Hong Kong Property Tycoon Gave Away Children’s $400m Inheritance
bloomberg.com
bloomberg.com
Someone who is really wealthy would've bestowed their children with immensely valuable lessons and experiences while they were growing up. And most of those children would already be on a path to their own success well before their wealthy parents die. After all, you'd expect most of them to become successful in their 30s and 40s while their parents are still alive. At which point any inheritance is simply a cherry on top, even if it's just 5% of the estate with the rest going back into charitable causes / society.
I understand the argument about how the wealthy who earned their wealth have the right to do what they want with it, but we already know that a lot of wealthy people end up adopting this mentality around giving away most of their wealth anyway. Like Gates, Buffett, etc. It seems like once you get into the real echelons of wealth you have a better understanding of why large public works projects are more noble than simply giving the entire estate to your offspring who are likely already going to be well-off by the time you keel over and die.
It's not that laws are sometimes not enforced, it's that there's an entire echelon of lawbreaking in which the law is hardly ever enforced. Nobody worries about going to jail for engineering complex tax schemes designed to shield themselves from billions in tax obligations.
https://www.propublica.org/article/ultrawealthy-taxes-irs-in...
Sorry for the wall of text but this is an interesting look at the richest in America (spoiler: 60% inherited)
"In its just-released new report, United for a Fair Economy extends this baseball analogy to last year’s Forbes 400. UFE defines as “born in the batter’s box” those Forbes 400 rich who hail from poor to middle-class circumstances. Some had nothing growing up. Others had parents who ran small businesses.
About 95 percent of Americans, overall, currently live in these “batter’s box” situations. Just over a third, 35 percent, of the Forbes 400 come from these backgrounds.
Just over 3 percent of the Forbes 400, the United for a Fair Economy researchers found, have left no good paper trail on their actual economic backgrounds. Of the over 60 percent remaining, all grew up in substantial privilege.
Those “born on first base” — in upper-class families, with inheritances up to $1 million — make up 22 percent of the 400. On “second base,” households wealthy enough to run a business big enough to generate inheritances over $1 million, the new UFE study found another 11.5 percent.
On “third base,” with inherited wealth over $50 million, sit 7 percent of America’s 400 richest. Last but not least, the “born on home plate” crowd. These high-rollers, 21.25 percent of the total Forbes list, all inherited enough to “earn” their way into top 400 status."
https://inequality.org/research/selfmade-myth-hallucinating-...
This is why I'm in favour of very high levels inheritance tax. It would encourage rich people not to hoard their money and instead spend it on things that keep the economy moving (people spending money is what creates jobs). People being rich is great, but only if they actually spend their money.
The other way for economies to keep moving is for poor people to borrow more, and we saw the long term effect of that in 2008.
For your personal habits and plans it is good to keep in mind that most millionaires are self made and you can be one too. For policy purposes, understand that wealthy people tend to have wealthy children.
Friend of mine works for a high wealth individual with children in their 20's. That's exactly what's going on. If they actually come to need to inherit a $100 million from their dad then they don't really deserve it.
From a Chinese Culture perspective, that is exactly so.
This guy spelled out a will that directly went against the way how the general laws of the land would have normally given his estate to his heirs.
So by creating the will, he actively took that away those rights from them, and gave away his fortune to someone else.
(1) Inherited dynastic wealth creates a plutocracy. I believe people of each generation should rise to the level of their abilities and not to the level of largesse of their families. Allowing people to hand down massive wealth is like playing monopoly where every square already has a hotel on it.
(2) The children didn't earn it, so they deserve it as much as anyone else. Inheriting it may adversely affect who they turn into as humans.
(3) I believe in a large social safety net so that those who cannot succeed don't have to die, but rather can live out their lives comfortably. Basic income, socialized medicine, education, etc.
This strikes a fair balance IMO. You earned the money, you created the value, you have to spend it in your lifetime. If you can't, the state will decide where it goes. The next generation will be looked after, and if they too are successful they can also enjoy the spoils. If not, they can live out their lives in comfort.
