1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence)
2) tax 100% above it. (should only concern a fraction of a fraction of cases)
3) put all this tax's proceeds in a sovereign wealth fund
4) at 21, a citizen gets access to her redistributed generational wealth
5) profit
There are many solutions, many ways to limit the magnitude of differences of wealth.
But America is so thoroughly owned by the wealthy that implementing one of these solutions is not desirable. The legislature in America only works on behalf of the ultra wealthy and any legislation that passes will be to increase the magnitude of the wealth gap.
Also there's the aspect of how many Americans view themselves as temporarily inconvenienced millionaires. The average person doesn't want rules like this because they're sure it'll apply to them someday.
There's a reason why countries, like Sweden, have scrapped the inheritance tax - it doesn't work like that anymore.
The benefits of wealth are exercised long before the inheritance can be applied.
Your first home down payment, your education, your wealth generation while being on support by your parents, etc. - will push you off the ground faster, than any inheritance in a world where people easily live to 80-90. Most people hit retirement age, by the time their parents pass away.
> The benefits of wealth are exercised long before the inheritance can be applied.
Agreed.
But isn't that an argument FOR a strong inheritance tax? Because inheritance doesn't actually help your children anyway? That seems like it was your argument.
With that argument taking 100% of the inheritance as tax and taking 0% is exactly the same, as the wealth transfer was done before anyway.
The only thing that I personally care about is the ability of ordinary people to build and retain wealth.
Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not, it grows because the rest can't build and retain their wealth.
This isn't a zero sum game.
PS: I would also not trust the government or any political body to handle income from the inheritance taxes. So I would rather the children of wealthy people squander their wealth, than a politician transfer that wealth to their patron.
> The only thing that I personally care about is the ability of ordinary people to build and retain wealth.
Why? Just "having wealth" isn't important in itself, it's just a number in a computer. So there is something else you are trying to get at. What is it?
> Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not, it grows because the rest can't build and retain their wealth.
Disparity happens when two groups diverge. That's what disparity means. As long as the richest have a higher growth rate, the disparity grows.
> This isn't a zero sum game.
That's a different conversation though. You talked about wealth disparity, not about quality of living or something. THERE it's not a zero sum game. But in wealth disparity it is by definition a zero sum game.
> I would also not trust the government or any political body to handle income from the inheritance taxes.
But you would trust the wealthy? Ok.. but...
> So I would rather the children of wealthy people squander their wealth, than a politician transfer that wealth to their patron.
So you don't trust the wealthy either?
I don't understand what you are arguing at this point.
>Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not,
Yeah it does. The way compounding interest works means at some point that your passive accumulation of savings will outpace what most workers can earn as a salary. You can't really combat that by throwing more money at workers.
It's just mathematically impossible to let wealth run rampant in an individual like that and expect everyone to keep up with their limited hours of energy.
>This isn't a zero sum game.
It isn't. But with modern labor habits the billionaires want to make it one. That's why there isn't such thing as an 'earned billionaire'. They take from workers, lobby government to pay less, engage on anti-competitive behavior, or outright commit crimes to get to that point. The best case billionaire merely inherits the wealth and lets it accumulate, but I don't see many people like that these days who also don't fall into the other points.
>I would also not trust the government or any political body to handle income from the inheritance taxes.
Well someone has to. The us government has most things in record, so they are the easiest to audit.
This is more a sign that we need to pay more attention to politics and trustworthy figures who will self regulate. As in, pass laws that hold them and future policy makers in check.
While Sweden does fairly well on income inequality, it has _extremely_ high wealth inequality for a developed country; it's pretty much the worst in Europe and just a little behind the US.
So it's, er, probably not a great model case here.
I don't see the problem with GP' solution here, though. Unless socialism is to be frowned upon. It won't fix upbringing, but knowing there's some income coming when you cone of age can help shape your post secondary education and housing habits.
You can perform a "child fund to the parents instead if you need earlier impact. And maybe we will need that as an incentive as 1st world populations decline. But it might not make a difference based on the spending habits of the parent.
If you have a better idea then I'm all ears. But dismissing a long established solution without an alternative makes it sound like you prefer the status quo.
> Leif Pagrotsky, som då var näringsminister, har i efterhand avslöjat att avskaffandet av arvsskatten var en eftergift från Regeringen Persson till Svenskt Näringsliv
Look at the modern labor market and tell me they aren't trying their darndest to make it one.
And yes, we should "hold back the successful". Taking 99% of a billion dollars still lands someone with a career's worth of savings to tap into. That's how utterly ahead they are. And it's clear they used that power to ransack the nation. So be luck "holding them back" is the only stipulation here.
By the time the treasure hoard gets passed on to the next generation, the inequality "damage" has already been done. If an inheritance tax has to be applied, this means society has already failed to stop runaway wealth accumulation and inequality.
I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritance tax which takes effect long after the accumulation happened.
>If an inheritance tax has to be applied, this means society has already failed to stop runaway wealth accumulation and inequality.
