6 ms·

Curious to not see inheritance/estate taxes listed among the possible solutions here, but I guess that a "wealth tax" could indirectly address this by whittling

by ericra 3y ago

Curious to not see inheritance/estate taxes listed among the possible solutions here, but I guess that a "wealth tax" could indirectly address this by whittling away at large fortunes over time while people are still alive. This may help avoid the issue of people using trusts to sidestep estate taxes (although I'm sure they would find a way!). More generally, I highly recommend any of Thomas Piketty's books for detailed discussion about the history, causes, and consequences of inequality. They are exceptionally well-researched. And while you may not agree with all proposed solutions, they are well-written (and well-translated into English) and provide a great historical overview.

pmichaud 3y ago
I'm not an expert here but my understanding is that most generational wealth is gone by the third generation anyway. Even if you outlawed inheritance entirely it seems like it wouldn't make a huge marginal difference?
- jauntywundrkind 3y ago
  I don't think there's been 3 generations to test this across, since the post-war boom. Sure there's data from before, but society hasn't been "at scale" for very long. It sure seems like the recently emerged mega-economies have a few star powers, ever consolidating their hold. Squeezing out other wealthy families isn't helping the total distribution, if that is the case. Companies keep getting bigger and bigger & the ultra rich get ultra-richer. Families could keep falling like flies, but wealth could still be ever more owned by ultra-wealthy.
- vlovich123 3y ago
  Historically true but definitely not once rich people figured it out. They created all sorts of financial and societal instruments to solidify this (various trusts and non profits as examples). There are many many families that are much older than 3 generations at this point.
- gumby 3y ago
  Today's rich families in Florence, Italy, were rich 700 years ago: https://www.vox.com/2016/5/18/11691818/barone-mocetti-florence https://www.vox.com/2016/5/18/11691818/barone-mocetti-floren... Inheritance in a republic is disgraceful.
- alexawarrior23 3y ago
  Three generations of wealth is a common belief, but the research doesn't bare it out. Try 28 generations. https://qz.com/301150/this-is-the-proof-that-the-1-have-been-running-the-show-for-800-years https://qz.com/301150/this-is-the-proof-that-the-1-have-been...
- jackcosgrove 3y ago
  That is a truism that applies mainly to the US, if it applies anywhere. The US differs from a lot of places in, say, Europe in that partible inheritance is almost universally practiced. That is, inheritances are divided equally between children. This accelerates the drawdown of the fortune. In Europe I have heard it is more common, although perhaps not a norm, to practice a meritocratic form of primogeniture. One child, who is not necessarily the eldest son but who is seen as the best steward, is chosen to receive most of the fortune, and is trained how to maintain it. Other children may receive much smaller amounts. The fortune is much more likely to persist if not divided, preventing the liquidation of large holdings and more importantly managing expectations among the gaggle of heirs about how much they'll get.
- xboxnolifes 3y ago
  Maybe the median family does, but where do you think the money they lose ends up? In the hands of the families who don't squander their wealth, further concentrating it into generational wealth.
rossdavidh 3y ago
Also, "Capital in the 21st Century", in nice hardback editions barely used, are available in many used bookstores. :) All joking aside, it is a good read.
throwaway13337 3y ago
I agree. Inheritance is extremely unmeritocratic yet is somehow completely acceptable even among hardcore libertarians. Why? Most 'tax the rich' talk revolves around income. But real rich people don't make an income. They make capital gains or take loans against assets. It's a complete red herring. Gifts and inheritance should be the target of any fair-minded individual. As with any power passed down by familial connection, it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea. People who earn their wealth in life have, as good as any, a justification to know something of how to allocate it. That is, in the ideal society where wealth is a reward for growing the economic pie. We're not there yet. But this is the closet thing we've got. People who inherit their wealth have no such justification. Let wealth die with the person.
- xyzzy123 3y ago
  > yet is somehow completely acceptable even among hardcore libertarians. Why? A common area of concern for libertarians is the balance of power between citizens and government. In this case, the power of the government to take your (or your family's) stuff after you die, despite you already having paid taxes on it. Through a libertarian lens the government "stepping in to make everything fair" can be viewed as unwarranted interference. Especially when a politician's idea of "fairness" might not square up with yours and be subject to political winds. (I have some libertarian leanings but wouldn't call myself one, overall I believe wealth and inheritance taxes make sense, the big question is "what rate").
  - throwaway13337 3y ago
    A fair point. However, unless they are the kind of libertarian that believes in no tax, the government is still going to tax something. And in doing so will decide who is taxed and who isn't. Taxing fundamentally must answer the question of what is fair to tax. I believe the reason that income is taxed is mainly because it's much easier than wealth for governments to determine and is generally more liquid. I guess my issue with inheritance is less economic and more moral. It just doesn't seem to fit with modern values yet is untouched as a debate topic. I'm curious as to why that could be.
campl3r 3y ago
I disagree. I'm in favor of a wealth tax, but a strong proponent of any inheritance tax (and income). A wealth tax is more fair. Avoiding it is way harder than for inheritance taxes and it's a constant spend for any estate (avoiding issues around a one time big taxable event, easing planning). If we as society want(need!) to redistribute wealth we should not wait for people to die!
- loco5niner 3y ago
  'Proponent' means you are in favor of a thing. I assume that's not what you intended?

