5 ms·

I always find it fascinating how quickly a family fortune disappears That's a good thing and the reason why e.g. the Inheritance Tax exists. Inherited wealth

by moe 12y ago

I always find it fascinating how quickly a family fortune disappears That's a good thing and the reason why e.g. the Inheritance Tax exists. Inherited wealth sabotages the fundamental reward mechanisms of society and ultimately harms it by bringing the wrong people into positions of power.

levosmetalo 12y ago
While I agree here with you, it's not only the inheritance that saboatages this reward mechanism. It's also the capital gains. If we were to value hard work and real contribution, then income / salary tax should be much lover that capital gains tax. We should just value human effort more.
- armenarmen 12y ago
  the counter argument here is whether or not government wants spending rather than saving/investing to be encouraged. Higher taxes on capital gains i.e. investing discourages that, at least in principle (unavoidable pun)
  - pjc50 12y ago
    Capital gains taxation steers investing from mere asset appreciation into actual productive investment - land improvement, machinery, building, etc. - which is usually granted various sorts of tax break.
    - jessaustin 12y ago
      Rather, capital gains tax steers investments away from the taxing jurisdiction and toward other jurisdictions. If the state wishes to maximize revenue, it must be patient, and wait for the wealthy to die before demanding its cut. Of course there are political reasons to do otherwise...
comrade1 12y ago
I don't disagree that it's a good thing for society for generational wealth to be dispersed. But I think for your family and descendents it's probably for the better to keep the fortune whole. Someone brought up the Rockefellers - that is an example of keeping the fortune whole. It's controlled by only the male members of the family and it is locked up in a single family trust.
kristjansson 12y ago
Tocqueville identifies the division of estates and fortunes as essential to equality and democracy: But the law of inheritance was the last step to equality. I am surprised that ancient and modern jurists have not attributed to this law a greater influence on human affairs. ... When the legislator has once regulated the law of inheritance, he may rest from his labor. The machine once put in motion will go on for ages, and advance, as if self-guided, towards a point indicated beforehand. [0] The whole passage is worth the read, and well supports your point that the effect of inheritance taxes is both societal (smaller estates) and individual (different incentives for wealthy progeny) [0] https://play.google.com/books/reader?id=xZfiBEzcPTEC&printsec=frontcover&output=reader&hl=en&pg=GBS.PA61 https://play.google.com/books/reader?id=xZfiBEzcPTEC&printse...
Frozenlock 12y ago
I inherit wealth from my past self. If I earned $100 yesterday, I have $100 available to spend today. Is it destroying the 'fundamental reward mechanisms of society'? What is the difference if you substitute myself with say one of my children? The wealth was still earned, I should still be able to decide what to do with it. I would recommend this short video: https://www.youtube.com/watch?v=bJwUaVDIPXg https://www.youtube.com/watch?v=bJwUaVDIPXg If anything, the tax is what is destroying the fundamental reward mechanisms of society.

by moe 12y ago

levosmetalo 12y ago

While I agree here with you, it's not only the inheritance that saboatages this reward mechanism. It's also the capital gains. If we were to value hard work and real contribution, then income / salary tax should be much lover that capital gains tax. We should just value human effort more.

armenarmen 12y ago
the counter argument here is whether or not government wants spending rather than saving/investing to be encouraged. Higher taxes on capital gains i.e. investing discourages that, at least in principle (unavoidable pun)
- pjc50 12y ago
  Capital gains taxation steers investing from mere asset appreciation into actual productive investment - land improvement, machinery, building, etc. - which is usually granted various sorts of tax break.
  - jessaustin 12y ago
    Rather, capital gains tax steers investments away from the taxing jurisdiction and toward other jurisdictions. If the state wishes to maximize revenue, it must be patient, and wait for the wealthy to die before demanding its cut. Of course there are political reasons to do otherwise...

comrade1 12y ago

I don't disagree that it's a good thing for society for generational wealth to be dispersed. But I think for your family and descendents it's probably for the better to keep the fortune whole. Someone brought up the Rockefellers - that is an example of keeping the fortune whole. It's controlled by only the male members of the family and it is locked up in a single family trust.

kristjansson 12y ago

Tocqueville identifies the division of estates and fortunes as essential to equality and democracy: But the law of inheritance was the last step to equality. I am surprised that ancient and modern jurists have not attributed to this law a greater influence on human affairs. ... When the legislator has once regulated the law of inheritance, he may rest from his labor. The machine once put in motion will go on for ages, and advance, as if self-guided, towards a point indicated beforehand. [0] The whole passage is worth the read, and well supports your point that the effect of inheritance taxes is both societal (smaller estates) and individual (different incentives for wealthy progeny) [0] https://play.google.com/books/reader?id=xZfiBEzcPTEC&printsec=frontcover&output=reader&hl=en&pg=GBS.PA61 https://play.google.com/books/reader?id=xZfiBEzcPTEC&printse...

Frozenlock 12y ago

I inherit wealth from my past self. If I earned $100 yesterday, I have $100 available to spend today. Is it destroying the 'fundamental reward mechanisms of society'? What is the difference if you substitute myself with say one of my children? The wealth was still earned, I should still be able to decide what to do with it. I would recommend this short video: https://www.youtube.com/watch?v=bJwUaVDIPXg https://www.youtube.com/watch?v=bJwUaVDIPXg If anything, the tax is what is destroying the fundamental reward mechanisms of society.