More than half of all private wealth has been inherited in most of Europe
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It seems that the graphs in this tweet are another confirmation of Piketty's observation.
Someone who got a good middle class start, went into the right career, and had everything work out pretty well (no major financial misfortune or an injury or sick family member) while saving responsibly, can become a millionaire in a few decades today. They can probably afford a nice house, which their kids can carve up to have their own nice middle class start.
This group of people is still insanely privileged but it is nothing on the obnoxious levels of real inherited wealth in the upper crust.
What's different today is that inflation and high taxes have wrecked the middle class. The truly rich are the $100M and billionaire types whose wealth has run away from the rest of the people. Almost none of the truly wealthy are that way because they were smart (merit) only a few are. The rest . got rich either because they were lucky or because of some angle they could exploit such as favorable connections or regulatory capture. Above them, Old Money rules the world by at least one order of magnitude.
It would be pretty weird to have <$500 in checking at the same time as 5-6 figures in retirement + home equity, but possible. It helps that 401k is a payroll deduction and there's really no bargaining with yourself on whether to pay the mortgage this month (whereas it's easy to splurge instead of saving extra cash).
You can also loan against 401k (though there are limits, but if you have it for a while loaning $500 would not be a problem, though again fees could make it a bad deal). Advantage is that while you lose the growth for the time of the loan, you are paying interest to yourself, not somebody else.
Yes. Low-paying jobs at Wal-mart and Lowes and some gas stations offer a 401k. The contributions are tiny because the checks are tiny but the company usually contributes as well. These folks aren't as likely to have access to credit.
I'll put this as well: If you are looking to take $500 from your 401k outside of those groups, I'm gonna guess things have gone horribly wrong. Getting a new credit card might be a bit tough because your credit is probably already showing the hurt.
> If you are looking to take $500 from your 401k outside of those groups, I'm gonna guess things have gone horribly wrong
Yes, probably, but the question was is it possible, when the things go horribly wrong. I still think if you have 401k that should be possible.
This doesn't explain everyone in your category, though, so a portion suck at saving.
[1] https://www.forbes.com/sites/timworstall/2011/12/16/well-of-...
https://www.reddit.com/r/TrueReddit/comments/1v4t18/it_is_ex...
The 57% figure is much more illustrative, in large part because it conveys an absolute capability which people can lose or acquire.
A median-income household is unlikely to own a median-price house for a reason very similar to the reason they are unlikely to own a median priced jet, because home ownership isn't uniformly distributed across income levels, as low income households are more likely than high income households to be renters, and high income households more likely to be homeowners (and to own multiple homes.)
If a median-income household owns a home, it is likely to be a singificantly-below-median-value home.
This shouldn't gel well with someone who values meritocracy/social mobility.
If millionaire parents are only twice as likely to have millionaire children I would be surprised.
Upbringing is important and I think children of millionaires are more likely to develop healthy spending habits.
That doesn't mean that the gains for capital since the 70s are from housing. Only that the gains from the 40s are. It also doesn't address the industrial revolution's affect.
In an interview, Nobel prize-winning economist Joseph Stiglitz (who served under Bill Clinton) criticized Piketty [0] of overemphasizing the increase in concentration of wealth, and this was on the basis that the current increase in wealth stems from an increase in land value.
[0] https://www.salon.com/2015/01/02/joseph_stiglitz_thomas_pike...
Let's not imagine the unwanted effects and just bask in the idea of those kind of perfect societies.
That's OK, we can use CRISPR tech to solve that problem.
Brave New World in 3.. 2.. 1..
Keep everything as is, but don't allow inheritance, or cap it at some number.
And that's something advantaged people don't like to think about when they use the meritocratic word: most of them benefited from huge advantages by being born in the right family. Or even just by being born in the right country.
Nowadays you benefit from your inheritance when you are established and don't really need it anymore. What really helped you was the 100k-1 million 0% interest loan with no problem if you don't pay it back you got during your 20s from your parents. Or just knowing you could be attending a good college and knowing the most important you have to get out of there is the right network of people.
https://news.stanford.edu/news/2013/september/toddler-langua... for an example of what having the right parents can help a long time before inheriting their property.
