fixing the actual bug.

> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth. Is there something virtuous about hoarding wealth?

csours 6y ago

I don't have an answer, but to flip that question: If the very wealthy can live on passive income from accumulated wealth, then why can't all of society?

winston_smith 6y ago
Because most people in society, across all wealth levels, refuse to live within their means. I was quite disappointed when I discovered this, because I thought that if I made enough money, I'd be able to support all my family. But then I started noticing that the people who were broke generally had newer cars and computers than I did, and that families with multiple six-figure incomes were spending their way into bankruptcy. And the government does it too, accumulating ever more debt.
- titanomachy 6y ago
  The very highest wealth level does live within their means. It's hard to spend 10 billion dollars on houses and cars.
mstratman 6y ago
You need a large amount of capital for it to do enough good for others (e.g. via investments into companies) that the returns you receive are enough to live on.
akhosravian 6y ago
Let's liquidate all US billionaires and spread that money to every person in the US. Let's also set aside the question of how one could legally liquidate the billionaires. Per https://www.forbes.com/sites/tommybeer/2020/05/21/the-net-worth-of-americas-600-plus-billionaires-has-increased-by-more-than-400-billion-during-the-pandemic/#5717d90e4a61 https://www.forbes.com/sites/tommybeer/2020/05/21/the-net-wo... the combined net worth of every US billionaire was 3.4 trillion in May of this year. Per https://www.pbs.org/newshour/nation/3-ways-that-the-u-s-population-will-change-over-the-next-decade https://www.pbs.org/newshour/nation/3-ways-that-the-u-s-popu... there were 331 million Americans in January of this year. Dividing that out: $10,271.90 per person. Not enough to live on the passive income even in the cheapest parts of the globe.
- Jabbles 6y ago
  Not enough to live on the passive income even in the cheapest parts of the globe. Why do you think that is the right metric? 3.4T is obviously a vast amount of money.
  - csours 6y ago
    They were probably just responding to how I framed the question.
  - postingawayonhn 6y ago
    It's not really. That would fund the US Government for about 9 months.
- rhacker 6y ago
  OR, just parcel out land and give people seeds and allow them to trade with nearby neighbors... There's no longer a need for money and everyone gets to eat - which is all we really need. Beyond that, people can help each other build homes in smallish communities. Money, even on a planet with this many people, isn't necessary, because it's like people driving cars - the system works because everyone is operating to keep themselves alive. HN is not a fan of this take.
  - Dirlewanger 6y ago
    >HN is not a fan of this take. Probably because it sounds like utopian nonsense.

mensetmanusman 6y ago

I guess the counter question is whether there is something virtuous about spending all your money before you die.

megablast 6y ago
Well, you are putting your money back into society, creating jobs. So yes. That is better then not doing those things.
- cabaalis 6y ago
  People with money don't put it all under a mattress. It's active in the economy, creating jobs.
  - modo_mario 6y ago
    I can assure you the vast majority of billionaires did not become that by caring about creating jobs. They cared about the return. A return that does not have to come matched with creating good jobs. Assuming you're American I believe you still have people in gov that got rich because of their family starting a pyramid scheme. I wouldn't call that a benefit to society. Remember those guys in the 90's tanking company stocks and reputations then buying em up under the guise of saving them only to dismantle em and make their profit on the sale of the scraps? yeah they made money removing jobs. The list goes on and on.
    - smaryjerry 6y ago
      Organizing is difficult. Wealth is created because they are able to appropriately organize people into the jobs they are most efficient. They are able to get people to work harder, produce more, and more efficiently use resources. You might not think efficiency is moral but it does result in a higher quality of life across the board. Why are tech companies currently the darlings? Because each was able to find efficient ways to do things, communicate, search, or combine or improve existing technologies. Instead of printing every book they can just be downloaded and on the same device you make calls. It isn’t a natural process, it requires leaders to make things efficient in order to make money. No one should care about “jobs” because they mean nothing. If one person could produce all the food needed to feed the world then we don’t need jobs. That is the progress these people bring and that is the only reason they are able to make money, by improving efficiency. If you are saying their are ways to make money that don’t improve efficiency, obviously that is true but rare, and even if the case where someone tanking company reputations, the owners of the company are not required to sell, look at Tesla which had the most short sellers of any company and a constant barrage of negative articles but that was all able to be overcome by Tesla’s owner Elon Musk.

lucaspm98 6y ago

Virtuous is subjective, but there is the age old goal of leaving the next generation better off than yours. It seems like a personal choice of whether to spend money responsibly, spend frivolously, give it away, or pass it on to whoever you want at any time to do any of those options. I'm not sure where I stand on a wealth tax, but I would always be hesitant to tax money that in theory was already taxed when earned. I could certainly see the idea becoming more acceptable if the importance of community and a traditional, tight-knit family structure continues to erode.

strbean 6y ago
> but there is the age old goal of leaving the next generation better off than yours Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off. > I would always be hesitant to tax money that in theory was already taxed when earned This is incompatible with having an income tax and any other tax. Although, income tax isn't exactly well loved by economists, so maybe there is something to that.
- imtringued 6y ago
  >Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off. You're thinking that taxing the wealth of a billionaire is guaranteed upon death. Therefore from your perspective there are two options: taxing the wealth or not taxing the wealth. Except taxation is the exception, not the rule. If you know your wealth will disappear then you will try to get rid of it before it can disappear. With the estate tax there is a strong incentive to just hand over your wealth to your children before you die or by spending it all on donations so the government can't take it.
  - strbean 6y ago
    I was just thinking in terms of the morality / virtuosity discussion there. In practical terms, there are of course massive problems with enforcement and the flight of wealth, for both estate taxes and wealth taxes.

