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Comment by LatteLazy | Hacker News Reader

What we need is inheritance tax. If you've made money, you can keep it. But you can't live for free just because some guy 100 years ago made money and you won the genetic lottery.

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That's rarely the case as it is. The majority of wealthy families lose their money in just a few generations if they aren't actively working to maintain it.

https://money.com/rich-families-lose-wealth/

Right now, they piss that money away on fast cars and lose <insert partner preference>. So we could divert that money to pay for infrastructure or cut income taxes or whatever, and aside from fast car dealerships, everyone should be happier.

"in just a few generations". One generation with an inheritance tax.

With a land tax many wouldn't get rich in the first place, let's address the root cause.

I’d gladly pay 100% inheritance tax on exchange for zero taxes during life.

Would anyone else go for a deal like that?

No chance. Deciding when to retire would be a nightmare. Many would retire too early. Most on death would donate 100% to the charity of their choice.

If you want to know when to retire, you can just buy an annuity. That's what pensions are today.

No.

The amount I will get in inheritance is more than the tax I will pay in my life.

interesting idea, but I think I would decline. I don't plan on having children, but I would like the primary beneficiaries of my excess productivity to be my friends and family. plus, I think it sets up a weird incentive to spend as much of your money as possible before you die, which causes a big problem if you live longer than you planned.

I actually think the current US estate tax rules (minus the loopholes) are pretty reasonable. you get to pass on $10mm or so to your beneficiaries untaxed, but any wealth past that is subject to a steep tax. if you remove the basis step-up for assets and somehow prevent super-wealthy people from avoiding the tax altogether, I think it would be a pretty good system. enormous estates would decay quickly through the generations, but ordinary to upper-middle class folks could still leave their life's excess productivity to people they care about.

If you're working for a firm that isn't actively tanking, then the primary beneficiaries of your excess productivity are always your employers. As many other people here have said the floor of any wealth tax is far higher than anything you could ever accumulate on a salary income.

note that I am replying to a comment asking whether I would accept an unconditional 100% inheritance tax in exchange for paying no other taxes while I'm alive.

regarding the wealth tax in general, I see no reason to prefer it over a capital gains tax. if it's not possible to eliminate the loopholes that allow very rich people to avoid paying capital gains, I don't see why the same wouldn't be true for a wealth tax. with the possible exception of LVT, I would greatly prefer to see the existing tax structures get fixed than to add an entirely new tax into the mix.

Fair point, I misread that. But even so, the inheritance tax is still a delayed wealth tax and a 100% tax would generally be easily avoided with gifts -- still taxable, but presumably not at 100%.

(Edit: if we had a combination of capital gains + personal income tax that effectively achieved the same goal as a wealth tax, wouldn't that be basically a maximum wage? Seems even harder to sell. It seems to me the main difference would be that a capital gains tax still encourages holding on to assets and a wealth tax encourages spending.)

Isnt there a loophole that you transfer all the money to a foundation and then your children control the foundation effectively getting the money but on the books they did not inherit the money.

There are 1001 loopholes. They should all be closed just like they are for earned income...

12 states have an inheritance/estate tax. Definitely worth replicating in the others, too.

As I see it, those just penalize people with moderate amounts of money (ie: trying to build generational wealth) while the truly rich simply find loopholes.

> while the truly rich simply find loopholes

You'll have to walk through how exactly, otherwise this is just a hand-wavy and unfalsifiable assertion.

Create a non-profit foundation that pays them, store assets outside the country/state, legally reside 51% of the time in a different state/country at their 5th house, etc. That's just random thoughts, I'm sure the truly rich have dozens more that their high priced accountants and lawyers dreamed up.

It's the same way Warren Buffett pays less taxes, percentage wise, than his secretary. When you've got millions to spend on lawyers and tactics amazing things are possible.

edit: Also trust funds and setting up a family corporation to manage assets.

I think the argument that you're making is that the existing estate taxes need to close foreign asset loopholes, but that's about it.

Then they'll find other loopholes as they have for centuries is my point. And the government has a vested interest in keeping those loopholes open for the truly wealthy since they're all friends and political donation buddies.

Then the strongest argument against a wealth tax is simply: "they'll find loopholes".

It's circular and un-falsifiable.

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