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I recently started to think that inheritance should just be all together eliminated. It is still a root of inequality, and promotes all kind of bad behavior. Yo

• tasuki 6y ago
  What about gifts? Can people gift other people things? If we forbid gifts, because they're an obvious transfer of wealth, what about financial transactions that favour one party? Should it be legal for a rich parent to sell their car to their offspring for below market value? How much below market value? As you can see, none of this makes any sense to me. I believe people would get around whatever restrictions you put in place rather easily.
  • thaumasiotes 6y ago
    > If we forbid gifts, because they're an obvious transfer of wealth, what about financial transactions that favour one party? Should it be legal for a rich parent to sell their car to their offspring for below market value? How much below market value? In fact, this is already illegal, but there's no enforcement. (Enforcement would be challenging in any realistic scenario; it always is when every party to a transaction benefits from it.) According to the law, whenever you obtain anything from anyone (not just relatives) at a price below market value, you have to pay taxes on the difference.
    • cgriswald 6y ago
      In fact, neither of those is illegal. You’d have to be fairly wealthy and incredibly generous to actually trigger conditions needed to pay taxes on gifts. Aside from being able to give $15K per person per year (or twice that for married couples) you also get a lifetime gift-giving exemption of nearly $12 million for any gift giving over the annual amounts. You’re also allowed to sell your kid your car for $1. It’ll probably be counted as a gift of market value - $1. Your kid will probably be required to pay taxes on it as if he purchased it for market value. But it’s not illegal.
      • thaumasiotes 6y ago
        > You’re also allowed to sell your kid your car for $1. It’ll probably be counted as a gift of market value - $1. Your kid will probably be required to pay taxes on it as if he purchased it for market value. But it’s not illegal. Sure. But when I say "this is already illegal", I'm implicitly including the kid not paying the taxes after this happens.
        • sokoloff 6y ago
          They don’t have to pay income taxes on it in the US; it’s a gift. They may have to pay excise or property tax on it at the fair market value, but that’s about registering the car for road use, not about gifted property being taxable to the recipient as you claimed.
          • starfallg 6y ago
            Gifts may be taxed in the UK if they were made up to 7 years before the death of a person. The tax would then be deduced from the estate.
        • cgriswald 6y ago
          Not pay taxes is always illegal, but as the sibling poster said, taxes aren't required for the gift. The state will still probably require the recipient to pay taxes to transfer the title as if you paid full market value. I say probably because it isn't always market value that's required and there is some discretion involved. The gift exemption is one way in which the wealthy already avoid existing estate taxes.
  • didibus 6y ago
    That's why I said: "Now how would that be managed in practice, no idea, and I haven't fully thought through everything here" It's clear that finding mechanisms to implement this would be the next steps, but also not worth thinking about if people refute the premise itself. That said, I'm not going to accept refuting the premise based on the fact that we don't know how to implement it, that's circular to me.
    • sokoloff 6y ago
      Even before we get into practical concerns, I don’t believe that the state should (morally) have more claim to the residual of my estate than my family (or whomever else I choose to leave my items and money to). If you want to tax large estates (as we do currently), I’m ok with that, but taxing any portion at 100% and taxing estates substantially lower than the current exemption at all I find an unseemly (and for small estates, unwieldy) picking the pocket of someone who worked hard and saved/invested diligently to give their family a better life.
      • IG_Semmelweiss 6y ago
        This man speaks truth
    • tasuki 6y ago
      Fair enough. My gut feeling says such mechanisms are impossible. If you do find any without obvious loopholes, many people will be quite excited. Keep us posted!
  • bserge 6y ago
    They would, but there will be many who won't. Which is why I think it's a good idea.
    • thatguy0900 6y ago
      The people who won't will be the poor people. As it always is. The people with money can afford to get the expertise to avoid it. And the politicians writing the laws will be in that group.
• dsq 6y ago
  That might work, just until the supply of suckers dries up. There's one born every minute, which makes 1440*365 = 525,600 suckers per year. Hmm, that is quite a few suckers. Okay, tax away!
• Supermancho 6y ago
  > I recently started to think that inheritance should just be all together eliminated. Indeed, this is considered by a lot of people. Nobody in power has been interested in this, anywhere, ever. This alone, should raise concern.