Sure. Give something. But let a huge percentage of it be returned back to the society you got it from in the first place.
Presumably to the state I suppose.
Dynastic wealth needs to be paired with a code of ethics and training ... nothing inherently wrong with it.
1) The really wealthy find loop holes.
2) It discourages saving and investment.
3) It encourages consumption and spending on frivolities.
Imagine if everybody would have to start from the ground up, we would rarely see any progress at all.
I like Bill Gates' approach, he gave his children some fortune and allegedly will donate the rest of it
Even the kid of this Tycoon ended up becoming the CEO of his father's company. What a coincidence!
He won't inherit wealth, but he already did inherit the means to become wealthy himself. Probably is by now.
> It discourages saving and investment.
It won't do so significantly for your average Joe. Rich people not hoarding their money can also arguably be good for the economy. Though I'm undecided on that issue.
The really wealthy will always find loopholes in any system: that's not an excuse to do away with all societal structure or rule of law. No system can be perfect, but the idea is to strive to close such loopholes (even if this may be somewhat of an arms race—many things in life are)
> 2) It discourages saving and investment.
It discourages saving, but not investment (and only the latter has intrinsic societal benefit). One could argue it might skew investments more toward short term return, but I doubt this.
> 3) It encourages consumption and spending on frivolities.
Spending is generally framed as societal good and the definition of a "frivolity" is highly subjective.
However, if we do run with the subjective, I would argue that the biggest driver of frivolous spending is having a lot of (/too much) disposable income, which often stems from inheritance.
It's also often argued that inheriting does little to teach the "value" of money and as such encourages frivolity (though tbh I don't know how much I believe this).
> Imagine if everybody would have to start from the ground up, we would rarely see any progress at all.
Wow. Are you seriously proposing that only those who inherit riches can improve the world??? Or, worse yet, only those should have that opportunity???
> This type of policy is proven to be regressive
Define "proven" here. Where/when has this policy been implemented? What were the environmental factors?
Short term investment goals is precisely the problem. If one invests for a return only in their lifetime (for consumption), one can't make longer-term investments that have intergenerational benefits (consider the concept of investment broadly).
Only the state would be able to do that, so you'd better hope for a good state.
Not true. To begin with, what most people think of as "savings" is actually an investment—unless your savings take the form of cash stuffed in a mattress. An interest-bearing savings account is an investment, after all, even before we consider that larger sums would normally be held in money-market accounts or CDs. Even if you did keep your savings stuffed in a mattress, though, that saving still benefits others. You produced something of value and you're not spending the cash you received in return on things other people also want to buy. This reduces the supply of cash in circulation relative to the amount of goods available to be purchased and thus lowers prices for everyone else compared to what they would have had to pay if you'd chosen to spend the money. Normally in a healthy, growing economy this forbearance would be rewarded through appreciation of the purchasing power of the unspent cash over time—price deflation—but TPTB have decreed that price deflation is evil and must be avoided at all costs. (The key lesson here is that it's a really bad idea to treat any fiat currency as a store of value, since they can always make more and dilute your savings.)
>> 3) It encourages consumption and spending on frivolities.
> Spending is generally framed as societal good and the definition of a "frivolity" is highly subjective.
I'll grant that "frivolity" is subjective but consumption is pretty much the opposite of a societal good. It's not a bad thing, of course. Production without consumption would be pointless and wasteful. However, it's the process of production that provides value to others; consumption is just the opposite, claiming one's own personal share of what all the members of society have collectively produced.
> Are you seriously proposing that only those who inherit riches can improve the world???
It is an objective fact that those few lone individuals who can claim to have lived their lives free of unearned gifts from their parents or other interested parties (apart from life itself, which is a major concession) have not been particularly successful at improving the world beyond the narrow scope of their own necessities. That's because they're spending their entire lives and all of their energies just trying to survive. Just having parents who take even the most basic care of you as you're growing up is a huge inheritance in its own right. More indirectly, we have the vast stores of knowledge left to us by previous generations as well as a huge amount of capital to amplify the productivity of our efforts. We tend to focus on mere differences in inherited material possessions, but in reality that pales in comparison to the vast riches gifted to even the poorest among us has by those who came before.