What is better, to give $100K in wealth to everyone, from idiots to geniuses, or concentrate our efforts on those that have more chance to succeed?
As quoted from "The Concise Oxford Dictionary of Politics":
Part of the difficulty in establishing sensible and consistent usage is that commitment to the biology of natural selection and to 'survival of the fittest' entailed nothing uniform either for sociological method or for political doctrine. A 'social Darwinist' could just as well be a defender of laissez-faire as a defender of state socialism, just as much an imperialist as a domestic eugenist.
Can you explain further?
If you are going to go that route a better measure would be how much upwards mobility someones parents have demonstrated proportional to their starting point.
Of course that still suffers from a number of confounding factors (e.g. we don't know how much is down to luck)
If you are just trying to promote success, then it stands to reason to reward success of the parents, incase some of those confounding factors are hiding actual fitness. After all, if the null hypothesis is true, you aren't losing anything by promoting some people over others, if they are all equality capable, anyway.
If we don't vary the amount of support people get, then we won't be able to take advantage of situations where more support (or less) would result in greater success.
And given that everything is constantly changing, there is no way to find a perfect level of opportunity to give to people.
So, a system that provides a varying level of support spread out against the population will do better nearly all of the time than one that provides an equal amount to everyone.
If you consider that there is no constant landscape, it's always changing and always an unknown, the best option is to try a plethora of different ideas, hoping some will succeed.
It's more like fighting a war in an unknown battlefield. If you play it just one way, you are more likely to lose than if you try many different strategies at once.
The ones that succeed will be self-sustaining, for as long as they are successful, anyway, and gain you enough ground to compensate for the strategies that didn't work.
If this wasn't true, nature would only have produced one single organism rather than a billion or more.
Right now some country implement some inheritance tax, but that's the only time when wealth is actually measured and taxed and there are so many loopholes (trust funds, donations, …) to make this incredibly ineffective especially on the richest.
The only time that wasn't true in the USA was before income started being taxed.
If you do the math, the only tax which is not destructive to working people is taxing commerce.
That's the way the US federal government was funded when free enterprise was more available to a greaater percentage of citizens. Switching over to income taxes shifted the burden dramatically from the powerful to the relatively powerless. What more effectie way was there at the time to keep down the first freeborn decendandts of slaves after bondage ended?
The most prominent feature of taxing income is its huge damping effect on upward mobility.
That's OK, the ones who instituted income tax to begin with did so because as far as they were concerned enough citizens had moved up already, especially from the very bottom.
That's the most important consequence.
This is by design.
It's probably best to try and look beyond conventional wisdom when invoking caca del toro.
Pardon my french, but that's such bullshit. Everyone who doesn't like to pay taxes has a noble excuse like yours. Sometimes they oppose to taxes being used to fund the arts, even though it's such a minuscule slice of the total pie as to be barely visible. Other times it's something else that they feel is frivolous or opposed to by some principle or other. The thing is however, that the nature of public spending is such that there is always something which we as private citizens would prefer not to pay for, if given the choice.
People with a libertarian bend tend to think of tax money being spent inefficiently as simply being wasted. But money spent by the government doesn't just disappear after it has been spent. It ends back in the pockets of the citizens! In the worst case scenario, it is thus simply being redistributed. In the best case scenario, it buys society something valuable (universal healthcare, say, or public education) along the way.
Regarding social welfare I don't know anywhere that's doing it well enough to be considered a success. We should be able to provide housing and food for 100% of the people 100% of the time. For the edge cases that fall through mental health care should be provided for as long as necessary.
Not to want to seem like a downer on Europe the things I think they do exceptionally well includes investing in education, while they are also OK on the healthcare front (personally I'm a huge fan of the NHS model and would prefer if it was more widely adopted).
