3 ms·

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

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.

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.