This goes against the idea that I should have the freedom to do whatever I want with my post-tax money. What if I decided I want to give my money to a bunch of random strangers on the street? Would you insist "they deserve it as much as anyone else"? It's an essential matter of freedom. Where do you draw the line? Would you say I can't donate too much to X charity, and must donate equally to all registered 501(c)(3) orgs?
What about me just going out and buying stuff? What if a super-rich person decided screw my kids, and chose to splurge everything they earned on incredibly-expensive vacations, cruises, food, hotels, etc. Are you going to attempt to use the force/violence of the state to prevent them from giving their money to whomever they want to give it to?
Reductio ad absurdum. The ultimate consequence of carrying your line of thought would be the appropriation of all income and wealth, a.k.a. communism -- which we know doesn't work very weell.
> (3) I believe in a large social safety net so that those who cannot succeed don't have to die, but rather can live out their lives comfortably. Basic income, socialized medicine, education, etc.
Ignoring the fact that every European country that does this has an absurd and shocking tax-as-a-percentage-of-GDP (it's nearly 50% in France) -- your "large social safety net" is only going to work in very wealthy countries (with high per-capita income). This wouldn't work in most middle/low-income countries, where annual incomes 30 to 40 times to lower than very-high-income countries. And my point being -- I think we should aspire to develop universal political principles -- not ones that break in certain economies, while barely-working (with extremely high taxes) in others.
> (1) ... Allowing people to hand down massive wealth
I don't really know what the solution is to this. I'd have to reflect more. What I can say it's unfair to completely take away something that someone truly worked to build/earn. Perhaps we could frame things to say that there is a moral limit to how much someone can "fairly"/"ethically" earn in their life, and anything above that limit, is society's to plunder. I don't know. I haven't found an idea that I find comfortable or confident supporting.
Define absurd and shocking. Is it shocking to an American with a seemingly lower tax rate or to a European who has to pay these taxes every month?
“In 332 AD Emperor Constantine issued legislation that greatly restricted the rights of the coloni and tied them to the land. Some see these laws as the beginning of medieval serfdom in Europe.” [1]
Not everything was better in the past.
You don't have the freedom to do whatever you want with your post-tax money. That's constrained by law. You can't give it to someone else, for instance, in excess of $14K per year you have to pay a gift tax. You can't pass it on to your children without paying an estate tax. You can't open a brokerage account in a foreign country and buy assets there. You can't pay anyone on the OFAC list. The list goes on, and on, and on.
If you gave a stranger on the street <$14K sure. More than $14K prepare to pay the gift tax, which treats it as income. I don't draw the line, you're welcome to spend it anywhere. You just can't give it to your children as an estate.
> Ignoring the fact that every European country that does this has an absurd and shocking tax-as-a-percentage-of-GDP (it's nearly 50% in France).
The top marginal tax rate in California is over 50%.
> I don't really know what the solution is to this. I'd have to reflect more.
Force people to spend it or tax it at 90% when it's passed on.
Your whole line of thinking seems absurd to me. Why is it totally fine (by you) for someone to spend all their money on themselves, but not okay for them to gift it to someone? You're saying if it's a gift (or estate passed to children/spouse), tax it a second time at 90%. But if they spend it on fancy hotels, luxury cruises, etc. there's no double tax. This is absurd, and irrational.
> The top marginal tax rate in California is over 50%.
How is this relevant? Marginal tax rate is a different unrelated thing. I for one, support a marginal tax rate of at least 70% on very high incomes. I think the people making less than $100k should pay a near-zero income tax, and people making above, say $2 million, should be taxed at least 70%. (Or, even better, at 90%.) But I want to keep taxes zero or nearly-zero for the middle-class, especially for the poor. In a tax system like mine, the tax-as-a-percentage-of-GDP would remain fairly low. So your comment on the "top marginal tax rate in California" is absolutely irrelevant.
> You can't give it to someone else, for instance, in excess of $14K per year you have to pay a gift tax.