Housing is badly managed as is support for cash strapped entrepreneurs. The taxes nearly broke us when we started the last business in Berlin. In Ireland there is (the last time I checked) a possibility of a 2 year tax hiatus for new businesses in certain circumstances. In general these kind of incentives could do wonders for entrepreneurialism and the potential knock-on upward mobility it can bring.
Are they now? It used to be true in the east bloc countries when they were all communist, but it's not remotely true in today's Germany where OP lives.
Having experienced living in numerous countries i can safely say that taxes are often (not always) poorly spent in Europe
People say that, and I hear: Taxes are not spent the way I would spend them, if I were in power.
when i see public sector inefficiencies on the scale that they exist in Europe
Please be specific about which inefficiencies your are referring to.
European countries are doing very well on the list of riches countries in the world as measured in GDP per capita. That would be quite surprising if their large public sector really were so horribly inefficient.
What do GDP and government efficiency have to do with each other?
Money doesn't disappear, but resources (labor, natural resources) do. Money is just a proxy for resources, so it is valid to say that money can be "wasted", even if it flows into the pockets of workers – for every unit of money spent, there is an opportunity cost.
> In the worst case scenario, it is thus simply being redistributed.
That is not the worst case scenario. The worst case scenario is that resources are used up with little or nothing constructive to show for it. I disagree with many libertarian opinions, but it is not unreasonable to worry about wasteful government spending.
Over here we pay a lot and don't get nearly enough in return. The effect of this is a growing libertarian political scene.
I'm going to assume you are french, and invite you to come to Spain, where we have a flamboyant highspeed railroad service in which there's not a single line that covers costs (not even Madrid-Barcelona). And guess what, we keep throwing money to that thing.
As for "money not disappearing", you are falling for the "parable of the broken window". Wikipedia has a much better explanation for it.
Once you're done with that, I suggest you to look at how 10 years ago Spain redid all it's public walkways (that were mostly ok) to "improve the economy". It was a massive waste of resources.
What if you let go of the notion that public transportation must be profitable? I don't know anything about the railroad service of which you speak, but I find it incredible if the cost of running it is more than the value it creates (although I concede that it's possible in principle). Do you know what else most societies keep throwing taxpayer money at? Roads. Yet you don't find very many people having a hard time accepting that the cost of building roads exceeds the value created by doing so.
As for "money not disappearing", you are falling for the "parable of the broken window".
I don't know what you mean by this.
Wikipedia has a much better explanation for it.
I'm sure they do.
Once you're done with that
I have this principle which is that if you can't or won't make the argument, I'm not going to go elsewhere and read someone else make it for you.
You are talking about private property. Personal property is distinct from private property.
As far as removal of private property, I don't think I like the living conditions in Venezuela, Cuba, or China very much, thanks. Again, nobody cares about property better than its owner, someone with a vested interest in maintaining it.
As far as I can tell, the graph is based on an earlier graph from Pikettys paper:
http://piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2015....
Compare to Figure 5
These two facts only contradict one another if you have an implicit belief that "fair" is "equal".
And no, I was not mixing up anything, I was pointing out that you were merely confirming what the comment said. That you disagree with the definitions used does not change that, given that it was clear which definitions were used, as you clearly understood yourself what was meant.
Assets and money are just some of the things that people inherit from their parents. Many people inherit their entire careers from their parents through social connections - These people would probably be classified as 'self made' which makes the statistics seem more benign than they actually are.
I bet if you counted out all those people who were raised with a silver spoon, the percentage of real 'self made' people would probably be less than 1%.
https://en.m.wikipedia.org/wiki/Socioeconomic_mobility_in_th...
Answer: it’s not great and getting worse, but not as dire as you portray.
> If a parent's income had no effect on a child's opportunity for future upward mobility, approximately 20% of poor children who started in the bottom quintile (in the bottom 20% of the US range of incomes) would remain there as poor adults. At the other end of income spectrum, if children were born into wealthy families in the top 20%, only 20% would stay in that top income category if their mobility opportunities were equal to every other child's in the country.
