4 ms·

It's Not Just Income Taxes. Billionaires Don't Pay Inheritance Taxes Either.

37 points by maxwell 5y ago

aliasEli 5y ago
Contrary to what a lot of people believe, it is actually pretty difficult to go from rags to riches in the USA, compared to other countries. One of the reasons is the low inheritance tax. [0]https://www.theguardian.com/commentisfree/2021/mar/13/american-dream-broken-upward-mobility-us https://www.theguardian.com/commentisfree/2021/mar/13/americ...
- Grim-444 5y ago
  How does making it cheap and easy to pass money to your children make them less likely to succeed?
  - happytoexplain 5y ago
    I'm a layman, so correct me if I'm misunderstanding, but I thought inheritance tax only occurs north of ten million dollars, so nobody in a "rags" position is being helped by a lower inheritance tax. If you believe financial success is largely a zero-sum game, then a low inheritance tax hurts the poor. Alternatively, even if you don't believe that, a low inheritance tax still doesn't help the poor.
    - ac29 5y ago
      A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one. I'm not sure what your point is.
      - happytoexplain 5y ago
        In general, of course. I was disagreeing that it helps the poor, specifically. Is what I said untrue?
      - dragonwriter 5y ago
        > A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one. It absolutely can for the people who wouldn't, in either scenario, pay inheritance tax in the first place, since for them a low inheritance tax means only less wealth distributed out from those who already have enormous generational wealth from which they might build intergenerational wealth, but not any advantage in passing the wealth they do acquire.
  - dragonwriter 5y ago
    Making it easier for the super-rich to pass money to their children makes everyone else’s children less likely to succeed, because people’s ability to succeed dependent primarily on absolute resources (once you get beyond the most abject poverty).
thedudeabides5 5y ago
This seems like a far bigger deal in terms of 'justice' outcomes than getting worked up over the capital gains from people who earned their stakes.
- amelius 5y ago
  There is nothing wrong with earning money. The problem is that this money usually works against all the other people who made different life choices. For example, excess money can be invested in real-estate, and this can cause housing prices to surge, which can hurt the normal guy.
  - simonh 5y ago
    In the UK home ownership rates are at about 2/3 of the population, so here the normal guy owns their own home.
- thrill 5y ago
  Because taxing things multiple times is only "justice".
- happytoexplain 5y ago
  What if you don't believe 100% of capital gains over a certain acceleration threshold are "earned" by the colloquial definition?
0x0nyandesu 5y ago
I love how this article blatantly lies in the title when there's clearly an inheritance tax which actually has not been adjusted with inflation so it keeps hitting more and more people who aren't billionaires and the fact that it's a literally a double dip tax which is on money that has already been taxed. And the fact that it literally doesn't even matter. Inheritance tax is such a small part of the federal income. Just increase taxes on capital gains above 10 million a year and call it a day.
- panarky 5y ago
  > there's clearly an inheritance tax The point is if you're rich enough to pay the inheritance tax, you're rich enough to hire professionals to structure your estate so that you never actually pay any inheritance tax. > small part of the federal income It would be a bigger part of federal revenue if rich people actually paid it.
  - 0x0nyandesu 5y ago
    Taxing everything doesn't work. Rich people will just leave the country while alive and still pass on their wealth to their children. It's as easy as buying a painting and hanging it in your kid's house.
Grim-444 5y ago
So another class warfare propaganda article. Let's see .. - Takes as many digs at Trump as possible .. check - Uses outrageous language like "America’s ultrawealthy already get away with murder" .. check - Article title which lies and states that they "don't pay inheritance taxes" yet even the article itself then explains how much they DO pay .. check - Constantly takes digs at Republicans, because of course there's no rich Democrats that take advantage of anything, just evil Republicans .. check - Buries deeper in the article the fact that non-billionaires can also leave literally all their money to their kids, tax free, it's not some secret loophole that only billionaires have access to, in fact billionaires are the only ones that DO pay inheritance taxes .. check - Uses the article as clickbait to promote their book .. check
- bigphishy 5y ago
  This isn't a left vs right issue, it's a top vs bottom issue.
- happytoexplain 5y ago
  All of the criticisms seem relevant to me. There is definitely a political bias, legally speaking, on this topic, so that makes sense. Maybe they could have tried to make it clear this isn't exclusively the result of conservative policies, if that's the case, but their criticisms are hardly misleading or irrelevant.
RcouF1uZ4gsC 5y ago
> What about rising from rags to riches? In the US, 8% of children raised in the bottom 20% of the income distribution are able to climb to the top 20% as adults, while the figure in Denmark is nearly double at 15%. Whenever these comparisons are done, they always use percentiles instead of raw numbers. So let's look at raw numbers in USD. In Denmark using Statbank https://www.statbank.dk/statbank5a/selectvarval/define.asp?PLanguage=1&subword=tabsel&MainTable=IFOR21&PXSId=191064&tablestyle=&ST=SD&buttons=0 https://www.statbank.dk/statbank5a/selectvarval/define.asp?P... You can calculate the 20th and 80th percentiles: In Denmark(2019): The 80th percentile is: 27,893.10 USD The 20th percentile is: 59,261.18 USD You can calculate the USA numbers from https://dqydj.com/average-median-top-individual-income-percentiles/ https://dqydj.com/average-median-top-individual-income-perce... In the USA(2019): The 80th percentile is: 18,324.02 USD The 20th percentile is: 81,368.00 USD The US has quite a bit more gap between the 80th percentile and 20th percentile. I am not sure the issue is mobility as much as the baseline income equality. I think it should be expected to be easier to go from $28K to $59K than from $18K to $81K. I have not seen any analysis on how easy it would be to go from $28K in the US to $59K or from $18K in Denmark to $81K.
vidanay 5y ago
There's only one class of person that pays inheritance taxes: Dumb rich ones. If you aren't rich, don't worry about it. If you are rich, hire someone to structure your estate to avoid the taxes.
gremlinsinc 5y ago
Here's my solution: Make inheritances cap out at 500k, that's the max you can give anyone. Period. So at least in that way, if you're a billionaire you'd need at least 2000 people on your will to give out just 1 billion dollars. If you don't have enough people on your will, it'll go into a lottery system where anyone who's net worth is under 200k gets a chance to win 100k until it's all gone.