I'm well aware of the gift tax, and I support it (at the current rate). It was created to prevent people from circumventing the estate tax (which I also support at the current rate). Now, notwithstanding the fact that this also is irrelevant to the point I raised, I'll point out another error: you and a lot of people think the gift tax exclusion is the only things there is, and forget about the lifetime gift tax exemption. You have a lifetime gift tax exemption of $11.18 million, and an annual gift tax exclusion of $15K, as of 2018. Only after you've given away $11.18 million, does the annual $15K limit kick in.
> You can't open a brokerage account in a foreign country and buy assets there
This is patently not true. Plenty of countries let you open brokerage accounts without being a citizen or resident there. And US law doesn't prevent you from opening brokerage accounts abroad. (The FATCA has made it a PITA for foreign financial firms to deal with American clients, and they might turn you away; but for those who are not American, that's not an issue.)
Yes. They earned it, they should benefit from it. Wealth is society's way of rewarding you for creating value to society. That reward shouldn't be transferrable (beyond some trivial quantity). If they don't want to spend it on themselves, they should return it to society. Think about it dispassionately; why does your child deserve your money? They didn't do anything other than be born, so you're basically rewarding them with a privileged lifestyle just for existing. You're choosing to privilege people because of the circumstances of their birth, and I'd hoped we as a people have moved beyond that. They should rise to the level of their ability on their own and be rewarded accordingly. If they can't they shouldn't obtain the benefits and lifestyle. Those who deserve it in the next generation should. IMO, of course.
> How is this relevant? Marginal tax rate is a different unrelated thing. I for one, support a marginal tax rate of at least 70% on very high incomes. I think the people making less than $100k should pay a near-zero income tax, and people making above, say $2 million, should be taxed at least 70%. (Or, even better, at 90%.)
Fine by me :)
> Only after you've given away $11.18 million, does the annual $15K limit kick in.
Indeed, I'd forgotten that. I think that should be eliminated.
> This is patently not true. Plenty of countries let you open brokerage accounts without being a citizen or resident there. And US law doesn't prevent you from opening brokerage accounts abroad. (The FATCA has made it a PITA for foreign financial firms to deal with American clients, and they might turn you away; but for those who are not American, that's not an issue.)
Those who aren't "US Persons," which includes anyone resident in the US -- even anyone a tax resident of the US in the current year. Regardless of nationality. This one isn't FATCA related, it's SEC regulation:
"Under Regulation S of the Securities Act 1933, the SEC prohibits – among other things – foreign financial institutions that are not registered and regulated in the US abroad from soliciting US residents as clients." [1]
FATCA is awful, but it's not responsible for this.
[1] https://the-international-investor.com/investment-faq/us-res...
Yes, I'm well aware of that. I moved to the U.S. in 2007, and I'm not a citizen or a permanent resident yet (and not that close getting permanent residency either). Not because I don't want to become a US citizen, but because US immigration laws make it incredibly difficult to gain permanent residency if you're not family-sponsored and qualify for refuge/asylum. My presence in the US, per the IRS' Substantial Presence Test[1], makes me a "US person" and subjects me to the related taxes. I use the word "American"[2] in the sense defined by Jose Antonio Vargas[3]. He's written a great book[4] on the topic.
> the SEC prohibits – among other things – foreign financial institutions that are not registered and regulated in the US abroad from soliciting US residents as clients
This is a good thing, and this makes perfect sense. The SEC exists to protect US investors. If an unregulated nefarious company solicited US investors, that would expose them to potentially huge danger. There are enough bad-faith and Ponzi investment schemes cropping up, it's best to not expose Americans to soliciting from investment firms all around the word.
But -- as far as I'm aware -- nowhere does federal law or regulations (incl. SEC rules) state that a US person can't open a brokerage account abroad. Sure, a foreign brokerage can't advertise to you nor solicit you, but there's nothing preventing you from doing your research, and finding a brokerage abroad you like, and applying to open an account with them. (Of course, it'll depend on that country's rules and whether they allow non-citizen non-resident person to open brokerage accounts in their country, but in general, one could say a country loses nothing by receiving foreign direct investment, so would likely welcome it.)