  • Gibbon1 6y ago
    The problem with people with power passing that on to their often dumb as rocks children is a pernicious problem in most societies.
    • walshemj 6y ago
      Well German SME family companies are immune from inheritence tax seems to work ok for them
• AYBABTME 6y ago
  If you look at Korea with its 60% inheritance tax rate, the result is that rich people inheriting large sums will have elaborate means at their disposal to transfer the wealth in subtle ways. Point in case: Samsung's heir. On the other hand, less well off people won't be able to afford these manoeuvres.
• goodcanadian 6y ago
  As I understand it, that is sort of the philosophy behind inheritance tax in the UK: https://www.gov.uk/inheritance-tax https://www.gov.uk/inheritance-tax It has caused the break up of many old estates in the last century.
• shouldwethink 6y ago
  You are talking about eliminating a system that has existed for several millennial , at least 4000 years . That is in other words let’s recreate human society. Going down to particulars, strip individuals of rights to determine who gets their property and another group of people - through the elected or by mob action , should determine it. This creates more incentive to be part of the group that makes that determination than the group that actually creates wealth. Secondly, the question of distribution comes up and the question of citizenry. If this is a high minded idea , not one based of millennial of social constructs of nationhood and citizenry , why not share the resources to everyone in the world, why only in a particular “country”. Would you be happy if you have to make sacrifices to succeed , and I am very sure every success comes with a sacrifice just to give others who have not made such or similar sacrifices . My assumption is that countries that have high inheritance tax create a disincentive to creators of wealth via aggregations / efficiency or disruption because such wealth would be stolen from them . You make enough just to be comfortable .
• bserge 6y ago
  People who really want their kids/relatives to inherit anything will just do it illegally. But overall, it would likely be a net positive.
  • cgriswald 6y ago
    Why illegally? Assuming a 100% estate tax, you could likely avoid it through legal means. I'm sure there are way more tricks for passing on your wealth and I'm sure it's much more complicated than this, but: My first thought would to incorporate and have the corporation own all the wealth. You could hire family as employees and pay them in money and stock. Income taxes would have to be paid, but those are a lot lower than 100%. Any properties would be held by the corporation. Over time, you'd gift your shares to your children using the gift tax exemption. You'd secure contracts with your corporation for the exclusive use of your properties while you live, so even after you no longer have a controlling interest, you can't be removed from, say, your favorite mansion. These contracts would be expensive and payable on death, so when you died, your estate had to pay back the corporation. But the only thing you personally own is stock in the corporation. So the stock goes back to the corporation to pay your debts and the government gets nothing. So, rather than 100%, your effective tax rate would be some income taxes and whatever you couldn't manage to divest yourself of by the time you died. Voila. Your children just inherited all your stuff legally.
    • bserge 6y ago
      Yeah, such a law would likely have loopholes. But let's say it's somehow perfect. People will still do it, completely illegally.
• refurb 6y ago
  It sounds like a great idea until you realize a bunch of countries have abandoned their inheritance tax scheme. Countries like Sweden, Australia, Israel and New Zealand. I assume they had a good reason for it.
  • Scoundreller 6y ago
    Usually when a country abandons a tax, I assume there’s some heavy lobbying by a few that would massively benefit from it and a complete disregard for anyone and everything else.
    • acheron 6y ago
      So there is literally no situation in which a tax could be a bad idea?
• mellavora 6y ago
  I understand and respect your perspective. However, one of life's strongest drives is to protect/provide for your children. Not just a human drive, and not even just an animal drive-- trees preferentially support their offspring... You justify your proposal from a moral basis ("root of inequality, promotes bad behavior"). While there is much to commend a morals-based approach, it is hard for me to accept that one of life's most fundamental drives is immoral. My parents are now old. I want to encourage them to spend their money enjoying their last few years. But I also know that the thing which would bring the most joy to my father would be to gift money to my siblings and myself, especially at his passing-- if he were to spend it all, he would feel like he had been a poor steward. I have a very hard time with a legal structure which penalizes people for deciding to provide for their children rather than for themselves. This is before we look at all of the edge cases (surviving spouse, early deaths, ...) and also the observations made by others that the rich will avoid the law anyway, thus defeating the purpose of reducing inequality at the high end of the spectrum.