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Comment by pqtyw | Hacker News Reader

The potentially perverse incentive to spend every single $ you have before you die? If everything you have goes to the government after you're dead and you have more money than you personally need you can still spend it all on your children before you die.

Presumably this 100% tax would also apply to gifts cause otherwise it wouldn't really work but where does it stop? Parents can't pay for college? Buy their children a car? Go on vacation with them? Spend any money on them at all so that they would "stand on their own two feet"? Be banned from giving any financial support to their children when they reach 18?

I mean... it's an obviously not a good idea.

Also the most optimal strategy would be to spend all the money you have in addition to getting a reverse mortgages on any property so that by the time you die your net worth would be as close to 0 as possible. Or just selling everything and buying an annuity.

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Why is spending everything before you die a perverse incentive?

Lower savings rate, higher inflation, higher interest rates, less capital available for investment. So most capital intensive sectors wouldn't do well.

A lot more volatility, without a (or much smaller one) buffer most economic shocks would have a bigger impact on the economy.

Also there would still be a lot of inequality it would just be intra-generational.

Then again.. all the annuity money has have to go somewhere. So maybe the insurance companies would become the primary sources of investment capital (which wouldn't be great). A lot of uncertainty though i.e. buying a house if you have a family would become much riskier..

I'd need a source to back up those claims, as you note it's not trivial to understand how economy would react.

I also don't see why buying a house would be much riskier? If you buy a house for your family it's because you either prefer the lifestyle or think it provides economic advantages over renting. Given you only need housing when your alive, I think what happens after you pass is not as major a concern as presented.

> I'd need a source to back up those claims

A source like what? I don't think there are many studies refuting bizarre not well thought out policies. Also it's pretty hard for me to argue against a suggestion that's so ill defined.

Albeit a massive increase in consumption and a reduction in savings would be the most obvious outcome (with all the implications of that).

> after you pass is not as major a concern as presented

Therefore there is no point for you to own your house. When you get older you either get a reverse mortgage or don't buy property in the first place. There would be no rational reason to own property beyond a certain age.

If no sources exist, then you must accept making claims such as this would 'lower savings rates' are simply not backed up. Maybe it will... maybe it won't.

So what if there is no reason to own property beyond a certain age? Even if we take this claim as true... that doesn't explain if this is a good or bad thing.

> then you must accept

I don't, because this argument is nonsensical (I mean your point about source specifically). Unless you disagree with some of the core principles of modern economics (not saying that you have to agree with them..) that would be the most obvious outcome.

> So what if there is no reason to own property beyond a certain age?

Well that would mean that the savings rate would go down (for better or for worse).

You've not established that your suggestions are core principles of modern economics or derived from them.

For example, you are asserting there would be 'no reason to own property beyond a certain age'... which isn't supported, and then jumping to the conclusion that that would lower savigns rates.

None of this is clearly true, just supposition.

> which isn't supported

The general consensus amongst most economists is that humans behave in a rational way? Not spending all the wealth you before you die would be irrational if your children won't inherit it.

Of course in reality that's often not the case especially these days so it might not be sufficient enough.

> clearly true, just supposition.

Well by such standards every discussion on any policy that hasn't been tried is meaningless because there isn't any empirical evidence.

> Not spending all the wealth you before you die would be irrational if your children won't inherit it.

Sure, but that's only one small aspect of the economy.

Maybe younger generations would earn more with all the spending and save more knowing there is no inheritance coming.

You only look at one aspect, claim you know what would happen, and the proclaim yourself right.

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