> But long-term income statistics show this isn't happening. Mobility opportunities are different for poor and wealthy children in the US. Parental incomes and parental choices of home locations while raising children appear to be major factors in that difference. According to a 2012 Pew Economic Mobility Project study[19] 43% of children born into the bottom quintile (bottom 20%) remain in that bottom quintile as adults. Similarly, 40% of children raised in the top quintile (top 20%) will remain there as adults. Looking at larger moves, only 4% of those raised in the bottom quintile moved up to the top quintile as adults. Around twice as many (8%) of children born into the top quintile fell to the bottom.[19] 37% of children born into the top quintile will fall below the middle. These findings have led researchers to conclude that "opportunity structures create and determine future generations' chances for success. Hence, our lot in life is at least partially determined by where we grow up, and this is partially determined by where our parents grew up, and so on."[20]
Intelligence is the capacity to achieve your goals. Intelligence is highly heritable. A goal of most people is to become wealthy. So people who acquire wealth tend to be much more intelligent than average, as wealth is graded on a curve. Thus though there is regression to the mean, their children will be more intelligent than average, and so worth more as employees and more likely to succeed even if they were put up for adoption.
This has unfortunate class implications, but putting cotten in our ears is not going to help. We must separate the normative from the descriptive. This is horrible and unfair. But natural selection is heartless algorithm literally running on death and suffering. We should not expect it to distribute capacities in a manner that is aligned with the prescriptions of our flimsy ideologies.
Wealth distribution would not fix this.
But let us seize the high-IQ alleles and distribute them to the proletariat!
Such thoughts are verboten now, even as our tools for such interventions get ever sharper and assortative mating magnifies these differences to a point where it is getting difficult to ignore.
That is an impressive syllogism you've got there.
But a certain amount of wealth distribution could improve the life quality of those born with less potential.
While a noble goal, I don't believe this is a goal shared by the majority of the population. I think if you ran a poll between "improve the life quality of those born with less potential" and "improve the progress of humanity", the results would favor the later.
Is it better to bring fresh cold water to all, or hot and cold water to some? If it cost $100 to each person for either, I believe that those who possessed $100 would pay for hot water for themselves.
There's an argument for "do both", but that's not always realistic. Those without can force the issue with democracy, but if they force the issue too far, bad things are known to happen from history. I'd be wary of forcing it too far, but your opinion is your own.
Then why do most countries have welfare for the poor?
> I think if you ran a poll between "improve the life quality of those born with less potential" and "improve the progress of humanity", the results would favor the later.
What's the point of improving the progress of humanity if not to actually make life better for the majority of humans?
In a few decades the majority of the population might find _themselves_ poor due to not being born with enough potential to compete with automation and robots. Should we keep engineering the economy such as to only improve life quality for the most fortunate?
Because of democracy.
The rest of your points are good and I agree with them. Just pointing out that "improve the life quality of those born with less potential" is probably not a goal most people strive for. I do hope I am wrong, but I don't believe I am.
The ability to make money has more to do with dumb luck and confidence than any kind of value-creating intelligence.
The ability to keep money once you already have it might have a stronger genetic component however but it has nothing to do with value-creation.
Also you're conflating "value-creation" with "make money" in your comment which muddles the issue. Making more money is often associated with greater value creation, but it's not strictly necessary.
My maternal grandmother came from a low level German noble family that sold the family title when they fell on hard times. Given my aunt's assessment of wealth distribution in relation to nationality, I guess mom made the right decision coming here.
(Edited to clarify my nationality in response to a question. I did not realize I left that out. Oops.)
Where's here?
Oh, from your Hacker News profile -> Twitter profile (https://twitter.com/doreen_michele) which says "Southwest Coastal Washington".
I've never thought about it before, but your comment made me realize that maybe the best thing is to feel free to mention what's in someone's HN profile but leave it at that. On the other hand, I broke that myself only this afternoon: https://news.ycombinator.com/item?id=15947396. So I don't know.
There's no point in protecting someone's imaginary privacy, if their personal details are a google search away, they have no privacy and if that's important to them, they shouldn't post their private details in their profile.
> Ever less private wealth is accumulated through own work, increasingly more through inheritance.