37 points by maxwell 5y ago

Contrary to what a lot of people believe, it is actually pretty difficult to go from rags to riches in the USA, compared to other countries. One of the reasons is the low inheritance tax. [0]https://www.theguardian.com/commentisfree/2021/mar/13/american-dream-broken-upward-mobility-us https://www.theguardian.com/commentisfree/2021/mar/13/americ...

Grim-444 5y ago
How does making it cheap and easy to pass money to your children make them less likely to succeed?
- happytoexplain 5y ago
  I'm a layman, so correct me if I'm misunderstanding, but I thought inheritance tax only occurs north of ten million dollars, so nobody in a "rags" position is being helped by a lower inheritance tax. If you believe financial success is largely a zero-sum game, then a low inheritance tax hurts the poor. Alternatively, even if you don't believe that, a low inheritance tax still doesn't help the poor.
  - ac29 5y ago
    A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one. I'm not sure what your point is.
    - happytoexplain 5y ago
      In general, of course. I was disagreeing that it helps the poor, specifically. Is what I said untrue?
    - dragonwriter 5y ago
      > A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one. It absolutely can for the people who wouldn't, in either scenario, pay inheritance tax in the first place, since for them a low inheritance tax means only less wealth distributed out from those who already have enormous generational wealth from which they might build intergenerational wealth, but not any advantage in passing the wealth they do acquire.
- dragonwriter 5y ago
  Making it easier for the super-rich to pass money to their children makes everyone else’s children less likely to succeed, because people’s ability to succeed dependent primarily on absolute resources (once you get beyond the most abject poverty).

thedudeabides5 5y ago

This seems like a far bigger deal in terms of 'justice' outcomes than getting worked up over the capital gains from people who earned their stakes.

amelius 5y ago
There is nothing wrong with earning money. The problem is that this money usually works against all the other people who made different life choices. For example, excess money can be invested in real-estate, and this can cause housing prices to surge, which can hurt the normal guy.
- simonh 5y ago
  In the UK home ownership rates are at about 2/3 of the population, so here the normal guy owns their own home.
thrill 5y ago
Because taxing things multiple times is only "justice".
happytoexplain 5y ago
What if you don't believe 100% of capital gains over a certain acceleration threshold are "earned" by the colloquial definition?

