But America is so thoroughly owned by the wealthy that implementing one of these solutions is not desirable. The legislature in America only works on behalf of the ultra wealthy and any legislation that passes will be to increase the magnitude of the wealth gap.
A lot genuinely have no idea that there's a very high lower limit on inheritance tax... at the same time they hate the ultra rich.
This is genuinely a very schizophrenic country.
The benefits of wealth are exercised long before the inheritance can be applied.
Your first home down payment, your education, your wealth generation while being on support by your parents, etc. - will push you off the ground faster, than any inheritance in a world where people easily live to 80-90. Most people hit retirement age, by the time their parents pass away.
Agreed.
But isn't that an argument FOR a strong inheritance tax? Because inheritance doesn't actually help your children anyway? That seems like it was your argument.
With that argument taking 100% of the inheritance as tax and taking 0% is exactly the same, as the wealth transfer was done before anyway.
Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not, it grows because the rest can't build and retain their wealth.
This isn't a zero sum game.
PS: I would also not trust the government or any political body to handle income from the inheritance taxes. So I would rather the children of wealthy people squander their wealth, than a politician transfer that wealth to their patron.
Why? Just "having wealth" isn't important in itself, it's just a number in a computer. So there is something else you are trying to get at. What is it?
> Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not, it grows because the rest can't build and retain their wealth.
Disparity happens when two groups diverge. That's what disparity means. As long as the richest have a higher growth rate, the disparity grows.
> This isn't a zero sum game.
That's a different conversation though. You talked about wealth disparity, not about quality of living or something. THERE it's not a zero sum game. But in wealth disparity it is by definition a zero sum game.
> I would also not trust the government or any political body to handle income from the inheritance taxes.
But you would trust the wealthy? Ok.. but...
> So I would rather the children of wealthy people squander their wealth, than a politician transfer that wealth to their patron.
So you don't trust the wealthy either?
I don't understand what you are arguing at this point.
Yeah it does. The way compounding interest works means at some point that your passive accumulation of savings will outpace what most workers can earn as a salary. You can't really combat that by throwing more money at workers.
It's just mathematically impossible to let wealth run rampant in an individual like that and expect everyone to keep up with their limited hours of energy.
>This isn't a zero sum game.
It isn't. But with modern labor habits the billionaires want to make it one. That's why there isn't such thing as an 'earned billionaire'. They take from workers, lobby government to pay less, engage on anti-competitive behavior, or outright commit crimes to get to that point. The best case billionaire merely inherits the wealth and lets it accumulate, but I don't see many people like that these days who also don't fall into the other points.
>I would also not trust the government or any political body to handle income from the inheritance taxes.
Well someone has to. The us government has most things in record, so they are the easiest to audit.
This is more a sign that we need to pay more attention to politics and trustworthy figures who will self regulate. As in, pass laws that hold them and future policy makers in check.
thus the importance of the sovereign fund.
EU made this easy with the UBO register, it takes just political will.
So it's, er, probably not a great model case here.
You can perform a "child fund to the parents instead if you need earlier impact. And maybe we will need that as an incentive as 1st world populations decline. But it might not make a difference based on the spending habits of the parent.
Inheritance tax doesn't work anymore, in any case.
It's not the 19th century and we shouldn't try fixing 21 century issues with 19th century remedies.
A yearly tax of a few percent on all capital assets.
Well, not quite.
And yes, we should "hold back the successful". Taking 99% of a billion dollars still lands someone with a career's worth of savings to tap into. That's how utterly ahead they are. And it's clear they used that power to ransack the nation. So be luck "holding them back" is the only stipulation here.
I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritance tax which takes effect long after the accumulation happened.
Yes. And we are already on "too late" mode. So we should go with the 2nd best solution because the best one (actually taxing billionaires) won't work retroactively.
>I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritance tax which takes effect long after the accumulation happened.
Both would be nice. I don't see this as mutually exclusive. Though proper wealth taxes will lessen the need for inheritance tax. But not in all cases.
Most 80 year olds know they arent going to live forever and would probably just transfer their assets a little early.
Is it though? I think most very wealthy people are already using more complex structures like trusts and whatnot.
> Moving that level of money already has so many stupulations.
Like what exactly?
>Like what exactly?
In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed. Investing it into assets like property will have that taxed, unless you choose to go to very specific areas. Throwing it into a business will jabr capital taxes.
Exceptions are disproportionatly utilized, but there are in fact more ways to be taxed on your money than not. That's why a lot of the current mechanisms lie less in "grab money, get taxed, use it" and more "point to money, get loans, stay in 'debt' and use not your money make money".
Sure, but there is a very very big difference between capital gains tax and inheritence tax. Most proposals for inheritence tax are on the entire value of the property being inherited. Capital gains taxes are just on the difference in value between when you got it and when you sold it.
If every transfer of property behaved like an inheritence tax, the economy would probably screech to a halt as you effectively couldn't sell anything without taking a huge hit.
I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.
Any tax plan that requires people to be stupid in order to be taxed is a bad one because then the only people who get taxed are poor people who can't afford to hire an accountant to figure these things out for them.
The obvious way to close that loophole would be to tax capital gains at the same way as inheritence, but the side effects of that seem disasterous.