> They didn't do anything other than be born, so you're basically rewarding them with a privileged lifestyle ...
Let's clarify who gets the proceeds from your hypothetical 90% tax. The citizens of the X country? I want to ask a rhetorical question at this point: why should the citizen of the X country be rewarded over another country? Because they were born there or have ancestry to the people who inhabited that land a long time ago? As per your argument, they didn't do anything to deserve it. Other than being born on X piece of soil. I've paid hundreds of thousands of dollars in taxes. The US has such horrid immigration laws that it's almost impossible for anyone to obtain permanent residency in this country outside family/DV/reugee+asylee routes. The fact that I've been here for over a decade legally, and have paid hundreds of thousands of dollars in taxes -- counts for nothing/nada/zilch under US immigration law. My freedom to live here could be stripped away easily if I lost my job. I'm years away from citizenship. So here's my question: wouldn't the right thing to do be to distribute all of the revenue equally to the whole world? Is that fine?
> hey earned it, they should benefit from it.
What if they don't want to benefit from it, but rather want someone else to benefit from it? Why is that not okay? Spending money on oneself vs spending it on someone else -- where's the distinction? Perhaps they get great joy in giving the money to others. That's their choice. By the way, the only distinction between the two kinds of money transfers is that one's a donation/gift, while the other is a transaction involving the exchange of services/goods. What you want is to effectively ban gifts and donations. It seems like in your ideal world, all people (are forced to) engage in purely transactional relationships, and charity is non-existent/banned.
In summary, what I can say is: all of your ideas and arguments are truly shallow, poorly thought-out, logically inconsistent, and incoherent. While leaning heavily towards communistic tendencies, and an utter destruction of personal freedom / individual liberty.
[1] https://www.irs.gov/individuals/international-taxpayers/subs...
[2] https://defineamerican.com/
> So here's my question: wouldn't the right thing to do be to distribute all of the revenue equally to the whole world? Is that fine?
If you're still alive feel free to do so subject to the rules and regulations of your jurisdiction. If you die with an estate, it'll get handed out by the government of the place in which you were last resident. It's not that complicated, it's how it works right now, just with a higher rate and a lower exemption. I'm not exactly breaking ground here.
> In summary, what I can say is: all of your ideas and arguments are truly shallow, poorly thought-out, logically inconsistent, and incoherent. While leaning heavily towards communistic tendencies, and an utter destruction of personal freedom / individual liberty.
This entire block was logical fallacy, simply attacking me instead of the argument. This is a great way to lose a debate, so when you're having a consequential debate in your real life, I suggest you avoid this line of attack.
It's interesting that what I propose was the law of the land in the US for much of the 1900s. The US estate tax was between 70 and 80% from the early 1930s to the late 1980s. This included the entirety of the so-called "second red scare" (1947-1960). Clearly the neo-McCarthy-ites didn't consider this to be "communist" or an "utter destruction of freedom and liberty." During this same period the top marginal tax rate was between 80 and 95%. You'd think if it was classically "communist" leaning, that might have come up? This isn't meant to be an appeal to authority, nothing I've suggested furthers the Communist agenda of "advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs." I'm pro- wealth inequality and pro- income inequality so long as it's coupled with social mobility and people start out more or less from the same place in each generation. [1]
To quote Wikipedia, "free market supporters of the tax, including Adam Smith and the founding fathers would argue that people should be able to get to the top of the market through earning wealth, based on meritocratic competition, not through unearned, inherited handouts, which were central to the aristocratic systems they were opposed to." [1]
I posit to you that having generations start off on even footing is the definition of meritocracy and the American Way, and you're representing the post-1990s modern neo-con mentality. That's fine, and I don't think your arguments are "poorly thought-out and inconsistent" -- I just disagree with you.
[1] https://en.wikipedia.org/wiki/Estate_tax_in_the_United_State...
