4 ms·

The estate tax should be near 100%. We do not need dynasties. I don't mind people making the wealth, but they can't take it with them. It shouldn't just trans

by snarfy 12y ago

The estate tax should be near 100%. We do not need dynasties. I don't mind people making the wealth, but they can't take it with them. It shouldn't just transfer to their children.

Thriptic 12y ago
What is the incentive to continue working once you hit a threshold to comfortably retire with a good quality of life then? Might a 100% inheritance tax remove significant capital from the markets which would affect growth? In this scenario, what is stopping people from transferring all of their money to their children before they die at a much lower tax rate? How would assets like real estate be handled?
- whybroke 12y ago
  You assume that such wealth was earned in the first place which is rarely the case and is less so every year. The meritocracy is broken and will be so exactly to the degree that there is inheritance, the two are directly connected. Inheritance is the exact definition of anti-meritocracy.
  - Thriptic 12y ago
    > You assume that such wealth was earned in the first place which is rarely the case and is less so every year. Fair point. It's true that my statements only applied to individuals who earned the money themselves, and I failed to consider people who had themselves inherited money.
totalrobe 12y ago
You haven't quite thought this out. Young parents die too, and children need to be provided for.
- RodericDay 12y ago
  If you believe in equality of opportunity, parents should not be the main source of provision for children. Every time someone mentions "who will provide for your children if you don't leave an inheritance behind?" I immediately have to ask, "what about all the children whose parents are not able to leave them an inheritance (ie: most of them)?" It seems that it is you who have not really thought it out. Here's Adam Smith on the topic btw: > "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death." http://budiansky.blogspot.ca/2010/10/adam-smith-thomas-jefferson-and-other.html http://budiansky.blogspot.ca/2010/10/adam-smith-thomas-jeffe...
  - totalrobe 12y ago
    Equality of Opportunity as defined legally has nothing to do with taking care of the children. 1) n. a right supposedly guaranteed by both federal and many state laws against any discrimination in employment, education, housing or credit rights due to a person's race, color, sex (or sometimes sexual orientation), religion, national origin, age or handicap. Most human cultures are built on the nuclear family.. especially when it comes to raising children. I'm not sure what system you propose to replace that.. Adam Smith lived in the clouds. We live in a civilization where we have to consider actual use cases, transitions, exceptions, etc.
    - RodericDay 12y ago
      >> Most human cultures are built on the nuclear family >> Adam Smith lived in the clouds >> Family structures of one married couple and their children were present in Western Europe and New England in the 17th century, influenced by church and theocratic governments.[5] With the emergence of proto-industrialization and early capitalism, the nuclear family became a financially viable social unit.[6] The term nuclear family first appeared in the early twentieth century. [...] The concept that a narrowly defined nuclear family is central to stability in modern society has been promoted by familialists who are social conservatives in the United States, and has been challenged as historically and sociologically inadequate to describe the complexity of actual family relations.[8] https://en.wikipedia.org/wiki/Nuclear_family https://en.wikipedia.org/wiki/Nuclear_family Is this some kind of joke?
- pdkl95 12y ago
  I seriously doubt that there are a lot of young parents that are leaving more than $5,430,000[1]. Below that amount, it usually isn't necessary[2] to even file an estate tax return. The idea that the estate tax ever applies to most people has been very successful propaganda for a long time. The estate tax should absolutely be very high, because the people leaving large amounts of wealth are generally the only people the tax would affect. [1] for parents dying in 2015; future years will probably have a higher limit ( http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... ) [2] for actual legal advice, see a proper tax lawyer
- rhino369 12y ago
  It is trivial to create exceptions to fix this. An up to 1-2 million dollar trust that reverts to the state after the minor turns 22 for example.
LordKano 12y ago
You're being short sighted. Consider the time, money and effort that people put into avoiding taxes under the current system. You would exponentially increase their incentive to do so. Let's think about what would happen if this were to become reality... When wealthy people were approaching death, they'd simply give their money to their heirs and only incur a gift tax. Do you propose that we ban monetary gifts between family members or friends? In that case, they would just hire their next of kin as advisers and pay them increasing portions of their remaining wealth. Then, they would only pay payroll taxes. So next do we ban hiring family members? In that case, they could set up a corporation, sell stock to their heirs, dump their fortunes into making the company valuable and the stock owned by the heirs would skyrocket. They could cash out and only pay capital gains taxes. Do you see where I'm going with this? People will find ways to avoid burdensome taxes.
- ryandrake 12y ago
  Your points are good. I think most people can agree that dynastic wealth is a social ill, but good luck trying to devise a loophole-free way to stop it. But the IRS is not fooled by things that look like a duck, swim like a duck, and quack like a duck. For example, they catch employers who try to pass off employees as contractors. I think if there was political and cultural will, our society is capable of stopping perpetual dynastic wealth transfer.
  - LordKano 12y ago
    It's a losing proposition to even try to stop people from passing their wealth to their offspring. People will tolerate some taxation but once it becomes too burdensome, they will find ways to avoid it. That's the biggest problem with using tax policy for social engineering. We would see an unprecedented expatriation of wealth. If someone has a billion dollars worth of assets that they know will be confiscated by the US Government upon their death, they wouldn't keep it in the US. They'd structure their finances in such a way as to make it impossible or impractical for the US to get anything. One could become partners with (for example) a Costa Rican shipping magnate in a company located in Costa Rica so that upon their death, the US government won't get any liquid recompense. Sure, they can take that 49% ownership in the hypothetical Costa Rican company but then they have to find a buyer. Who's going to pay dollar for dollar to the US government for an asset that is only useful as a wealth sink? Do we ban foreign investment? What happens when the rest of the world retaliates and bans their people from investing here? Do we require government oversight for all investment decisions? That will certainly cure the problem of there being too many rich people. It'll make everyone poor. The only way to prevent the generational acquisition of wealth is under a totalitarian regime and that is a far worse problem than modern day robber-barons.