sokoloff 6y ago

IMO: There's something virtuous about living beneath your means and ensuring that you can be self-sufficient in your retirement. There's something virtuous about living beneath your means and ensuring that, at a minimum, you are not a burden to your family, but that ideally you provide them support rather than siphoning support from them. In order to do that, it's almost a given that you will die with money left over. (The alternative being feeding the bloodsuckers who sell annuities.) One person's "hoarding of wealth" is another person's "natural outcome of frugal living and appropriate planning".

newsclues 6y ago
You speak of frugal living, but why live frugally amassing great wealth? There is a difference between having money to be self sufficient and sitting on billions of dollars
- jimbobimbo 6y ago
  My money, my choice. As long as taxes are paid, it's nobody's business what I do with my money, as long as what I do is not illegal.
  - newsclues 6y ago
    But you don’t decide how much tax to pay. Obviously many poor people will decide that few rich people must pay more.
    - NegativeLatency 6y ago
      > many poor people will decide that few rich people must pay more I fail to see the problem, if you have more money than you could possibly use in a lifetime, why shouldn't that be redistributed through programs that benefit all of society, instead of whatever pet projects the rich person favors.
      - sokoloff 6y ago

rcpt 6y ago

Yeah what am I missing here?

mattmanser 6y ago

Turning greed into a virtue, feels like something only an American economist could do!

niij 6y ago
The same could be said about people who want to take other's money away. People are spend-thrifts enough as it is, a wealth tax just dis-incentivizes being fiscally responsible.
- Mandatum 6y ago
  How about a wealth tax on everything above $10MM? Suddenly 99% of the world is no longer discouraged from being fiscally responsible. Do I really care if a billionaire is fiscally irresponsible? Maybe for a single generation. After that, we're good.
  - andersonvom 6y ago
    This is already how things work in the US: you only need to file if your estate is greater than 11.5MM as of 2020 [1]. "As a result, only about 2,000 estates per year in the US are currently liable for federal estate tax." [2] The argument that it "discourages living frugally" is just complete nonsense. [1]: https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax https://www.irs.gov/businesses/small-businesses-self-employe... [2]: https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_States https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_Sta...
    - deleted 6y ago
      [deleted]
    - niij 6y ago
      What GP proposed was a Wealth Tax which is an additional tax on _living_ people who have a net worth over a certain amount. What you linked is an Estate Tax (aka death/inheritance tax) which only applies when someone passes wealth on after death. If they decide to give all their money away to charity or otherwise spend it while they're alive it does not apply.

clinta 6y ago

Those who "hoard" wealth do not do so by filling a swimming pool with gold coins like Scrooge McDuck. They invest in companies that provide jobs and the goods and services that the rest of us enjoy. Yes that is virtuous.

MichaelGlass 6y ago
Those who "invest in companies" need somewhere to put their excess money. That demand for credit is likely responsible for downstream financial crises. https://link.springer.com/article/10.1186/s40854-019-0136-2 https://link.springer.com/article/10.1186/s40854-019-0136-2 I like Milton Friedman too, he had a cool show on PBS, but history isn't going to be good for that guy.
- clinta 6y ago
  Do you mean supply of credit? Because additional money wouldn't drive demand for credit, it would drive supply as those with money look for places to lend it. If you are saying an excess supply of credit leads to financial crises, I agree with you. But the federal reserve that intentionally pumps money into the big banks to make credit easy is a far bigger contributor. I agree that Milton Friedman had his flaws, one of which is this very topic, he never properly connected the federal reserve, money expansion and easy credit to economic instability.
asdasfasdfasdf 6y ago
Jeff Bezos' employees could also invest in those companies if the wealth were better distributed. With the current model yes, Bezos invests in companies that pay wages, but he's the one seeing compounding returns... by comparison the workers who do the majority of the work get peanuts. I'd be interested to see what an alternative reality America would look like if Amazon were employee-owned. You do also have situations where companies like Alphabet and Apple are absurdly cash-rich to the point that it's actually problematic for everyone involved.
mactrey 6y ago
Sitting on billions of dollars in stock in a publicly traded company isn't really all that different from having a swimming pool full of gold coins. The day-to-day functioning of that company is not going to be affected if the billionaire sells shares to pay taxes rather than giving the shares to their children. An initial investment in a company is virtuous but once you have billions keeping that money in the family isn't really virtuous given that the alternative is contributing to the society that made the initial investment possible.

georgeecollins 6y ago

I think it is virtuous to plan and prepare for your own security and the security of those who depend on you. But beyond that (like if you are rich enough for financial security to not matter much) I don't think it is inherently virtuous to save. People used to argue that saving (investing) is better for the economy than spending (consumption). That's an argument for a lower capital gains tax. But you could argue the US has gone too far in favor of investors, at the expense of consumption. Presumably more $ in the hands of the 1% = more investment, more $ in the hands of the lower 50% = more consumption.

cscurmudgeon 6y ago

Is there something virtuous about not creating wealth?

Ericson2314 6y ago

Virtue should be paying your goddamn taxes, and donating the rest to the government (i.e. destroying it, to offset other inflationary measures the people elect to enact). Anything else is either an affront to democracy, or at best is is morally neutral. E.g. what this guy did is morally neutral, and only good relative to the Carnegie knockoffs trying to launder their reputation.

maerF0x0 6y ago

There is lots of virtue in giving far more to society (remember that rational free markets are value exchanges, each party thinks they got a good deal). Someone who has a lot of stored up value has given lots to society without receipt of anything but some electronic digits (yet). Plus if the government's rules were working they'd also have paid at least some taxes on all that stored wealth, leading to additional societal value. in rational free markets sone does not need to give twice because the contribution to society is in the provision of things people want. IMO most of the debate is missing that America doesnt have free markets and keeps trying to duct tape around it without fixing the actual bug.