A massive part of people's motivation to work is to provide for their children. That an increasing portion of wealth is inherited rather than build in an individual's working life-time is indicative that the system is function as intended.
The graph seems to indicate there was a bit of a golden area after WWII up until the early nineteens, and that the nations included on the graph are returning the regular state of affairs.
But what does any of this mean?
Saving wealth to take care of your children is one thing but this much seems excessive and ultimately means that inequality will continue to increase as wealth is trans-generationally hoarded.
Massive inequality also portends social unrest, plagues due to people who can't afford medical care, wars, etc etc
As for the "golden area" you mentioned; yes, the war(s) did function as great equalizing wealth redistribution force. Arguably bit of a blunt instrument to accomplish that.
If they went back to having a dozen children apiece, wealth would dissipate at least an order of magnitude per generation.
Primogeniture concentrates inherited wealth in firstborn (usually male) offspring. [1]
The last ones were decades ago and there is no sign of it coming back any time soon. We're living in unprecedented times.
Or if you're right-leaning maybe you would argue that it was the high growth that was a great equalizer.
Or perhaps a mix of these. I don't see social-liberalism going away in Europe. And while growth might not be same as it used to be, technology is likely to keep disrupting established businesses.
No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices.
How you feel about that depends upon how you feel about in increase in unearned income flowing to the wealthy I guess.
The income was taxed when it was earned. What reason is there to tax it twice?
> how you feel about in increase in unearned income flowing to the wealthy I guess.
Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's arguably better than expropriating citizen's wealth to fund expaditionary warfare.
We tax transactions, not specific euros. Income tax when an employer pays their employee. Inheritance tax once the money goes from the deceased to the heirs.
These are separate things! And no different than, say, VAT on that iPhone. Sure it's between family members , but in the vast majority of cases all parties are independent adults.
The land you inherit is not "justly yours". It was the previous owner's thing. You are getting it but it is not your divine right, except that you won the birth lottery by being born into this family.
Of course a lot of families also have smaller domains, and it makes since to have some lower limit... But let's not forget people affected by inheritance tax are overwhelmingly very rich. Most of the population ends up with nothing.
Of course those arguments apply to governments as well, since they don't derive their law-making authority by claim to divinity - at least in modern times. Why should a government be specially privileged over a citizens wishes to provide for their family and/or community after death?
You could use that statement to argue about anything a government does. Why does the inheritance tax need a special justification?
Well, the alternative is wonderful stuff like civil forfeiture law. Whereby a policeman without evidence or proof of criminal wrongdoing can take that $2000 in your glovebox in the name of a defacto beneficiary (the state), because on a balance of probabilities he thinks he has a better claim than you do.
What moral authority does a private citizen have to own land in Manhattan created 3 billion years ago and made valuable by the infrastructure he didn't build and community he charges rent to?
Government confiscation of private wealth in the name of perceived inequality, should be examined very carefully when modern economies are structurally indebted, and budget for foreign policy objectives over domestic improvement.
Would you rather all the wealthy people in the world just blow all their money on yachts or something?
Because that is the alternative. Why bother saving money if it is all just going to be confiscated when you die. Instead you should just blow it all on ridiculous things that help nobody but yourself in the immediate time frame.
Working people spend their money.
You know what happens to the money when the government taxes an estate?
That money gets put back into the economy in the next calendar year. While it might be good for individuals to have savings, it's better for the economy when money gets spent. The reason that Gary Cohn got so many shrugs when he asked CEOs how many of them would expand businesses with the money from the tax cuts is simple: they hire more people when they have more demand. Making rich people richer or giving rich kids more of their parents' wealth does jack shit for the economy.
Taxing wealth is basically paying a rent to the society that allows that wealth to exist. Your land in manhattan is only worth $10m because society hasn't gone all Syrian. Your copyright holding over your film is only worth anything because we don't let people freely copy it.
When the wealth is owned by the people who aren't productive, you have a problem. It may be that those that are productive Leave and move elsewhere - who runs your hospital/golf course/power station then.
