6 ms·

I don't understand why so many people applaud hefty inheritance taxes, with some far-left voices demanding inheritance taxes well above 90% or even 100%. It fee

by heipei 5y ago

I don't understand why so many people applaud hefty inheritance taxes, with some far-left voices demanding inheritance taxes well above 90% or even 100%. It feels to me like this is sending the signal to "use it or lose it". While everyone is talking about cutting unnecessary consumption you're effectively telling people to spend all their money on frivolous luxury items because they can't pass it on to their children anyway. As someone with children, my main motivation is living within my means and keeping the rest of my assets as a retirement/rainy-day fund, or, after my demise, to have it passed on to my children. If you tell me I can't do that I might as well just buy an expensive sports-car tomorrow...

Joeri 5y ago
In our modern economic system wealth accrues more wealth. If you don’t actively redistribute the wealth, not just the income, then you end up with wildly unequal societies, in essence what we have today. Wildly unequal not just in terms of resources but also in opportunity. If you believe that equal opportunity should be a birthright of everyone then a sensible way to deliver a more equal opportunity for each new generation is to redistribute the wealth tied up in inherited estates from those with a lot of opportunity (the inheritors) to those lacking opportunity. Do you understand it better when put like that?
- manuelaljibes 5y ago
  I don't care about society at large, I only care about my own.
  - emc3 5y ago
    And... you're a piece of shit, thanks for sharing!
    - dang 5y ago
      Obviously you can't do this here, and I've banned the account. Could you please stop creating accounts to break HN's guidelines with? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- ttt0 5y ago
  What's wrong with an unequal society? I get that you might want to help out the poor, but I don't care if someone has more money than me. I don't like what some of those rich people or corporations are doing to the society, but I really don't care about their money. When you talk about opportunities, what do you specifically mean by that?
  - tolbish 5y ago
    Considering how many things in our society are effectively illegal for the poor (e.g. the concept of fines for breaking the law as opposed to jail time) but legal for the rich, it's pretty clear why an extremely unequal society is inherently evil.
    - ttt0 5y ago
      How's that inherent? It's still illegal for the rich by the way. At some point your bail will be denied by the court, if you're a repeat offender.
      - Frost1x 5y ago
        Wealth becomes a proxy for power, freedom, liberty, and so forth in our society. The most obvious example is that the very wealthy do not have to work. Their wealth snowballs at some point through investment vehicles and others manage their wealth. At that point you can do whatever you want with your life. You and I on the other hand may not have that option. I'm in a high income bracket relative to most,, but I still rely on my labor (time), even if I live frugally. I have to spend a large portion of my life working to remain solvent in society. I could reject society and go out into the woods as a survivalist or become homeless but that's not a very desirable life for many to live. To your example, let's say the offense is a speeding fine. If I get a fine for speeding, depending on the state and speed, you can accumulate these indefinitely. At some point it's just a fee to do something you want to do. Let's assume that you can't speed indefinitely though, let's say it's a wreckless driving offense, well for me I'm out of options--after a ticket or two I'll lose my license to drive which is critical to my livelihood. I'll go to court for repeat offenses because I'm the driver. What if I'm really rich and I hire someone to speed for me: a driver? As a passenger I have no legal responsibility, it's the driver. I could cycle through drivers willing to speed for me whenever they lose their licenses for wreckless driving. If I pay them enough, I guarantee you'll find drivers willing to speed regularly for you. The money goes back into the economy, sure, but using wealth, I've passed risks and liabilities off to others and inherently can do things others in society cannot. I've got you to trade your freedoms to drive to my desire to speed. Wealth has been used as a proxy to give rights someone otherwise wouldn't have. This is one silly example but there are many rights and laws that have no sort of co-conspirator offense wealth can buy away. We realized this with murder which is why you can be charged when you pay someone to murder someone else. Not all laws have these catches, buying co-conspirators rights.
- bzbarsky 5y ago
  It seems to me that you're speaking a bit past heipei's question, which is about the actual consequences, as opposed to the intended ones, of policies. If you have a 90-100% estate tax, then the intended consequence might be "redistribute the money via the government" but the actual consequence is much more likely to be "most of the money is spent on luxury consumption, because why not?". At lower levels of estate taxation intended and actual consequences might align better, of course. This is pretty specifically a question about calls for near-100% estate taxation, not a question about why there's an estate tax in general.
perryizgr8 5y ago
> While everyone is talking about cutting unnecessary consumption you're effectively telling people to spend all their money on frivolous luxury items because they can't pass it on to their children anyway. People will easily find a way to pass wealth to children. Naive example: 1. Register company in kid's name. 2. Buy a penny from his company for $1B. 3. Die peacefully.
- bidirectional 5y ago
  That's called tax fraud. It's not only a naive example but also useless, the system isn't that bad.