> I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.
I think the downside is that the actual affect of the plan would be that really rich people would be unaffected, and if anyone was actually taxed it would be low-mid income people. Thus further cementing inequality.
There's always loopholes. An internet forum isn't the best place to try and close every hole.
I'd go further and say that "unearned wealth corrupts" is a well known effect, and (apart from the small subset of rich people who do not care about their kids corruption and intrinsic worth apart from them being the vehicle of their dinasty) we see that divestment into charity / foundations are the modern preferred way for inheritance management, both sparing the kids somewhat (being downgraded to a multimillionaire is not a hellish situation) and gifting them cultural influence. A sovereign fund could scratch that itch somewhat.
If a net worth of $2 mil is considered outrageous then surely that kind of salary would be considered equally so.
There should be no wealth tax, but above a certain threshold - there should be a maintenance fee associated with the wealth. I get charged maintenance fee by my mutual funds, for example.
One of the purposes of the government is to protect and secure property... and that is what ultra wealthy are getting for a fraction of what they should be paying.
That rate will not be where you and I live. It will be some tiny foreign government.
And when some of those people say no? That seems like either a short lived con or very quickly we are bombing people.
Why not just literally put a gun to someones head and rob them then? Skip the middlemen. Bombs are expensive as is jet fuel.
There is a lot of low hanging fruit.
Arguably capital gains should be taxed at a higher rate than income. But that's not going to happen, because your home's change in value is capital gains.
Now that 'progress' is actively optimizing things in a way where large amounts of the public's lives are getting worse, you are going to have to give a better response. Because right now progress is synonymous with improved rent seeking, worse access to food (and food that is now noticeably optimized to be of poorer quality), worse access to housing, worse working conditions, and on, and on.
Cool, cool. Work for 30 years, save up and have say $3M to retire on, based on stock market at an all-time high. You're not a robber baron or investment banker, just someone who worked a long time and saved and invested. Govt takes $1M away from you, you have $2M now. Market drops 25%. Now you have $1.5M.
Congrats, your "plan" resulted in someone like that having HALF of everything they saved up just gone.
Yeah, yeah, I know, "if you have $1.5M you don't NEED any more money." Sounds like something that only someone with something less than $1.5M would say.
You don't "need" your iPhone, or your flat screen, or whatever. The government should not be in the business of determining what you "need" and taking the rest.
If you think you’ve seen zany tax schemes, just wait till they try implementing something as crazy as a 100% tax.
There’s also a moral question of why you feel entitled to not just a majority of the fruits of my labors, but apparently all of them.
There's an unproven assumption that somehow the inequality of outcome is 1) unjust, and 2) something to be "corrected."
The first has no foundation other than appeal to emotion to create in-group / out-group tribes ("eat the rich!") to then suggest what end up being power grabs that destroy the middle class and do nothing to the wealthy.
The second item requires destroying value. All economic activity comes from exchanges of value, which is intrinsically tied to time; that irreducible finite quantity to which everyone is subject. We've seen over and over again, when you try to destroy the concept of value, which is subjective and circumstantial for each individual, all you end up doing is causing human misery.
This obsession with taking other people's money rather than enabling opportunities to make your own is unhealthy, destructive, and immoral.
There's decades of research into this if you care to look up wage theft, worker productivity vs compensation, the lobbying against unions and minimum wage and any other labor protections, and the fact that we ruled that it's okay for billionaires to buy politicians.you talk about enabling opportunities, but lobbyists have used it to pull up all the ladders and pay less back to the people. So yes, we're due for a correction.
If you're a millionaire this doesn't really apply to you. Your taxes go up maybe 2-3%. "Wealth tax" is in the realm of 100m and definitely by 1b.
Also, your loins did hot "earn" that money either by popping out of a uterus. Inheritance tax is probably the easiest to push of you can convince people that children aren't entitled to be billionaires by existing.
There is some kind of bizarre world that we live in that the article has a quote from Ramaphosa, the totality of his extraordinary wealth was generated by corruption, on the terrors of inequality.
Hoarding is, generally, not a real problem because it requires believing that wealthy people are not greedy. The problem is that most societies heavily incentivize irrational behaviour through disincentivizing investment. Strangely, these same places also have political cultures that focus heavily on inequality (again, there is no better example than South Africa) because genuine openness tends to be very disruptive politically.
There is no way to square the circle. The solutions are known, the problem is that human nature and political culture tends to prevent those solutions being realised (as it is more politically beneficial to continue to sell people lies: it is this group of people, they are the problem, if we can take their money and give it you then you will be rich).
Isn't the fact that the ultra rich are using their wealth productively the reason we have growing wealth inequality? Because active money grows faster than inflation, which is why they get richer compared to the rest of us over time.
Or in other words: money grows if you use it. If you just put it in a bank account it slowly erodes away under inflation.
personally I think the only real solution is slowing down by reducing incentives to keep growing money (or stock value) by implementing some kind of tax ceiling in turn slowing down innovation and instead hoping that giving more people the ability to grow (easier access to education, healthcare, opportunity) eventually outweights the disadvantages of having such a ceiling
Billionaires have dozens of other things like the above that makes thos an issue