It may be that the productive say "enough is enough" and decide to invent the guileteen.
Either way when people have less to lose than you, it's a dangerous place to be.
That would massively discourage saving. I'm not sure that's great in the long run. In the short run I'll probably lead to massive growth as every goes to burn their dollars on something :)
(Arguably it might be a low tax, might even limited to people with a lot of wealth)
Since the numbers would be going down instead of the increasing money supply devaluing savings, I guess people wouldn't like it, because losing wealth would actually feel like losing wealth.
Also I'm not sure discouraging invests is a good side effect..
But it's an interesting thought nonetheless.
However under your assertion, you are already massively discouraging productivity, by taxing it so high.
However rather than taxing monetary wealth via inflation (which targets those who can't hide their wealth in other assets), you tax the assets that are impossible to avoid, namely copyright protection (charge an exponential fee to keep the work in copyright) and land (if you own $10m of land, and your neighbour owes $100k, you should be paying 100 times more for the upkeep of that land, and you can't hide that off shore).
This means tax on dividends goes to zero, tax on productivity goes to zero, and it encourages people to invest and work, not sit there collecting money from just being rich.
Big purchases, sure. But also as a safety net. As a retirement fund. To help send their kids to college.
The bit extreme extension to this is that if society had strong enough safety nets for everyone, nobody would need savings at all.
There’s no double taxation any more than it’s double taxation to tax my income then to tax the entrepreneurs who I do business with.
And while I agree that money staying with a family and creating economic inefficiencies and pointless disparities is better than war, that’s an absurd false dichotomy.
Let’s see how richer the trump family will become after the presidency...
I paid tax on my income, so when I buy milk at the store, the store shouldn't pay tax because the income was already taxed and the employees there shouldn't pay tax when they get paid, because the income was already taxed.
An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that much wealth other than having been raised by (and having the genetics of) the exceptionally productive individual, which is a far cry from being exceptionally productive themselves.
My thought was to create a cap on inheritance. Enough so that the heirs would be able to live a normal middle class life without working, but not be disgustingly wealthy like the parent. ~$5 million seemed like enough to live off interest for a lifetime. I don't think productivity would be disincentivized too much by this, as the productive individuals still get to use their wealth as long as they're living. It'd probably be pretty difficult to plug all the loopholes but I think it's worth thinking about.
edit: another thing, we could lighten some other taxes (income, property, whatever) for this increased death tax such that the overall government tax income remains roughly the same, to make the proposal more palatable. Overall, everyone keeps more of their wealth, and the playing field is leveled and we're a bit closer to an actual meritocracy.
The tax system seems to prefer this to actually earning money for some reason.
The tax system favors unearned income over earned income to adjust for risk. If you work a job you're guaranteed to be paid for the hours you worked (assuming an honest employer). Investments have no guarantees and you could lose all the money you put in.
There's an argument to be made that the top tax rate for unearned income is too low in some countries, but it makes sense to me that the tax rate for unearned income should always be less than the tax rate for the same amount in earned income.
For example, the risk of losing an earned income stream because my (assumed honest) employer (fires me, goes bankrupt, etc.) seems much higher than the risk of losing an unearned income stream based on my investment in bonds backed by the US government.
Also since passive investment requires "no skill and little luck" it's one of the few entry routes into the capital-owning class available to working-class people and middle-class professionals. Anyone can buy an ETF for a couple hundred dollars. You don't need a hot stock tip or a insider lead on an undervalued property. So I'm not sure why one would want to start treating unearned income exactly the same as earned income at the precise point in history that we've learned about the magic of passive investment.
"Unearned income includes things like annuity payments, pension income, distributions from retirement accounts, capital gains, interest income, dividends, passive income generated from rental real estate, alimony, stock dividends, and bond interest." [2]
Sorry...is that what you meant? Or were you referring to the definition of earned income?
1. https://apps.irs.gov/app/IPAR/resources/help/unearn.html 2. https://www.thebalance.com/earned-income-is-taxed-differentl...
> investment in bonds backed by the US government.