  - perryizgr8 5y ago
    So it is fraud and useless both? Seems like it would have to be useful to be termed actual fraud.
    - bidirectional 5y ago
      It is fraud, which is why it is a useless example.
      - perryizgr8 5y ago
        So is the example useless or the scheme? Because you have contradicted yourself twice in the last two comments. If it is a useless scheme that would indicate that it doesn't actually save taxes by illegal means. If true, that means it is not fraud. Otoh, if it does allow you to save taxes illegal, then it is not useless and could also be counted as fraud. So it cannot possibly be useless and fraud at the same time.
alok-g 5y ago
Here's the motivation: To maximize social developments, we reward those who create value for the society. If someone, via their own efforts and without stealing/fraud, generate a lot of wealth, they would have invariably added value to the society by creating a win-win for the buyers, employees and themselves. When however someone born to a rich person inherits wealth, they are at an unfair advantage for something that they did not really accomplish, and not for any value they added to the society. The world should aim to equalize opportunity for everyone (irrespective of who they are born to), and then reward them when they create more value than others from the same opportunity. Agreed that defining "equalized opportunity" is hard -- what all would it cover, health?, edutcation?, etc. However, even with some challenges here, this may be better than the current system. The "use it or lose it" would make the wealthy put money back into the system, and automatic adjustments would result via supply and demand balancing. I understand that it would also increase wastage, and this would need some thinking through. My gut reasion however is how much money can the super rich really use and waste? Ultimately, even items bought by them but unused may be reusable by others (who ideally should not be their hiers at 100%).
- ttt0 5y ago
  That's cool, but unless we're talking about some sort of progressive inheritance tax, it's not just about filthy rich people, but all of us. For example, if I die, why shouldn't I be able to pass my house onto my children? Real estate is really goddamn expensive, so do you expect me to force my children into debt slavery just so they can afford a decent place to live?
  - alok-g 5y ago
    >> unless we're talking about some sort of progressive inheritance tax, it's not just about filthy rich people, but all of us. Agreed. It cannot be abrupt. There needs to be gradations and caveats*. >> why shouldn't I be able to pass my house onto my children That should be reduced for equalizing opportunity for those children who are born without such a previledge. Yes, I agree we love our own children more, naturally. That's a result of biological evolution. However, social policies are inherently by nature aimed at balancing the good of individuals with the good of the society overall. (For sake of example, lairs lie as they reap some advantages out of doing so. However, we consider lying bad as it takes the society farther away from the optimal point of operation.) We can't also take away what nature built, so self-interest or the love for children cannot be taken off completely. And that's how "progressive inheritance tax" would come back into the picture. * Sample caveat: If a child develops some illness, a parent should be able to spend more on her/him. There are again different means to handle this too -- the two extremes being all children being treated equal irrespective of who the parents are, children of God, one may say :-), and then insurance or government funds handle such caveats. The other extreme is where parents solely help the children. The answer I believe lies somewhere in the middle of the two extremes.
rrss 5y ago
if an estate is worth less than ~$10 million, it is exempt from the estate tax, so you can pass on a few million to your children no problem. IIUC, basically no one with significant estates actually pays the estate tax, so I don't think this actually matters, but estate taxes are good because dynastic wealth is the absolute worst. > The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion.... > Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life. > by all means such taxes should be graduated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell, until of the millionaire's hoard, as of Shylock's, at least "_____ The other half \ comes to the privy coffer of the state." - Andrew Carnegie, Wealth, 1889 If you have a personal wealth more than $10 million (or whatever the estate tax exemption limit is/will be), then yeah, you should spend some of it on stuff that you think is worthwhile. It doesn't need to be a fast car - Carnegie was into libraries.
metabagel 5y ago
Currently, the inheritance tax exempts the first $11.5 million of an estate from the estate tax. Do you think your heirs will need more than that? This threshold goes up every year, by the way. I think it’s generally accepted that there should be a minimum threshold for the estate tax. You can consider it to be implied unless specifically stated otherwise.
- heipei 5y ago
  I should have added that I'm German, and here the estate tax is only exempt on the first €500k for spouses and €400k for each child. And everything above is taxed between 25% and 50% depending on your income tax bracket. Real estate is exempt if the heirs continue to live in it for at least 10 years. Edit: And yet I've heard the calls for 90%-100% estate tax from voices in Germany...
- debug-desperado 5y ago
  The problem is that number was as low as $1 million a decade ago. Inheritance taxes are a political football, and the current system just blindly taxes the estate rather than the one who receives the inheritance. If the goal is fairness or distribution of resources, it makes sense to switch to system like in Ireland where each heir is taxed individually.