by snarfy 12y ago

The estate tax should be near 100%. We do not need dynasties. I don't mind people making the wealth, but they can't take it with them. It shouldn't just transfer to their children.

Thriptic 12y ago

What is the incentive to continue working once you hit a threshold to comfortably retire with a good quality of life then? Might a 100% inheritance tax remove significant capital from the markets which would affect growth? In this scenario, what is stopping people from transferring all of their money to their children before they die at a much lower tax rate? How would assets like real estate be handled?

whybroke 12y ago
You assume that such wealth was earned in the first place which is rarely the case and is less so every year. The meritocracy is broken and will be so exactly to the degree that there is inheritance, the two are directly connected. Inheritance is the exact definition of anti-meritocracy.
- Thriptic 12y ago
  > You assume that such wealth was earned in the first place which is rarely the case and is less so every year. Fair point. It's true that my statements only applied to individuals who earned the money themselves, and I failed to consider people who had themselves inherited money.

totalrobe 12y ago

You haven't quite thought this out. Young parents die too, and children need to be provided for.

RodericDay 12y ago
If you believe in equality of opportunity, parents should not be the main source of provision for children. Every time someone mentions "who will provide for your children if you don't leave an inheritance behind?" I immediately have to ask, "what about all the children whose parents are not able to leave them an inheritance (ie: most of them)?" It seems that it is you who have not really thought it out. Here's Adam Smith on the topic btw: > "A power to dispose of estates for ever is manifestly absurd. The earth and the fulness of it belongs to every generation, and the preceding one can have no right to bind it up from posterity. Such extension of property is quite unnatural." Smith said: "There is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death." http://budiansky.blogspot.ca/2010/10/adam-smith-thomas-jefferson-and-other.html http://budiansky.blogspot.ca/2010/10/adam-smith-thomas-jeffe...
- totalrobe 12y ago
  Equality of Opportunity as defined legally has nothing to do with taking care of the children. 1) n. a right supposedly guaranteed by both federal and many state laws against any discrimination in employment, education, housing or credit rights due to a person's race, color, sex (or sometimes sexual orientation), religion, national origin, age or handicap. Most human cultures are built on the nuclear family.. especially when it comes to raising children. I'm not sure what system you propose to replace that.. Adam Smith lived in the clouds. We live in a civilization where we have to consider actual use cases, transitions, exceptions, etc.
  - RodericDay 12y ago
    >> Most human cultures are built on the nuclear family >> Adam Smith lived in the clouds >> Family structures of one married couple and their children were present in Western Europe and New England in the 17th century, influenced by church and theocratic governments.[5] With the emergence of proto-industrialization and early capitalism, the nuclear family became a financially viable social unit.[6] The term nuclear family first appeared in the early twentieth century. [...] The concept that a narrowly defined nuclear family is central to stability in modern society has been promoted by familialists who are social conservatives in the United States, and has been challenged as historically and sociologically inadequate to describe the complexity of actual family relations.[8] https://en.wikipedia.org/wiki/Nuclear_family https://en.wikipedia.org/wiki/Nuclear_family Is this some kind of joke?