Forcing people to spend money in their life time is going to incentivize consumerism. So I was super rich, and you want me to be forced to spend rather than invest and pass down to the next generation, I'm either going to try to pass it down illegally, or spend on things like sports cars and yachts and watches and fine wines and michelin star restaurants. None of them is as valuable as keeping it invested. On top of that, I'd divest all my holdings (which, if I didn't diversify well, means asset value in general will drop whenever someone super rich dies, which also opens up the opportunity for speculation, but that's beside the point).
This also doesn't take in the account of sudden death. What if you suddenly died at 45, with a $1.5 million estate? So you never had the opportunity to enjoy it. This will incentivize people to be a lot more near-sighted and again reinforces consumerism.
You mentioned having it being taxed at 90%. I'd say that's probably good, but I'd go a step to the right and say 90% on anything that's over $2mil, since your argument is contingent on a very very strong social safety net, which I do not think the United States has, and I would say it's also debatable on how strong you want the social safety net to be.
Just my two cents.
Not only did he believe this is for the greater good, but he must've had a strong conviction that his children would've been better off this way.
There remains, then, only one mode of using great fortunes; but in this we have the true antidote for the temporary unequal distribution of wealth, the reconciliation of the rich and the poor—a reign of harmony—another ideal, differing, indeed, from that of the Communist in requiring only the further evolution of existing conditions, not the total overthrow of our civilization. It is founded upon the present most intense individualism, and the race is projected to put it in practice by degree whenever it pleases. Under its sway we shall have an ideal state, in which the surplus wealth of the few will become, in the best sense the property of the many, because administered for the common good, and this wealth, passing through the hands of the few, can be made a much more potent force for the elevation of our race than if it had been distributed in small sums to the people themselves. Even the poorest can be made to see this, and to agree that great sums gathered by some of their fellow-citizens and spent for public purposes, from which the masses reap the principal benefit, are more valuable to them than if scattered among them through the course of many years in trifling amounts through the course of many years.
[0]: https://www.carnegie.org/about/our-history/gospelofwealth/
> self-made man!
> A graduate of the London School of Economics and Political Science, Shih said he considers himself an average Hong Kong citizen.
and
> Shih’s advice to his peers? Be realistic.
> He aims to buy a two-bedroom apartment in a middle-class neighborhood in West Kowloon
The interwebs tell me that a 2-bedroom flat in west kowloon starts around 2 million USD. I'm sure it's realistic for Shih, I doubt it's realistic for the average HK citizen.
It strikes me as very odd (and stupid) for someone to give their own child nothing, but then essentially give a bunch of other families and their children $400 million.
I mean, at least give your own kid a leg up! Geez.
I think he probabbly gave them something more than "nothing", possibly even a leg up.
>Evolutionarily speaking, people should...
What does this mean?
When I use this term, I'm referring to the general theory of evolution, particularly in reference to survival of the fittest and natural selection. I'm also referring to the natural instincts that a lot of animals (and humans) tend to have, such as the instinct to save the life of their own offspring, even if it means putting their own lives at risk.
Acting like what is "evolutionarily smart" isn't necessarily what's good. It can be, but that's not a strong basis for moral action.
But I also have a deep-rooted mistrust of most charities, since I have first-hand knowledge of how many of them mismanage their funds.
I'm pretty sure his kid has more than nothing. It wasn't sent to an orphanage to begin with. Having a good education and knowing the right people is often more valuable than some cash in the bank.
Edit: Also human has evolved to utilize social systems to further their survival and dominance. It's no good to have all the money in the world while the system itself crumbles. This dad has the foresight to use his money to ensure the system his offspring living in will survive and thrive. There's a saying, "no eggs can survive a fallen bird nest."
And if I could choose, I would highly prefer paying my taxes not from my income when I am alive, but from the estate I leave after I am dead. For some reason that is completely mindboggling to me, this preference seems to be quite rare...
Hope for the best, but plan for the worst.
Look, we all know that's not true. It's good to give kids a leg up so they don't suffer unfairly in this unfair world.
Why not give it to literally anyone else? Why not give your money to me when you die? I'm sure your gut said, obviously not, why would I do that? That's how I feel about inherited wealth.