Yes. And we are already on "too late" mode. So we should go with the 2nd best solution because the best one (actually taxing billionaires) won't work retroactively.
>I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritance tax which takes effect long after the accumulation happened.
Both would be nice. I don't see this as mutually exclusive. Though proper wealth taxes will lessen the need for inheritance tax. But not in all cases.
Sounds good to me. Moving that level of money already has so many stupulations. Inheritance is used because of tradition and because it's the one foolproof way to maintain generational wealth.
In the general sense that people are using ways to give money to others when they die instead of spreading the weskth, yes. I'm sure there's dozens of methods used to harbor wealth but I'm more talking on the general concept.
>Like what exactly?
In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed. Investing it into assets like property will have that taxed, unless you choose to go to very specific areas. Throwing it into a business will jabr capital taxes.
Exceptions are disproportionatly utilized, but there are in fact more ways to be taxed on your money than not. That's why a lot of the current mechanisms lie less in "grab money, get taxed, use it" and more "point to money, get loans, stay in 'debt' and use not your money make money".
> In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed.
Sure, but there is a very very big difference between capital gains tax and inheritence tax. Most proposals for inheritence tax are on the entire value of the property being inherited. Capital gains taxes are just on the difference in value between when you got it and when you sold it.
If every transfer of property behaved like an inheritence tax, the economy would probably screech to a halt as you effectively couldn't sell anything without taking a huge hit.
Sure, the person is dead so they won't need the assets anymore. That's why inheritance tax is so large. Not so much for capital gains that still has a (concept of a ) human that has other utilities to pay off.
I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.
My point is more - if you make inheritence have a large tax but just giving things to family members a small tax, people will just gift their assets before death.
Any tax plan that requires people to be stupid in order to be taxed is a bad one because then the only people who get taxed are poor people who can't afford to hire an accountant to figure these things out for them.
The obvious way to close that loophole would be to tax capital gains at the same way as inheritence, but the side effects of that seem disasterous.
> I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.
I think the downside is that the actual affect of the plan would be that really rich people would be unaffected, and if anyone was actually taxed it would be low-mid income people. Thus further cementing inequality.
GP probably spent 5 minutes writing that comment. I'm sure a proper policy naker will put more thought into it and consult lawyers/economists when making a fleshed out plan.
There's always loopholes. An internet forum isn't the best place to try and close every hole.
it is already more or less the case, but I argue that it's for the benefit of the living holder, not the heirs. A lot of the incentives to have huge, untouched inheritances revolve around dynasty effects, exactly the kind of behaviour we want to curb.
I'd go further and say that "unearned wealth corrupts" is a well known effect, and (apart from the small subset of rich people who do not care about their kids corruption and intrinsic worth apart from them being the vehicle of their dinasty) we see that divestment into charity / foundations are the modern preferred way for inheritance management, both sparing the kids somewhat (being downgraded to a multimillionaire is not a hellish situation) and gifting them cultural influence. A sovereign fund could scratch that itch somewhat.
If that value is recognized in a beneficial way (such as unlocking loans against it or using it as collateral at a specific recognized amount of value) it should be taxed at the point of value recognition for the amount of benefit recognized.
We have to reframe how taxes are viewed, by the wealthy.
There should be no wealth tax, but above a certain threshold - there should be a maintenance fee associated with the wealth. I get charged maintenance fee by my mutual funds, for example.
One of the purposes of the government is to protect and secure property... and that is what ultra wealthy are getting for a fraction of what they should be paying.
Capital gains should be taxed like income.
Fuel for private jets should be taxed like fuel for a car.
The corporations that generated large quantities of wealth for their owners should pay decent wages for their employees.
Arguably capital gains should be taxed at a higher rate than income. But that's not going to happen, because your home's change in value is capital gains.
That was a better argument when lives were getting better.
Now that 'progress' is actively optimizing things in a way where large amounts of the public's lives are getting worse, you are going to have to give a better response. Because right now progress is synonymous with improved rent seeking, worse access to food (and food that is now noticeably optimized to be of poorer quality), worse access to housing, worse working conditions, and on, and on.
This is, quite literally, the silliest thing I may have ever read.
Cool, cool. Work for 30 years, save up and have say $3M to retire on, based on stock market at an all-time high. You're not a robber baron or investment banker, just someone who worked a long time and saved and invested. Govt takes $1M away from you, you have $2M now. Market drops 25%. Now you have $1.5M.
Congrats, your "plan" resulted in someone like that having HALF of everything they saved up just gone.
Yeah, yeah, I know, "if you have $1.5M you don't NEED any more money." Sounds like something that only someone with something less than $1.5M would say.
You don't "need" your iPhone, or your flat screen, or whatever. The government should not be in the business of determining what you "need" and taking the rest.
I am talking inheritance, not weatlth tax, and have actually written I'm for reducing said taxes. you truly do not need the extra million when you're dead. Maybe read my comment again with more charity and re-engage?
incentives. It's okay to be successful and enjoy the fruits of your wealth, and you want people to strive towards wealth. but transmission across generations is a true societal poison.
> tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit
If you think you’ve seen zany tax schemes, just wait till they try implementing something as crazy as a 100% tax.
There’s also a moral question of why you feel entitled to not just a majority of the fruits of my labors, but apparently all of them.
There's an unproven assumption that somehow the inequality of outcome is 1) unjust, and 2) something to be "corrected."
The first has no foundation other than appeal to emotion to create in-group / out-group tribes ("eat the rich!") to then suggest what end up being power grabs that destroy the middle class and do nothing to the wealthy.
The second item requires destroying value. All economic activity comes from exchanges of value, which is intrinsically tied to time; that irreducible finite quantity to which everyone is subject. We've seen over and over again, when you try to destroy the concept of value, which is subjective and circumstantial for each individual, all you end up doing is causing human misery.
This obsession with taking other people's money rather than enabling opportunities to make your own is unhealthy, destructive, and immoral.
I am actually advacating for something different: I am not taking your money, I am saying after some level, what you accumulate is not - your kids - money. It realigns incentives (do something with it before you die), helps your kids (unearned weath corrupts, enormous unearned wealth corrupts enormously), and actually enables opportunities through investment and redistribution at a time when most people need something like a downpayment or school debt clearing.
>There's an unproven assumption that somehow the inequality of outcome is 1) unjust, and 2) something to be "corrected."
There's decades of research into this if you care to look up wage theft, worker productivity vs compensation, the lobbying against unions and minimum wage and any other labor protections, and the fact that we ruled that it's okay for billionaires to buy politicians.you talk about enabling opportunities, but lobbyists have used it to pull up all the ladders and pay less back to the people. So yes, we're due for a correction.
If you're a millionaire this doesn't really apply to you. Your taxes go up maybe 2-3%. "Wealth tax" is in the realm of 100m and definitely by 1b.
No one earns a billion dollars. By that point you aren't "earning" money anymore. Tax it 99% for all I care. You or someone else should be spending that by thatpoin. If you're a multi-billion aire then that's rough, but o don't think your QoL will be impacted.
Also, your loins did hot "earn" that money either by popping out of a uterus. Inheritance tax is probably the easiest to push of you can convince people that children aren't entitled to be billionaires by existing.
6) wonder why this has no real impact as it only recovers wealth from people who are over $2m in wealth but below set-up-a-trust-to-move-your-families-money-to wealth, which is a fraction of the wealth. 7) See trust-as-a-service businesses boom until there's no additional revenue.
I think the bigger issue is that people are hording wealth instead of spending it in general making money work for them and not for the greater economy which is the only thing giving their money substance long-term. Well, long-term is longer than human lifetime so I guess there's no real reason for them to worry about it either.
I heard something on here about an investment bubble?
There is some kind of bizarre world that we live in that the article has a quote from Ramaphosa, the totality of his extraordinary wealth was generated by corruption, on the terrors of inequality.
Hoarding is, generally, not a real problem because it requires believing that wealthy people are not greedy. The problem is that most societies heavily incentivize irrational behaviour through disincentivizing investment. Strangely, these same places also have political cultures that focus heavily on inequality (again, there is no better example than South Africa) because genuine openness tends to be very disruptive politically.
There is no way to square the circle. The solutions are known, the problem is that human nature and political culture tends to prevent those solutions being realised (as it is more politically beneficial to continue to sell people lies: it is this group of people, they are the problem, if we can take their money and give it you then you will be rich).
I've heard this take a lot and it doesn't make much sense to me. How exactly are ultra rich "hoarding wealth instead of spending it"? Afaik most of the net worth of the ultra rich is in ownership of companies (stocks) or loans (eg bonds). That money is all out there in the world working.
Isn't the fact that the ultra rich are using their wealth productively the reason we have growing wealth inequality? Because active money grows faster than inflation, which is why they get richer compared to the rest of us over time.
But... money becomes more money precisely because it's invested into companies that sell products and services that people buy, and use most of that money to pay employees, office rent, factories etc.
Or in other words: money grows if you use it. If you just put it in a bank account it slowly erodes away under inflation.
that's the catch-22 type deal in the end which makes wealth-inequality the only outcome as the super-wealthy will always benefit more than everyone else when that money is spent and there is no incentive to limit growth
personally I think the only real solution is slowing down by reducing incentives to keep growing money (or stock value) by implementing some kind of tax ceiling in turn slowing down innovation and instead hoping that giving more people the ability to grow (easier access to education, healthcare, opportunity) eventually outweights the disadvantages of having such a ceiling
Stock buyback is "spending" that does not in fact increase productivity nor stimulate the larger economy. But it makes them richer. Unrealized stocks that's hoarded isn't doing much of anything in the grand scheme of things.
Billionaires have dozens of other things like the above that makes thos an issue
Ok, but after that buyback makes some person richer, what happens then? They can't put that money into a bank account and hoard it because then inflation will eat it slowly. They have to reinvest it into the stock market or something for it to grow.
