It sure would.
If I wanted to design a system to throw society into abject chaos, basically permanently, I can’t think of a better way than a rule of “make it impossible to build something for your children”.
That idea is anti-family, it’s anti-civil-society, and it’s anti-civilization.
- Warren Buffett
I think progressive wealth transfer taxes are a perfectly good middle ground.
I fundamentally, emphatically disagree with this. I think it's a weird rewriting of history to think that "Civilization was built by trying to stop wealth transfers within powerful families".
Do I think a lot of wealth is trapped within a few families, and that might be a problem? Sure. Do I think that the ability to destroy generational wealth transfers is what made Civilization? No, and I think it's absolutely crazy to think so. It ignores every great family in history that did everything from win wars to build railroads.
Civilization experiments with policy. At the extreme, there is a push towards consolidation and monopolies and this is counterbalanced by the rule of a unhappy mob. This causes policy to shift over time.
Wealth transfer is income, so progressive income tax without exempting wealth transfer from income tax would seem the most direct solution.
We are past that now. Now we have advisors, funds, elite accountants, and all kinds of dead easy ways to invest and keep huge wealth long term, for even the most inane person. Plus those people are not accountable to anyone. It's not like a hated heir of a royal who has to tread lightly anymore, lest the senate or the people take them down...
In fact, inane people can even make a great fortune from scratch in this era, what with the various famous-for-being-famous celebrities...
1. Advisors and accountants do not own the wealth - you set the goals. If you want to spend it or mismanage it, they are not going to stop you.
2. The wealthier you are, the more difficult it is to maintain the real value of your wealth, in general.
3. If you have 3 children, they have 3 children and so on, and you split your wealth equally among your children, even a billion turns into only 5 million within 5 generations - and that is if they manage to maintain its real value over time.
And if they do manage it cleverly and get to keep the real value of the wealth? Great! Society is better off, because that means they allocated capital productively within our society, making the economy more efficient.
E.g. maintaining the "real value" is not as much of problem for people having tens of billions (as we increasingly see today). Even if the value drops, they're still multi-billionaires. And diversification strategies today span the globe.
And the "3 children inheritance diffusion" problem is easy to solve: rich people have less kids today than historically.
There's also that:
https://qz.com/694340/the-richest-families-in-florence-in-14...
2. If, on the other hand, there is some survivorship bias going on there and wealth rotates a lot, and some members of wealthy families keep their wealth, that is not as good an outcome but it is still not so bad, as it suggests that as a family's culture degrades their wealth will likely degrade as well.
The opposite. Civilization invented laws so people could pass their wealth and power to their children, to the point that the absolute head of the state was determined by birth and not by skills.
In precivilized tribal cultures there was inheritance of weapons, tools, tents etc. to childrens and of course it played a role beeing born the chieftains son, but no ruler was born that way. They had to directly earn the respect of the tribe, by proving they are good leaders, before they were accepted. Direct democracy, long before the greek "invented" the concept.
I find it strikingly hard to believe that democracy, which is what I assume you’re referring to, is the actual imperative that caused this. If we had managed to avoid WWI it’s really difficult to imagine that we’d still be using a horse drawn buggy and a typewriter.
Most European countries have steep inheritance taxes to prevent going back to oligarchy.
Which has the problem of course, that the really rich have ways of not beeing affected by those laws too much. Which is not too hard, when the tax-laws are ridiciously complicated with many exceptions for good connected lawyers and many countries on this planet who welcome any people and money as long as they get a small share.
The notion of the “idle rich” spoiled offspring exists for a reason. Nothing kills ambition more than unearned wealth. Obviously there are many counter examples with many wealthy heirs contributing significantly to society. But I would argue that they would behave the same if they inherited less.
As Aristotle roughly said, the mean between extremes is often the right answer. You could completely eliminate any transfer of wealth without social collapse; just like you could have essentially unlimited transfer of wealth with out social collapse: you would just end up with an aristocratic system. The question is what do you want to create.
People might be happy to overlook this when things are going well for them personally, or when they feel hopeful about the future. When that is no longer the case for a majority, though, the status quo could be just as 'anti-civilization' as extreme redistribution.
As if family is not about loving and preparing your kids for life (and being good citizens etc), but padding their bank accounts so they don't have to work...
Personally, I would sooner accept 90% tax to the rich&living, than 100% tax upon death.
Both are theoretical of course - there is no way to enforce them really without hurting overall society. There is also no need I think. A better solution is to make sure that wealth doesn't give too much unfair privilege, and that basic living conditions are guaranteed to everyone - we are getting closer to this every decade.
You want a situation where wealthy people build a lot more wealth than they consume. The last thing you want is for them to consume their wealth, making themselves better off but the society overall much, much poorer.
Or, maybe... if there were less of an advantage to accumulating wealth, we wouldn't destroy ourselves and the environment quite so madly while doing so. Great fortunes would not be generated, because what would the point be?
ISTM that a rich person who doesn't want her estate to be confiscated upon her death could just divide it among many heirs? If the progressive tax is not levied on the heir rather than the estate, then maybe it should be. Intentional division would destroy dynastic family wealth without wasting it on the frivolous spending of the state.