After all, wouldn't receiving that help that they didn't earn just automatically turn them into a bad person?
I guess we should just burn any extra money we have! Can't be letting people having something for free that they didn't earn!
Carnegie, for example, decided that He Really Liked Libraries. So he built a lot of them.
Paul Allen decided that we were wasting everyone's time redoing basic science experiments, so he did a lot of them and put them all online for free forever.
Brian Acton and Jan Koum decided that free, secure messaging should be available to everyone, so they sunk $500M into Open Whisper Systems so it can be a nonprofit with a warchest.
In years past, people have made similar decicions like "there should be a really good hospital in this town, so i am building one", or whatnot.
He used his wealth to benefit society, but he also effectively set up a system that would stamp and preserve his name and legacy in history. His actions weren't exactly entirely selfless.
This seems to be a common goal for a lot of people once they become very rich. They ask themselves, "what do I do with all this money?", and then they discover that even rich people die... So they attempt to white wash any of their past wrong-doings, and paint themselves as heroes and leave behind a legacy where their name will live on even after they die.
I highly doubt someone as famous as Andrew Carnegie was heavily motivated by having his name on another building.
Does it hurt anyone alive today? That's the more important question.
Link please. Couldn't find em
I believe it was $50 million not $500.
Power.
A very comfortable lifestyle can be had for orders of magnitude less than $400M in wealth, so lifestyle isn't a motivation at that point.
Inheritances function kind of like insurance policies against an unpredictable future for your progeny. The more dangerous you think that future is for your children, the more likely you are to set aside as much as you can for them.
The father in this case seems to be confident that the future holds promise for his children, whether because he thinks they will get a fair chance, or because he raised them well, and that therefore they don't need a massive inheritance to live well.
If I'm wrong, why?
All this aside, I think it's great that this gentleman made this choice. I think it will do a lot more good this way, and might even make his son more successful (by avoiding trust-fund syndrome).
While that process may be necessary to incentivize innovation, it has societal costs, and it's not unreasonable to consider offsetting those costs by confronting the wealth gap directly.
But I would argue the concentration of extreme wealth in few hands actually hinders innovation, and therefore makes society poorer overall, because a great number of people who might otherwise contribute creatively to major societal problems instead must focus their efforts on daily survival.
This is my issue with the whole "wealth inequality" concept. It's just that: you have more money than I do. So what? Sure, I'd like more money, but I don't think it's the government's job to take your money and give it to me. I have never seen the issue with CEOs making tens of millions of dollars; they do a very singular job (in a well-run company).
> Technology picks up some of the slack by raising the floor standard of living, but only if doing so is also profitable for the financier or seller of the technology, and never anything beyond that.
You think the Gates Foundation operates on a for-profit basis? I think you are correct with respect to businesses, but would prefer non-profits pick up the slack for the very bottom of society, rather than the government.
> While that process may be necessary to incentivize innovation, it has societal costs, and it's not unreasonable to consider offsetting those costs by confronting the wealth gap directly.
I agree it has societal costs. How do you propose to directly address it? I don't think giving the government the power to take and distribute how it deems best is a good solution.
> the concentration of extreme wealth in few hands actually hinders innovation, and therefore makes society poorer overall, because a great number of people who might otherwise contribute creatively to major societal problems instead must focus their efforts on daily survival.
Though it does have problems, I think it also makes it easier in some ways. Angel investors can make it much easier to start a business, and certainly easier than if you had to pitch the middle class for two thousand dollars a piece.
I guess my overall issue is that I don't know of a better way. The best solution I can come up with to help is to stop the crony capitalist element, subsidies, etc.; where government picks winners and hands out contracts. I don't trust the government (particularly not the federal) to do most anything right, and I think if they are given more money (via, say, increased taxes), they will just waste it, likely signing more large, crony-ist government contracts in the process.
If there's a better solution, what might it be? I think if one is proposed, maybe it's best to test it on a state or local level first. I tend to start from a moral perspective: how can we morally justify taking money from others at gunpoint to make things "fairer"?
