Don’t take my word for it. How many fourth generational heirs do we see among America’s wealthiest billionaires? Essentially zero.
This was used recently by an MP.
That being said I agree with your thoughts, however:
> How many fourth generational heirs do we see among America’s wealthiest billionaires? Essentially zero.
This is probably true but I'd like to ask the question: how many of them simply inherit a lot of money without any of the fame associated with it, and just go unnoticed? I've met such a person, actually.
EDIT: https://www.bbc.com/news/business-36009963 - this is what I was thinking about.
So, you pay gift taxes instead.
Unless you use fake business transactions.
Quite a few. Not sure how long you would make four generations, but let's say 100 years.
There are the obvious famous families; Ford, Rockafellers, Du Pont, Mellon, Mars, Hearst, SC Johnson ("a family company"), etc. But there are a number of billionaire families that aren't recognized much outside of their "home towns" because they started mundane things like retail stores or own mineral rights.
That's not even getting into families whose wealth has diluted, but whose descendents are politicians, actors, or otherwise notable / influential people.
Granted, most billion dollar businesses are <4 generations old, but more sophisticated investment vehicles exists for preserving wealth than existed even 50 years ago.
Plus, that money may get divided and spent over time, but it’s usually invested. It’s not like after 100 years it’s the same amount of money adjusted for inflation, if the next generations didn’t mismanage it.
Entrepeneurs aren't going to not build a company because of some specific tax treatment that only applies whilst they are wildly successful.
No SpaceX, no Tesla, no iPhone, etc.
Selling masses of stock to pay the tax will push the value of the stock down. That has a large effect on the company's ability to raise capital.
As for the entrepreneur, he'll have much less capital to invest.
It's a fantasy that one can extract endless billions from a company and its investors without consequences.
Most entrepreneurs would be overjoyed to be a billionaire and have to pay that extra 15%. Seems like they'd be the lucky ones. Seems like a billionaire or an aspiring billionaire complaining about such a thing would be pretty weird.
The parent you replied to mentioned wealth being locked up to avoid capital gains taxes. There are other pros and cons, I'm sure. Do you think this new tax on billionaires means that less people will be trying to become multi-millionaires?
Note that I'm not happy with the current tax system, and this seems like another kludge. I also don't know that we need to coddle or incentivize wealth maintenance, it's not an end in and of itself.
Even worse, you're taking the money away from the most effective investors.
It eliminates the risk to established entities to be disrupted.
And most entrepreneurs are not, nor will never be, billionaires who are subject to this extra tax. That being the case I wouldn't think that this will put a dent in overall entrepreneurship. It might have the opposite effect, where there are numerically more entrepreneurs making capital allocation decisions, which might be better for society than having fewer people (billionaires) controlling an ever increasing amount of capital.
I grant that tax changes like this have numerous conflicting effects, sometimes unpredictable. Perhaps their will be another art bubble...
I don't think that it's a good thing that we structure our society for the convenience of those who can amass money. I'm definitely not fond of kludgy taxes like this one, but I also don't understand why so many jump to the defense of so few billionaires.
And Steve jobs did t inject money into apple when they were creating the iPhone.
So you’re entire point has been pretty much invalidated
No Jobs money => no Pixar => no Next => no iPhone
Neener neener!
Well, arguably it's the step up in basis that enables generational transfer without taxation.
Wealth inequality is a good thing too. People who work harder necessarily live better lives. If you want to start stealing their hard work to give to the lazy, you're going to find that the hard-working flee the country à la the USSR.
Nothing is stopping someone from employing their wealth to build a yacht, fifteen McMansions, and a thirty-foot solid-gold Mothman statue just after getting off of a six-month prison stint for a billion dollars of ecological damage (all purely hypothetical but I would assert entirely plausible); that people exist with the right to exchange a colossal amount of wealth to be allowed to waste an equally colossal amount of actual effort and resources is the problem.
I won't say nobody has an issue with individual people being allowed to direct huge amounts of funding, but I would assert that more people recognize that extravagant waste for the purpose of status should not be scaled to the extant degree of wealth disparity.
This isn't to say that I would accuse the majority (or even very many) individuals in positions where they're able to leverage a lot of wealth of anything specifically this egregious, but rather that because they're able to control many resources because their efforts have enormous leverage (and therefore are worth more to the system they operate in), they can consume orders of magnitude more resources to gain comparably minuscule increases in personal utility.
In addition, because of how valuable their leverage makes their effort, when they cause damage whose negative value is on the scale of individuals, the disparity leads a system that's self-interested to forgive them much more quickly--if someone can get 1% more value out of 10 billion dollars' resources than anyone else, that system doesn't have any purely value-driven reason to replace them in their position if they should murder someone and its negative effects never amount to more than a couple million dollars' loss in value. From any ethical standpoint that holds "death at the whims of billionaires" incompatible with "certain unalienable rights", this is a problem.
I'm not making the suggestion that those who are wealthy should divest themselves of their wealth and donate it to charity, the point I'm intending to communicate is that such leverage shouldn't act as a pass to engage in unethical behavior.
There is no evidence that rich people work harder than poor people. In fact the opposite is far more likely to be true given the unique stresses of manual labour.
And there is no evidence that the driver of success is providing for their offspring. There are a whole range of factors at play.
It's not about working hard, it's about working smart. I.e. leverage.
For example, my patio door kept getting stuck. I spend a lot of time with a file and chisel trying and failing to get it to fit properly. Finally, I bought a grinder for a few bucks from the pawn shop and had it fixed in a couple minutes, and it looked a lot better, too.
But you earn orders of magnitude more.
Income and wealth aren't solely functions of who worked the hardest and they never have been.
Genuinely smart people with genuinely valuable skill (like Musk or Jobs) would work equally hard whether their offspring were set to inherit 10 million or 10 billion dollars.
Do you believe people without children have no motivation to work hard?
The words "CITATION NEEDED"— in bold 72 point-font flashing letters—spring to mind.
Do you have any data, or other evidence, to back that claim up?
The only reason my high school educated 80 years old mother in declining health can stay in a home, and county, she feels somewhat safe is because of prop 13.
Her biannual property taxes are still a big deal when they arrive.
I've said this before, but I'm beginning to think if you didn't live through the craziness before Prop 13, you won't ever quite get it.
Prop 13 has been the only blessing most homeowners have been given.
If you want to put income limits on the gift of prop 13 fine, but doing away with it completely would be evil. By income limits I mean the guy making $600,000/year, and a huge bank account, could probally still survive without prop 13 protection.
The 80 year old lady, or man, surviving on 1/2 widower's blue collar pension is another story.
(I'm for means testing on all programs. I'm also for tieing all societal fees/fines---speeding tickets, registration, patent fees, etc. to 1040 income/assets wealth.)
Stop calling people evil just because your grandmother isn't the center of their policy concerns.
I didn't think we reached the point where people are arguing that things that make housing more valuable disincentivize building more homes - but here we are.
It is zoning restrictions, EIR, etc., that disincentivize housing.
https://www.kqed.org/news/11700683/too-few-homes-is-proposit...
But if you own a home in California, you are incentivized to maintain prop 13.
It's funny how hard it is for people to understand something when it cuts against their personal interests.
At the sale, the appreciation becomes realized as capital gains income. There are some rules making a portion of gains tax-exempt for a typical homeowner, but the remainder of a large appreciation is taxed as income. There can also be a sales/transfer tax on the transaction, which is of a comparable rate to the annual property tax rate.
The third significant event is inheritance, where the house could pass to an heir without a sale and have its basis updated to current value. This is when the appreciated gains can really go untaxed.