by ericra 3y ago

pmichaud 3y ago

I'm not an expert here but my understanding is that most generational wealth is gone by the third generation anyway. Even if you outlawed inheritance entirely it seems like it wouldn't make a huge marginal difference?

jauntywundrkind 3y ago
I don't think there's been 3 generations to test this across, since the post-war boom. Sure there's data from before, but society hasn't been "at scale" for very long. It sure seems like the recently emerged mega-economies have a few star powers, ever consolidating their hold. Squeezing out other wealthy families isn't helping the total distribution, if that is the case. Companies keep getting bigger and bigger & the ultra rich get ultra-richer. Families could keep falling like flies, but wealth could still be ever more owned by ultra-wealthy.
vlovich123 3y ago
Historically true but definitely not once rich people figured it out. They created all sorts of financial and societal instruments to solidify this (various trusts and non profits as examples). There are many many families that are much older than 3 generations at this point.
gumby 3y ago
Today's rich families in Florence, Italy, were rich 700 years ago: https://www.vox.com/2016/5/18/11691818/barone-mocetti-florence https://www.vox.com/2016/5/18/11691818/barone-mocetti-floren... Inheritance in a republic is disgraceful.
alexawarrior23 3y ago
Three generations of wealth is a common belief, but the research doesn't bare it out. Try 28 generations. https://qz.com/301150/this-is-the-proof-that-the-1-have-been-running-the-show-for-800-years https://qz.com/301150/this-is-the-proof-that-the-1-have-been...
jackcosgrove 3y ago
That is a truism that applies mainly to the US, if it applies anywhere. The US differs from a lot of places in, say, Europe in that partible inheritance is almost universally practiced. That is, inheritances are divided equally between children. This accelerates the drawdown of the fortune. In Europe I have heard it is more common, although perhaps not a norm, to practice a meritocratic form of primogeniture. One child, who is not necessarily the eldest son but who is seen as the best steward, is chosen to receive most of the fortune, and is trained how to maintain it. Other children may receive much smaller amounts. The fortune is much more likely to persist if not divided, preventing the liquidation of large holdings and more importantly managing expectations among the gaggle of heirs about how much they'll get.
xboxnolifes 3y ago
Maybe the median family does, but where do you think the money they lose ends up? In the hands of the families who don't squander their wealth, further concentrating it into generational wealth.

rossdavidh 3y ago

Also, "Capital in the 21st Century", in nice hardback editions barely used, are available in many used bookstores. :) All joking aside, it is a good read.

throwaway13337 3y ago

I agree. Inheritance is extremely unmeritocratic yet is somehow completely acceptable even among hardcore libertarians. Why? Most 'tax the rich' talk revolves around income. But real rich people don't make an income. They make capital gains or take loans against assets. It's a complete red herring. Gifts and inheritance should be the target of any fair-minded individual. As with any power passed down by familial connection, it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea. People who earn their wealth in life have, as good as any, a justification to know something of how to allocate it. That is, in the ideal society where wealth is a reward for growing the economic pie. We're not there yet. But this is the closet thing we've got. People who inherit their wealth have no such justification. Let wealth die with the person.

xyzzy123 3y ago
> yet is somehow completely acceptable even among hardcore libertarians. Why? A common area of concern for libertarians is the balance of power between citizens and government. In this case, the power of the government to take your (or your family's) stuff after you die, despite you already having paid taxes on it. Through a libertarian lens the government "stepping in to make everything fair" can be viewed as unwarranted interference. Especially when a politician's idea of "fairness" might not square up with yours and be subject to political winds. (I have some libertarian leanings but wouldn't call myself one, overall I believe wealth and inheritance taxes make sense, the big question is "what rate").
- throwaway13337 3y ago
  A fair point. However, unless they are the kind of libertarian that believes in no tax, the government is still going to tax something. And in doing so will decide who is taxed and who isn't. Taxing fundamentally must answer the question of what is fair to tax. I believe the reason that income is taxed is mainly because it's much easier than wealth for governments to determine and is generally more liquid. I guess my issue with inheritance is less economic and more moral. It just doesn't seem to fit with modern values yet is untouched as a debate topic. I'm curious as to why that could be.

campl3r 3y ago

I disagree. I'm in favor of a wealth tax, but a strong proponent of any inheritance tax (and income). A wealth tax is more fair. Avoiding it is way harder than for inheritance taxes and it's a constant spend for any estate (avoiding issues around a one time big taxable event, easing planning). If we as society want(need!) to redistribute wealth we should not wait for people to die!

loco5niner 3y ago
'Proponent' means you are in favor of a thing. I assume that's not what you intended?