Sometimes we become what we set out or destroy.
I am seeing bus stop ads here in Sydney with a tagline from a BTC exchange saying something like "If you're seeing bitcoin on a billboard, it's time to buy".
Now I'm hardly an astute investor but I thought the usual rule is that if your cabbie starts talking about it, it's time to get out of the market.
I think crypto has plenty of run left. It’s still a pain to buy. When your dentist is loading up his 401k with Bitcoin ETFs, that’s going to be the peak.
>If your cabbie understands BTC you might have a point. We aren't even close to there yet
The point is that the cabbie likely doesn't understand BTC. When an asset class becomes so popular that people who have no idea how it works are putting money into it and loudly campaigning for others to do the same that is a sign that you are in a bubble.
It doesn't necessarily mean that the bubble is about to pop. Some bubbles can last decades. See real estate in a variety of locations around the world as an example. However lot of dumb money (people who don't understand what they're buying) flowing into a thing because of fomo can be a predictor that prices are unsustainable.
It absolutely isn't a sign a of a bubble. There aren't many people that understand what they are investing in be it currency or Google. The success of the investment has nothing to do with the cabbies understanding. Taking his advice does.
My stripper friends first started asking me if they should buy cryptocurrencies in 2017. Had you bought btc at the $17k it was priced then, you'd have more than tripled your money in the following four years.
https://www.youtube.com/watch?v=sztf4hcGrB4&ab_channel=WestL...
It is said that the people are revolting!
You said it. They stink on ice!
For 100% (or otherwise significant) inheritance tax, the issue is how to implement it. If you know it's happening, you'll just gift what you own to the preferred recipients before you die. If gifts are also 100% taxed, you sell your property to them (and then spring up a company and hire them to do "work", so they get the money back). If sale of property and work are 100% taxed, well, it's a very different kind of economy.
100% inheritance tax only hurts when someone dies unexpectedly. Others will be prepared with workarounds.
Where I live, both inheritance and gifts are taxed with very similar rates. Also, selling things under their market value is considered gifting (which sometimes gets interesting, for obvious reasons).
You can treat all gifts a year or less before the date of death as inheritance. Many wealthy parents will be hesitant to give large amounts of money to children while in good health, as they're scared children won't care about them any more once they get their money.
The bottom line is, if someone wants to leave a significant inheritance to their (grand)children, there's little that can be done about it with tax policies only. By the time you have plugged all the holes to prevent inheritance, you've also prevented most of the things we consider necessary for the function of a capitalist free economy.
What about taking inheritance and gifts as ordinary income to the recipient? Ideally this would be coupled with a reform on capital gains tax, but even as is, should target high taxes only on large amounts or amounts given to people that are already rich.
There would certainly need to be some tweaks, but it should diminish the inherent injustice of inheritance.
If anything I think we should encourage rich people to give their money away (even if only to their children) since wealth consumed by a broader number of people leads to more happiness than if it's all consumed by one person. It's better for a $10 million fortune to be spent by 10 consecutive generations than for it to all be spent by the original owner.
I don't understand how you reach this conclusion. If the original owner spends all of it it enters a whole lot of more peoples pockets than his kids.
Sometimes I find all this money swirling around difficult to keep track of. It's easier to forget about money and look at what's happening to the goods and services. Ten families in $1 million houses get more happiness than one family in a $10 million house and nine homeless families. No matter how you shuffle the accounting around it has to add up to that same utility difference.
So if they go on more vacations, buy a flashy car, have more parties, you are saying that the Fed "takes that money straight back" and that it doesn't go to travel agencies, car dealers, caterers, party planners, service workers etc?
> Ten families in $1 million houses get more happiness than one family in a $10 million house and nine homeless families. No matter how you shuffle the accounting around it has to add up to that same utility difference.
Sure, and I reject your hypothetical and say it's better if 100 people live in $80k (after some tax) houses/condos than 1 in a $10M house, if we're just making things up.
They do get the money. But the world hasn't become any more productive; the number of goods and services being produced is still the same. So when they spend that money and consume goods and services, someone else must necessarily be consuming less.
More flights (its' virtue another discussion), more cars produced, more parties planned, food made, services rendered.
Of course production has gone up, and will continue when those people spend their money on their (smaller) houses etc.
And are you making your claim as a counterpoint to my scenario compared to inheritance? Because pushing money down the line to sit on it certainly does not make the world more productive.
That would only be possible if we had previously been using the labour and capital to produce those things at less than 100% efficiency. That's not what happens. Businesses will always have been trying to operate as efficiently as possible. When demand increases they either have to increase prices or increase supply. Increasing prices will mean that someone else doesn't get the good or service. Increasing supply will mean employing extra labour or capital that would otherwise have been used elsewhere. Either way, spending money doesn't cause total productivity to increase.
(Unless of course the Fed screwed up and put us in a deflationary recession. In which case, yeah, extra spending would help. But that's only if they screwed up. Normally, they have already optimised the variable you're trying to adjust. Adjusting it away from the optimum will just cause them to push it back.)
Or not used.
Throughout all of this, I don't generally disagree with your reasoning, but you're basing it all on assumptions I reject.
Why should inheritance be any different?
The difference is that when you give money to your children, you're not getting any goods or services in exchange. The transaction is making them richer, but you poorer by the same amount.
(Also, later when the children pay a mechanic the amount of total tax paid will be the same.)
Maybe you are, maybe you aren't. What if my kid is a mechanic and does the work for me?
Centuries from now they'll probably consider what we're doing now to be absolutely barbaric and adjacent to plain old slavery.
You can argue that there are ways of taxation that are compatible with this idea and there are ways of taxation that are counterproductive but you cannot argue that the taxes shouldn't exist because that would mean no government which would mean no rule of law and no political environment in which an advanced economy can exist. Of course, the big problem is that many governments fail to live up to their responsibility. The US and EU countries' government may be failing their citizens, but not as much as many Asian, African or Latin American governments.
Because we do not want to isolate children from their parents. A 100% inheritance tax is impossible from a practical standpoint.
>One person gets something for free,
Do you abandon your child as soon as it is born? Do you think your newborn should work and pay the bills? No, you support it for 18 years and let it grow as much as possible instead of considering your child something to be exploited for money.
> the other works and has to pay tax?
If you inherit something from someone, that person had to work and pay tax.
I can come up with good reasons for wealth taxes, I can come up with good reasons for abolishment of land ownership (replaced by a permanent lease model) or heavy taxation of land but I honestly cannot come up with any reason for inheritance taxes beyond jealousy, jealousy that other people had more fortunate parents than you and your selfish desire to drag them down. If everyone started off on an empty earth it would be fair, but it also would be equally bad for everyone, instead of bad for an unlucky minority. Being poor in the US is a blessing, being poor in India is not.
Especially when there is a fair solution to the wealth inequality problem. Simply split the wealth instead of giving it all to the first born son. If people are obscenely wealthy, let them have many children and let each of those children be less wealthy than their parents. If you must implement this with a tax, then set a maximum amount that a single person can receive through inheritance in a lifetime, say $1 billion and tax anything after that. Yes, that means Jeff Bezos will have to find 200 heirs or lose the money to the state. It would be in his best interest to reduce wealth inequality at the end of his life.
Untaxed inheritance perpetuates inequality. Inequalities are unfair and arguably damage our societies. Functioning societies aim to repair the damage by rebalancing structural inequalities. Hence inheritance tax. The children of the very wealthy aren’t being “abandoned”, they already have surpassing advantages while their parents are alive.
This ties up a lot of wealth in ways which slow down economic growth immensely.