Those bonds have a correspondingly low yield, to reflect their low risk.
Again, we can argue about how high the tax rate should be on unearned income vs earned income (20% max is too low IMO). But $50k in unearned income is worth less (risk-adjusted) than $50k in earned income and should accordingly be taxed lower. Maybe $50k in unearned income is the same as $20k in earned income and similarly all the way up the earnings ladder (I don't know the exact ratio; I made these numbers up).
We often talk about survivor bias in business success; how successful people owe something to luck as much as skill or hard work (which is true, IMO). Shouldn't the variance of this success be recognized in the tax code as well?
Well, yes, that's why the rewards of starting a business are often completely tax free up until a pretty high level. I don't really have a problem with that, which should have been pretty obvious from my above post.
However, that is completely irrelevant to what I said above.
Sitting on property and collecting rent is clearly not working.
>Again, we can argue about how high the tax rate should be on unearned income vs earned income
I'm of the opinion that unearned income should be taxed at 100% and distributed equally throughout the population whereas earned income should be taxed at 0%. I have yet to meet a person who can cogently argue why handouts (e.g. land rents) shouldn't be distributed equally.
Note that starting a business that grows is clearly earned at least up until a certain point (usually the point where the founder lets the employees run most things).
>Shouldn't the variance of this success be recognized in the tax code as well?
You really seem very keen on having the tax code encourage gambling over working.
I'm not so sure that using the tax code to deliberately discourage working for a living is necessarily the best way to generate a productive economy.
I guess we'll have to agree to disagree about that.
Even landlords have to work (and I say this as a tenant). There's tenants to screen, repairs to manage, regular safety inspections to perform. Land rents have volatility and risk as well. There's the possibility of vacancy or bad tenants which leaves you with a property that's not returning any value. A landslide could take away your property entirely and insurance won't cover it (don't scoff; I know someone this happened to). Maybe it's not as much work as running a small business, maybe it is, I don't know. But it's a non-zero amount of work.
EDIT: As I pointed out in a comment above, I think the top tax rate for unearned income should be higher, with more brackets overall. There's no reason for it to be flat 20% when the top rate for earned income is 40%. That unfairly penalizes small-time investors (who get taxed at 15% on an income that would be almost 0% if earned) as well as high-earning salaried people who pay 40% compared to the 20% someone making 20x as much in unearned income would pay.
> I have yet to meet a person who can cogently argue why handouts (e.g. land rents) shouldn't be distributed equally.
Taxing rental income at 100% would kill off the rental market completely. A lot of people like the flexibility of renting and don't want to deal with realtors and banks and mortgages every time they change their job. Many people can't afford the down payment to buy a house so they need to rent until they've saved up enough to do so (you might argue that property prices will go down because of no landlords and there won't be a need for mortgages, not sure that'll actually happen but it's another topic). Businesses also rent offices or retail space when they can't or don't need to buy. At the end of the day, landlords provide a service that's useful, by deploying their capital and labor.
> I'm of the opinion that unearned income should be taxed at 100%
Here's the IRS definition of unearned income:
"Unearned income includes investment-type income such as taxable interest, ordinary dividends, and capital gain distributions."[1]
So if you really mean that, you're going to be taxing average-Joe-worker-with-index-funds (that includes me BTW) 100% on his dividends. Maybe we need to start being clear on what the term "unearned income" really means before we argue further :-)
1. https://apps.irs.gov/app/IPAR/resources/help/unearn.html
> whereas earned income should be taxed at 0%
So...CEO making $50 million/year would pay $0 in taxes?
> You really seem very keen on having the tax code encourage gambling over working.
Gambling implies the possibility of loss, the presence of real risk. And even property speculation is still a lot of work; you have to research lots and lots of properties, crunch numbers, line up funding, develop and market the property for rent or resale. Given that it's work with more risk involved than taking a paycheck, why is it a bad thing for the tax code to recognize this?
??
Who gets to determine who deserves what?
Determining someone's future on parental wealth means determining someone's future on a lack of parental wealth - and a vast majority of parents don't have meaningful wealth.