by heipei 5y ago

Joeri 5y ago

In our modern economic system wealth accrues more wealth. If you don’t actively redistribute the wealth, not just the income, then you end up with wildly unequal societies, in essence what we have today. Wildly unequal not just in terms of resources but also in opportunity. If you believe that equal opportunity should be a birthright of everyone then a sensible way to deliver a more equal opportunity for each new generation is to redistribute the wealth tied up in inherited estates from those with a lot of opportunity (the inheritors) to those lacking opportunity. Do you understand it better when put like that?

manuelaljibes 5y ago
I don't care about society at large, I only care about my own.
- emc3 5y ago
  And... you're a piece of shit, thanks for sharing!
  - dang 5y ago
    Obviously you can't do this here, and I've banned the account. Could you please stop creating accounts to break HN's guidelines with? https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
ttt0 5y ago
What's wrong with an unequal society? I get that you might want to help out the poor, but I don't care if someone has more money than me. I don't like what some of those rich people or corporations are doing to the society, but I really don't care about their money. When you talk about opportunities, what do you specifically mean by that?
- tolbish 5y ago
  Considering how many things in our society are effectively illegal for the poor (e.g. the concept of fines for breaking the law as opposed to jail time) but legal for the rich, it's pretty clear why an extremely unequal society is inherently evil.
  - ttt0 5y ago
    How's that inherent? It's still illegal for the rich by the way. At some point your bail will be denied by the court, if you're a repeat offender.
    - Frost1x 5y ago
      Wealth becomes a proxy for power, freedom, liberty, and so forth in our society. The most obvious example is that the very wealthy do not have to work. Their wealth snowballs at some point through investment vehicles and others manage their wealth. At that point you can do whatever you want with your life. You and I on the other hand may not have that option. I'm in a high income bracket relative to most,, but I still rely on my labor (time), even if I live frugally. I have to spend a large portion of my life working to remain solvent in society. I could reject society and go out into the woods as a survivalist or become homeless but that's not a very desirable life for many to live. To your example, let's say the offense is a speeding fine. If I get a fine for speeding, depending on the state and speed, you can accumulate these indefinitely. At some point it's just a fee to do something you want to do. Let's assume that you can't speed indefinitely though, let's say it's a wreckless driving offense, well for me I'm out of options--after a ticket or two I'll lose my license to drive which is critical to my livelihood. I'll go to court for repeat offenses because I'm the driver. What if I'm really rich and I hire someone to speed for me: a driver? As a passenger I have no legal responsibility, it's the driver. I could cycle through drivers willing to speed for me whenever they lose their licenses for wreckless driving. If I pay them enough, I guarantee you'll find drivers willing to speed regularly for you. The money goes back into the economy, sure, but using wealth, I've passed risks and liabilities off to others and inherently can do things others in society cannot. I've got you to trade your freedoms to drive to my desire to speed. Wealth has been used as a proxy to give rights someone otherwise wouldn't have. This is one silly example but there are many rights and laws that have no sort of co-conspirator offense wealth can buy away. We realized this with murder which is why you can be charged when you pay someone to murder someone else. Not all laws have these catches, buying co-conspirators rights.
bzbarsky 5y ago
It seems to me that you're speaking a bit past heipei's question, which is about the actual consequences, as opposed to the intended ones, of policies. If you have a 90-100% estate tax, then the intended consequence might be "redistribute the money via the government" but the actual consequence is much more likely to be "most of the money is spent on luxury consumption, because why not?". At lower levels of estate taxation intended and actual consequences might align better, of course. This is pretty specifically a question about calls for near-100% estate taxation, not a question about why there's an estate tax in general.

perryizgr8 5y ago

> While everyone is talking about cutting unnecessary consumption you're effectively telling people to spend all their money on frivolous luxury items because they can't pass it on to their children anyway. People will easily find a way to pass wealth to children. Naive example: 1. Register company in kid's name. 2. Buy a penny from his company for $1B. 3. Die peacefully.