2. If the world is poorer, it will be able to afford to protect the environment less, not more. The wealthier a nation, or a neighbourhood is, the more it cares about protecting its local environment. For example, as China gets wealthier, it cares more about having cleaner air.
3. Wealth concentration in the right hands is not necessarily a bad thing. Increasing taxation is just concentrating more wealth in the hands of parliaments/governments, which they are unlikely to spend too effectively given that they are spending someone else's money, but yet which still results in some great outcomes (scientific advancements, until recently space flight etc.). Wealth concentration means that great leaps forward can happen in areas that at first are going to be very expensive (medical/longevity research, grand projects like SpaceX, even originally mobile phones etc.)
If you want to tax anything, it is probably better to tax (frivolous) consumption, i.e. wealth destruction, instead of wealth creation.
Sure, I agree, but we're talking about estate tax ITT.
It's nice to imagine that switching from income taxes to VAT (with appropriate progressive adjustments for the poor) would allow the merely hardworking rather than just the lucky and unscrupulous to accumulate wealth, but it's not clear that would be the case.
No, it would encourage people to conceal wealth transfers as consumptive spending. (Just like existing dedicated wealth transfer taxes—gift and estate taxes—do, but more strongly, and we've seen what people dedicated to transferring wealth, like Fred Trump, already do.)
That doesn't mean increasing the overall tax burden, either - it could be introduced to offset income tax reductions. It seems much "fairer" to me.
One of the most attractive features of a death tax is that it applies to everybody. After all, nobody escapes death.
Of course, that doesn't mean it'll be loved universally. Some people just hate taxes. Others don't like the idea of not being able to pass on their life's work to their children.
But most reasonable people understand the need for taxation. It's a lot easier to stomach the tax man dipping into your wallet after you're gone than before.
The death tax doesn't apply to everybody, as hardly everybody leave behind a significant estate. Lots of people die with a negative net worth.
The death tax is also often sold as "only affecting estates worth over $xx million", so it safely doesn't apply to the vast majority of voters, it only applies to those they are envious of.
People only value the capacity to transfer wealth inter-generationally to such a degree so long as its required to guarantee your children don't live a life of endless toil for meager subsistence wages.
You generally get wealthy by providing goods and services to others. The more you satisfy people's wants and needs, the wealthier you get. The wealth means that these people now owe you.
If you accumulate wealth instead of consuming it, you never take them up on it. You are basically acting altruistically - instead you use their IOUs to provide even more goods and services for others (not yourself) by managing your wealth instead of consuming!
I think it is actually an amazing feature of our civilisation. Wealthy people generally don't use their wealth to build massive monuments to themselves - they tend to invest it into economically productive enterprises that make society wealthier overall.
2. I suspect that no one in this discussion (even those whose words suggest otherwise) want it to be so that you literally can't leave anything to your children. So there's some point in accumulating whatever amount you can leave to them.
3. By and large, I think people accumulate wealth mostly in order to have it. I'd rather have $3M in the bank and know that barring really major upheavals I never have to worry about being poor, than have $0 in the bank and live precariously from one payday to the next. This would be true even if I had no children and no prospect of ever having any. It would be true even with a decent "safety net" ensuring that even if I completely ran out of my own money I'd never be, e.g., at risk of starvation or homelessness.
[EDITED to add:] Wait, there's more.
4. You might accumulate wealth in order to use it for some expensive enterprise. Consider e.g. Elon Musk, who (at least the way he tells it) got rich in order to save the environment and give us the ability to escape to Mars if we need to. I don't know what Warren Buffett's original motivation for getting rich was, but his present alleged intention is to give away almost everything he has for charitable purposes, and he explicitly says he doesn't want to give his children too much. (Though it may well be that "too much" in his sense is much more than 99% of parents could possibly give their children.) The advantage of this sort of use of wealth is that it doesn't suffer from diminishing returns as much as spending the money on yourself does. There's not much I could do with $2B that I couldn't do with $1B, but $2B will save approximately twice the number of lives that $1B will.
5. You might want to turn your wealth into power. Lots of lobbying. Carefully targetted political donations. Make yourself a household name and run for president of the US. Give funds to academics and other potential public intellectuals who happen to have views you want to be more widely heard. With a couple of billion used carefully you can have a big impact on your country, or even on the world as a whole.
[1] Or, of course, it might not; it could be, for instance, that the smooth running of a modern economy depends on a level of acquisitiveness that could never exist if people were getting money only for their own use and not their children's. (As it happens, I think that's unlikely.)
I had all this, thankfully, even without my parents being rich. They grew up in a time and area where they could still buy a decently sized house and have children on a single income. They struggled, but they made it.
Thanks to living in a (more) socialist country, taxpayer money paid for my education, allowing me higher social mobility than my parents. Ten or so years into my career, I've paid what was invested in me by the other tax payers a few times over already.
And how do you prevent people from giving gifts? Parents giving their children a gift of money?
And trusts are a thing, so gift tax would not help as much as you would think.