We need to acknowledge that 'trickle down' is a myth, and that the'rich gets richer' phenomenon is much stronger. And that is a massive democratic problem, which will destabilise our societies.
For our democracies to survive we must put many different taxes in place to counter the rich get richer, and the perverce gathering of power it causes. There won't be a single policy to fix it, and actually finding a good compromise which helps growth instead of hindering it is hard (especially giving the constant lobbying from the rich).
Personally I am quite for a high inheritance tax, but it's definitely not enough. I have no problem with JK Rowling being rich. But I don't think it makes sence that she has a wealth 1000000 times what a teacher makes in their lifetime. And it certainly don't make sence that her child (if she has any) should receive a wealth that size.
> But I don't think it makes sence that she has a wealth 1000000 times what a teacher makes in their lifetime.
Why? What number do you think “makes sense”? Once you pick that number, do you think it’s correct when you compare it to a teacher’s income in the DRC?
If it wasn't totally impossible to implement, you could replace all taxes with low single digit percent per year service fee on your total assets for protecting them from criminals and foreign dictators. (Piketty invented that. It was tried, and didn't work out well for pragmatic reasons like jurisdiction shopping.)
The service fee would be set so that the return on capital was equal to the overall growth rate of the economy. Naturally, it's higher, which makes it mathematically inevitable for a few family offices to end up owning everything. (Also from Piketty.) If the risk-free rate was 3% this year and the GDP grew by 2%, your service fee would be 1%.
Alternatively/in addition, significant inheritance taxes for the ultra-rich.
A lot of wealth is multi-generational and nepotistic (i.e. do we really think Jim Walton would have got the job if he wasn't the son of the founder, and even if he did, would he have earned as much as he has?).
Inheritance taxes don't work in a world where one can jurisdiction shop/utilize multiple different trust and other setups. What inheritance tax does accomplish is keeping the newly rich from becoming multi generational while protecting the old wealth, which is the worst possible outcome. On top of that, to enforce them requires a level of privacy and personal liberty abuse that is counterproductive.
A better solution is much more effective antitrust enforcement through both breaking up monopolies/oligpolies and outlawing contract abuses by oligoplies as we see them (i.e. the myriad of things amazon puts in their seller contracts to ensure the prices elsewhere are always near amazon's price).
You asked the wrong question about Jim Walton. You should ask would Jim be able to pull off the same level of wealth accumulation if walmart had been broken up so that it could not have abused its market power for the last 30-40 years? Probably not, because he's probably not great at creating businesses people want to spend money at. You could say the same thing about guys like Bill gates (he would be worth at least 10X what he is currently worth if he had just kept his microsoft stock instead of diversifying bit by bit each year). When you look at it, it's almost always the market power abuse that is the problem, not the wealth per se (notable exception is Elon Musk, who has knocked it out of the park on multiple companies in starkly different fields, kind of impressive).
This is a false dichotomy - It's not one or the other, it's both and more.
It's the right question about Jim Walton, and there is a question about breaking up Walmart on top of that. Walmart can still be broken up in a world where inheritance tax exists!
> On top of that, to enforce them requires a level of privacy and personal liberty abuse that is counterproductive.
Disagree with this - forcing billionaires (or anybody for that matter) to provide details of their estate for tax purposes is pretty well-trodden territory.
It's not a false dichotomy, it's actually what happens because the newly rich are often earning their new riches in a way that is not easily hidden away in any of the myriad of legal structures that can hide income permanently from the high tax countries. The new guys will get their wealth eaten by your proposed policies but the old wealth will not, calcifying the system.
It is the wrong question about Jim Walton because it only matters if walmart is still the obvious oligopoly abuser it is. There is a huge difference between someone who managed to get big enough to abuse market power in one space and collected monopoly rents to amass a large fortune (The waltons, bill gates, etc.) and the guys who appear to be excellent managers and have grown massively society improving businesses in disparate industries (currently only Elon comes to mind, I am sure there are other but they are rare enough and/or have stuck to a single business that they grew large enough to extract excess profits that I can't think of any other semi proven names). The good managers you want to be as rich as possible because they are deploying that cash well, the other guys not so much. This translates into much more concern about the children of the super rich (which is correct) but to which you are trying to solve with an inheritance tax, which will just make things worse and slow growth. It's far better to break up the monopolies/oligopolies/regulate away the most obvious abusive contracting and let time do it's thing to get the junk offspring back to normal wealth levels.
You don't get it. Reporting requirements are quite invasive now and they aren't working. The level they will have to get to to actually make an inheritance tax work is a place that is far too much power for the government to have and won't end well (because that level of power has never ended well in the hands of the government). You are trying to solve a questionable problem (billionaires) by feeding an obvious, terrible, and literally deadly problem with massive historical precedent (government power).
If Walmart is broken up and Jim Walton is forced to divest, he will invest his money elsewhere and still own the means of production (capital) just in other companies.
It doesn’t solve the underlying issue of wealth distribution.
Of course it will, just not on a very quick (and destructive) timeline. He loses a monopoly abusing company and its excess profits which fed inflated salary and stock compensation for him personally and is instead left with taking the equivalent of the S&P 500 return or trying his hand at actually being a good manager and growing a company from small to large again or investing in early stage private stuff and experiencing the huge risk of that. If he's actually a good manager/ entrepreneur he can still grow his wealth starting something new, if he's not then he, or his kids, or his grand kids will eventually put enough of the wealth into failed company ideas, up their nose, in their veins, down their throats, into bad real estate, etc. that they cease being billionaires and have to get real jobs. This is the classic way wealth was dissipated. It's non violent, slow, but effective. most importantly it doesn't ruin the calculus on whether someone should strive to be a great entrepreneur or just keep their head down because they can be sure the government will steal it if they succeed.
"Thomas Piketty and Emmanuel Saez, for instance, find that once corporate and estate taxes are added into the mix, the top 0.1 percent of earners paid 71.4 percent of their income to the IRS in 1960, compared with 34.7 percent in 2004"