pdkl95 12y ago
I seriously doubt that there are a lot of young parents that are leaving more than $5,430,000[1]. Below that amount, it usually isn't necessary[2] to even file an estate tax return. The idea that the estate tax ever applies to most people has been very successful propaganda for a long time. The estate tax should absolutely be very high, because the people leaving large amounts of wealth are generally the only people the tax would affect. [1] for parents dying in 2015; future years will probably have a higher limit ( http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-Tax http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ... ) [2] for actual legal advice, see a proper tax lawyer
rhino369 12y ago
It is trivial to create exceptions to fix this. An up to 1-2 million dollar trust that reverts to the state after the minor turns 22 for example.

LordKano 12y ago

You're being short sighted. Consider the time, money and effort that people put into avoiding taxes under the current system. You would exponentially increase their incentive to do so. Let's think about what would happen if this were to become reality... When wealthy people were approaching death, they'd simply give their money to their heirs and only incur a gift tax. Do you propose that we ban monetary gifts between family members or friends? In that case, they would just hire their next of kin as advisers and pay them increasing portions of their remaining wealth. Then, they would only pay payroll taxes. So next do we ban hiring family members? In that case, they could set up a corporation, sell stock to their heirs, dump their fortunes into making the company valuable and the stock owned by the heirs would skyrocket. They could cash out and only pay capital gains taxes. Do you see where I'm going with this? People will find ways to avoid burdensome taxes.

ryandrake 12y ago
Your points are good. I think most people can agree that dynastic wealth is a social ill, but good luck trying to devise a loophole-free way to stop it. But the IRS is not fooled by things that look like a duck, swim like a duck, and quack like a duck. For example, they catch employers who try to pass off employees as contractors. I think if there was political and cultural will, our society is capable of stopping perpetual dynastic wealth transfer.
- LordKano 12y ago
  It's a losing proposition to even try to stop people from passing their wealth to their offspring. People will tolerate some taxation but once it becomes too burdensome, they will find ways to avoid it. That's the biggest problem with using tax policy for social engineering. We would see an unprecedented expatriation of wealth. If someone has a billion dollars worth of assets that they know will be confiscated by the US Government upon their death, they wouldn't keep it in the US. They'd structure their finances in such a way as to make it impossible or impractical for the US to get anything. One could become partners with (for example) a Costa Rican shipping magnate in a company located in Costa Rica so that upon their death, the US government won't get any liquid recompense. Sure, they can take that 49% ownership in the hypothetical Costa Rican company but then they have to find a buyer. Who's going to pay dollar for dollar to the US government for an asset that is only useful as a wealth sink? Do we ban foreign investment? What happens when the rest of the world retaliates and bans their people from investing here? Do we require government oversight for all investment decisions? That will certainly cure the problem of there being too many rich people. It'll make everyone poor. The only way to prevent the generational acquisition of wealth is under a totalitarian regime and that is a far worse problem than modern day robber-barons.