So we're (society is at present) consigning a majority of children to a life of missed opportunity and missed potential. I don't see how that can be a good thing.
Also, parental wealth doesn't "determine their future" any more than the quality of the parents does. It's certainly a leg up, all else being equal, but it's very possible to live an enjoyable and fulfilling life without much wealth if you're willing to get outside of the focus on consumption, and personally, I'd generally take poor, loving parents over rich, uncaring/selfish/narcissistic parents.
Who you're born to will always be a lottery that leaves winners and losers, even if everyone is equally wealthy. You'll get variable quality genetics, if nothing else, at least until we completely master human genetic engineering.
There's still the option of living a comfortable life being totally unproductive - but why let that option waste an unnecessary amount of our society's assets?
This would be an extremely strong move by the government, you're right, but I think most people would be behind it, especially since it would affect less than a percent of the population. We're not headed down that path currently, but I thought it was an idea worth sharing.
Most productive parents are already highly incentivized to not see their children become totally unproductive wastrels, because the culture that made them productive taught them to value productivity, and good parents typically want to see their children instilled with what they see as good values. I don't think the government needs to do much more there.
> There's still the option of living a comfortable life being totally unproductive - but why let that option waste an unnecessary amount of our society's assets?
There are a couple things to unpack here. First off, wealthy peoples' wealth doesn't just sit in a cave, it's almost always ~100% invested in productive ventures. Even sitting in the bank, the bank is using it to write loans to people and businesses to do things with.
The other thing is that it's part of our very basic social compact that peoples' property is theirs and their family's, not the society's, and only in very limited circumstances can the government/society seize that property for the use of the group.
So long as you have a good financial advisor you're estate will go up in value over time.
Furthermore, when a person dies, their wealth can either be destroyed/lost, inherited by heirs, bequeathed to some institution, or absorbed into the state/public... by measuring only “private wealth” as TFA does, we don’t see those latter two routes for the flow of wealth across generations, thus biasing our view toward the inherited component of wealth.
Imagine an economy where wealth is accumulated more and more to a few, then even the total wealth grows, how everyone enjoy them equally? If not equally, the inequality soon will make wealth zero sum anyway.
PS: That doesn't mean that the claim is false. But you could - as is often the case - draw different conclusions from the data. E.g. that the European countries have heavy welfare and tax burdens that reduce social mobility and the chances of earning private wealth through work.
I agree with the general principle, but the US has lower social mobility IIRC than most of the EU countries. My current model is that whatever flaws our model has are currently dominating Europeans' reduction of social mobility.
Given how much better we integrate immigrants (especially in the parts of the economy that are high growth, like urban coasts), I wonder how much US social mobility is overstated. We didn't have a lot of money when I was growing up and my sister and I are both in a pretty high percentile of income, so we'd certainly show up as a data pt of social mobility. But my parents are upper class in "the old country", they both have master's degrees, and their kids' income relative to their human capital isn't really a central example of social mobility.
There’s more entrepreneurial spirit perhaps but the sons and daughters of wealth creators will still inherit.
https://wol.iza.org/uploads/articles/176/pdfs/intergeneratio...
It stands to reason that most wealth is inherited as inherited part grows gradually by gathered part (which is limited by human lifespan and pace of development of technology that creates new value).
Some inherited part is list due to gambling (on business mostly) but that just lowers pace of growth.
An extreme example: in Egypt they're making money out of the Pyramids, non inherited businesses (tourism) on the top of inherited public property.
failed revolution in the 1800s...
Would you please read https://news.ycombinator.com/newsguidelines.html, which ask you not to post like this? The parent comment has actually been decisively upvoted. It takes time for the community verdict to become clear.
Also, the "people are trying to silence your voice" thing is an internet trope that is best left elsewhere. We're hoping for thoughtful, non-repetitive discussion on this site, not boxing matches.
Edit: actually, since it looks like you're using this site for ideological battle and have done it multiple times before, I've banned this account. Please don't create accounts to break the HN rules with.