0x0nyandesu 5y ago

I love how this article blatantly lies in the title when there's clearly an inheritance tax which actually has not been adjusted with inflation so it keeps hitting more and more people who aren't billionaires and the fact that it's a literally a double dip tax which is on money that has already been taxed. And the fact that it literally doesn't even matter. Inheritance tax is such a small part of the federal income. Just increase taxes on capital gains above 10 million a year and call it a day.

panarky 5y ago
> there's clearly an inheritance tax The point is if you're rich enough to pay the inheritance tax, you're rich enough to hire professionals to structure your estate so that you never actually pay any inheritance tax. > small part of the federal income It would be a bigger part of federal revenue if rich people actually paid it.
- 0x0nyandesu 5y ago
  Taxing everything doesn't work. Rich people will just leave the country while alive and still pass on their wealth to their children. It's as easy as buying a painting and hanging it in your kid's house.

Grim-444 5y ago

So another class warfare propaganda article. Let's see .. - Takes as many digs at Trump as possible .. check - Uses outrageous language like "America’s ultrawealthy already get away with murder" .. check - Article title which lies and states that they "don't pay inheritance taxes" yet even the article itself then explains how much they DO pay .. check - Constantly takes digs at Republicans, because of course there's no rich Democrats that take advantage of anything, just evil Republicans .. check - Buries deeper in the article the fact that non-billionaires can also leave literally all their money to their kids, tax free, it's not some secret loophole that only billionaires have access to, in fact billionaires are the only ones that DO pay inheritance taxes .. check - Uses the article as clickbait to promote their book .. check

bigphishy 5y ago
This isn't a left vs right issue, it's a top vs bottom issue.
happytoexplain 5y ago
All of the criticisms seem relevant to me. There is definitely a political bias, legally speaking, on this topic, so that makes sense. Maybe they could have tried to make it clear this isn't exclusively the result of conservative policies, if that's the case, but their criticisms are hardly misleading or irrelevant.

RcouF1uZ4gsC 5y ago

> What about rising from rags to riches? In the US, 8% of children raised in the bottom 20% of the income distribution are able to climb to the top 20% as adults, while the figure in Denmark is nearly double at 15%. Whenever these comparisons are done, they always use percentiles instead of raw numbers. So let's look at raw numbers in USD. In Denmark using Statbank https://www.statbank.dk/statbank5a/selectvarval/define.asp?PLanguage=1&subword=tabsel&MainTable=IFOR21&PXSId=191064&tablestyle=&ST=SD&buttons=0 https://www.statbank.dk/statbank5a/selectvarval/define.asp?P... You can calculate the 20th and 80th percentiles: In Denmark(2019): The 80th percentile is: 27,893.10 USD The 20th percentile is: 59,261.18 USD You can calculate the USA numbers from https://dqydj.com/average-median-top-individual-income-percentiles/ https://dqydj.com/average-median-top-individual-income-perce... In the USA(2019): The 80th percentile is: 18,324.02 USD The 20th percentile is: 81,368.00 USD The US has quite a bit more gap between the 80th percentile and 20th percentile. I am not sure the issue is mobility as much as the baseline income equality. I think it should be expected to be easier to go from $28K to $59K than from $18K to $81K. I have not seen any analysis on how easy it would be to go from $28K in the US to $59K or from $18K in Denmark to $81K.

vidanay 5y ago

There's only one class of person that pays inheritance taxes: Dumb rich ones. If you aren't rich, don't worry about it. If you are rich, hire someone to structure your estate to avoid the taxes.

gremlinsinc 5y ago

Here's my solution: Make inheritances cap out at 500k, that's the max you can give anyone. Period. So at least in that way, if you're a billionaire you'd need at least 2000 people on your will to give out just 1 billion dollars. If you don't have enough people on your will, it'll go into a lottery system where anyone who's net worth is under 200k gets a chance to win 100k until it's all gone.