Perhaps it depends how they got it. If they got it by "unfairly" taking it from their neighbour at gunpoint, can we morally justify taking it from them at gunpoint - perhaps in order to return it to that neighbour? If that seems like a fair action, if we can justify that, then the principle is established that sometimes it is morally justified, and we then need "only" identify those qualifying situations.
We call those people robbers and do just that. Any one who takes money at gunpoint is such. I'm not sure if you were trying to make a different point, but we're pretty good at arresting violent criminals and punishing them.
I suggest, and you appear to agree, that sometimes it IS morally justifed to do so. The principle established, with both of us agreeing that sometimes it is morally justified to forcefully redistribute wealth, now it only falls to us to decide when we should do this forceful redistribution of wealth.
How do we justify it for paying for our common defense (the military), theoretically blind justice (the court system), public roads and infrastructure, critical public health programs? The answer is that if we don't, there would be dire consequences. It's not so different for the consequences of high inequality, or as someone recently put it cheekily: the Hamptons are not defensible ground.
However, you appear to be conflating taxation as a method of raising government revenue with the question of whether a society should have have resource redistribution of any kind.
Can you propose an alternate mechanism for raising government revenue, other than by threat of seizing it?
Or perhaps you simply oppose governments raising revenue at all, and by consequence, the existence of government itself?
We have many contemporary examples of societies that lack the ability to centrally tax and raise revenue. What happens in these places is revenue still gets raised, but in a decentralized way, and usually with the threat of real violence.
In the interests of not coming across as a passive-aggressive dickhead, I believe that the US and the UK (where I happen to live) are, to a large extent, meritocracies, and I think this is a bad thing that stunts (many) people's opportunities to excel and achieve. I suspect we have quite different working definitions of "meritocracy".
To be a little less snarky, this kind of simple prescription gets very, very complicated in practice. You really want to make it so that a lower-middle-class family whose primary breadwinner dies has to lose 100% of their assets? No? Okay, now we have exceptions to the 100% estate tax. What about spouses who outlive their partner? If I die, should my wife get kicked out of the house that we own jointly? If not, what happens when Joe Billionaire marries someone who he never gives any indication of regarding as a spouse right after his terminal cancer diagnosis, and she marries his son right after Joe's death? What if she marries Joe, immediately divorces him, his divorce settlement gives her the overwhelming majority of his assets, and the she marries his son and they immediately divorce and the settlement gives him the overwhelming majority of their assets?
What if Joe Billionaire starts foundations and those foundations employ his children? What if he starts a for-profit company that he owns 100% of the stock of, the company employs all his children and pays them $100M a year until the company runs out of money? At the end of his life, the government can take all the stock of the now-worthless company.
What if Joe Billionaire locates his assets in a different jurisdiction?
People (mostly) don't go to these extremes right now because they don't stand to lose hundreds of millions of dollars if they don't.
I'm talking about the estate tax we already have, where that family is already exempt:
>Because of these exemptions, it is estimated that only the largest 0.2% of estates in the U.S. will pay the tax.[7] For 2017, the exemption increased to $5.5 million. In 2018, the exemption doubled to $11.18 million per taxpayer due to the Tax Cuts and Jobs Act of 2017.
The rest of your examples aren't especially meaningful, the existence of loopholes doesn't mean we can't start with something simple and adjust it later. Those methods already exist and are used to dodge existing taxes, that doesn't mean taxes are a flawed concept.
https://www.latimes.com/politics/la-pol-sac-skelton-income-t...
>Sure, there are anecdotes galore. Everyone seems to know someone who has fled California to dodge its high taxes. But there’s no wholesale bolting of the rich.
>“Substantially more rich people are moving into California than moving out,” says Cristobal Young
https://www.courant.com/politics/hc-pol-millionaires-leaving...
>Florida, which ranked 39th in per capita income in 2017 according to the U.S. Census Bureau, gained the most income through migration. But Florida generally is considered an outlier, given its extremely attractive climate.
>“When Florida is excluded, there is virtually no tax migration,” the report states.
[0]: https://www.forbes.com/sites/jonhartley/2015/02/02/frances-7...