bidirectional 5y ago
That's called tax fraud. It's not only a naive example but also useless, the system isn't that bad.
- perryizgr8 5y ago
  So it is fraud and useless both? Seems like it would have to be useful to be termed actual fraud.
  - bidirectional 5y ago
    It is fraud, which is why it is a useless example.
    - perryizgr8 5y ago
      So is the example useless or the scheme? Because you have contradicted yourself twice in the last two comments. If it is a useless scheme that would indicate that it doesn't actually save taxes by illegal means. If true, that means it is not fraud. Otoh, if it does allow you to save taxes illegal, then it is not useless and could also be counted as fraud. So it cannot possibly be useless and fraud at the same time.

alok-g 5y ago

Here's the motivation: To maximize social developments, we reward those who create value for the society. If someone, via their own efforts and without stealing/fraud, generate a lot of wealth, they would have invariably added value to the society by creating a win-win for the buyers, employees and themselves. When however someone born to a rich person inherits wealth, they are at an unfair advantage for something that they did not really accomplish, and not for any value they added to the society. The world should aim to equalize opportunity for everyone (irrespective of who they are born to), and then reward them when they create more value than others from the same opportunity. Agreed that defining "equalized opportunity" is hard -- what all would it cover, health?, edutcation?, etc. However, even with some challenges here, this may be better than the current system. The "use it or lose it" would make the wealthy put money back into the system, and automatic adjustments would result via supply and demand balancing. I understand that it would also increase wastage, and this would need some thinking through. My gut reasion however is how much money can the super rich really use and waste? Ultimately, even items bought by them but unused may be reusable by others (who ideally should not be their hiers at 100%).

ttt0 5y ago
That's cool, but unless we're talking about some sort of progressive inheritance tax, it's not just about filthy rich people, but all of us. For example, if I die, why shouldn't I be able to pass my house onto my children? Real estate is really goddamn expensive, so do you expect me to force my children into debt slavery just so they can afford a decent place to live?
- alok-g 5y ago
  >> unless we're talking about some sort of progressive inheritance tax, it's not just about filthy rich people, but all of us. Agreed. It cannot be abrupt. There needs to be gradations and caveats*. >> why shouldn't I be able to pass my house onto my children That should be reduced for equalizing opportunity for those children who are born without such a previledge. Yes, I agree we love our own children more, naturally. That's a result of biological evolution. However, social policies are inherently by nature aimed at balancing the good of individuals with the good of the society overall. (For sake of example, lairs lie as they reap some advantages out of doing so. However, we consider lying bad as it takes the society farther away from the optimal point of operation.) We can't also take away what nature built, so self-interest or the love for children cannot be taken off completely. And that's how "progressive inheritance tax" would come back into the picture. * Sample caveat: If a child develops some illness, a parent should be able to spend more on her/him. There are again different means to handle this too -- the two extremes being all children being treated equal irrespective of who the parents are, children of God, one may say :-), and then insurance or government funds handle such caveats. The other extreme is where parents solely help the children. The answer I believe lies somewhere in the middle of the two extremes.

rrss 5y ago

if an estate is worth less than ~$10 million, it is exempt from the estate tax, so you can pass on a few million to your children no problem. IIUC, basically no one with significant estates actually pays the estate tax, so I don't think this actually matters, but estate taxes are good because dynastic wealth is the absolute worst. > The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion.... > Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life. > by all means such taxes should be graduated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell, until of the millionaire's hoard, as of Shylock's, at least "_____ The other half \ comes to the privy coffer of the state." - Andrew Carnegie, Wealth, 1889 If you have a personal wealth more than $10 million (or whatever the estate tax exemption limit is/will be), then yeah, you should spend some of it on stuff that you think is worthwhile. It doesn't need to be a fast car - Carnegie was into libraries.

metabagel 5y ago

Currently, the inheritance tax exempts the first $11.5 million of an estate from the estate tax. Do you think your heirs will need more than that? This threshold goes up every year, by the way. I think it’s generally accepted that there should be a minimum threshold for the estate tax. You can consider it to be implied unless specifically stated otherwise.

heipei 5y ago
I should have added that I'm German, and here the estate tax is only exempt on the first €500k for spouses and €400k for each child. And everything above is taxed between 25% and 50% depending on your income tax bracket. Real estate is exempt if the heirs continue to live in it for at least 10 years. Edit: And yet I've heard the calls for 90%-100% estate tax from voices in Germany...
debug-desperado 5y ago
The problem is that number was as low as $1 million a decade ago. Inheritance taxes are a political football, and the current system just blindly taxes the estate rather than the one who receives the inheritance. If the goal is fairness or distribution of resources, it makes sense to switch to system like in Ireland where each heir is taxed individually.