The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.
Fairest? I mean, land value tax is fair. So are Pigouvian taxes. In fact they're arguable more than fair. Not having these taxes is arguably unfair. Who deserves ownership of natural resources or to inflict negative externalities on others?
Taking things someone earned through labour and not letting them give it to who they want isn't very fair.
> To deserve means to be worthy of, entitled to, or to have a valid claim to a reward, punishment, or treatment based on your actions, qualities, or circumstances
So you genuinely believe that nepo babies, despite not taking actions or creating any circumstances to earn their wealth .... nevertheless deserve to have it anyway?
As a point on terminology: That's not a really a wealth tax on the accumulated assets at-rest own by the (now eternally-resting) owner, but an income tax on the wealth as it moves to the recipients who didn't have it and are getting a massive gift.
It just happens to be a kind of gift/transfer we've decided because of tradition to consider as a special case, where (A) it happens right after a given dies and (B) the giver is frequently but not necessarily related to the recipient.
Granted, this requires lawmakers to explore more of the "exploit space" around their proposed regulations, but I don't think that's really asking a lot of them.
“Oh, that’s regressive” they will say.
Make it small per transaction. A rich person spending 100x what a normal person spends will pay 100x as much tax. A billionaire spending 10000x what a normal person spends will pay 10000x as much. And they will also be taxed if they borrow money (that’s a transaction) against assets so they don’t have to sell them.
And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.
This is a big one—we continually decrease the estate tax, which is already waived until you get to 'fuck-you-money' at the federal level (around $11 M)
How is it terrible for my kids to not have to break their back like I did to build the wealth I'm looking to pass on to them after I die? Why should they go through the same struggles that I did? It is up to them to squander it or transform it into even more wealth to pass it down to their children and so on. Ideally the former, but sometimes what parents dream for their children does not always come to pass.
There is nothing wrong with striving to give a heads up in life to your kids, on the contrary, it's a core, visceral instinct of parents to do so, and removing that would be alienating.
There is a certain level of wealth though, where the "heads up" transforms to an unstoppable compounding lever.
France for instance has a progressive inheritance tax (starting at 5%, up to 45%), triggered for children inheriting at 100k€ per parent. In practice, 50% of the population inherits <70k€.
Also, the proposed Zucman tax in France for instance is triggered starting at 100M€ wealth. At these levels, a mere 2% risk free investment yields 2M€ annual income, this is enough to both compound and enjoy a very luxurious lifestyle. This level of wealth is unstoppably compounding, and that is why it is proposed to tax it.
If you don't, well you end up with a US situation, where disproportionate wealth (and thus power, influence) end up in the hands of random citizens with their own agendas, possibly (likely) orthogonal to the interests of the majority.
I also went to give my children the world, but giving them a few million when they're about to retire doesn't really do much.
parents wanting to support their kids should do things like pay for college or a trade school, cover their grandkids daycare costs, help them buy their first home. We charge young parents so much money they don't have, and, much like covid, only seem to cater to old people for whatever reason. I guess because they have the money.
On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.
Won't someone think of the children? The very wealthy children paying a 3% marginal tax rate on some of their multi-million dollar inheritance?
I don't care about estate and inheritance taxes much but many people do and it empirically drives behavior.
I might live till 72, my kids will be my age right now when they hit inheritance instead.
That's not a headstart.
Inheritance taxes tend to only kick in at the 8+ digit range.
If anything, taxing that should encourage descendents to do productive work, eh? Since not taxing it, but taxing other things actually discourages it?
I can’t imagine how it would result in anyone relying on public largesse either unless they are really terrible with money. In which case a few extra zeros is unlikely to help any?
Inheritance is, notably, not earning it.
> continue do productive work
That's a pretty bald assertion. Useless nepo babies abound.
> relying on public largesse
Any chance the existence of a stable, well-educated, high-trust society benefits the children of wealthy people at all?
There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.
I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.
To be clear, i'm not exactly defending inheritance tax if resources are shared another way. For instance, it would make sense to let people keep a − modest − home across generations. But i'm tired of rich capitalist tech bros saying income taxes are unfair because they've worked so hard, and inheritance taxes are unfair because they've already been taxed.
For example, step up basis allows inherited assets to have their cost basis re-struck at the value at time of inheritance. So if there is no inheritance tax, the assets transfer to a new owner and a large chunk of value is forever untaxed, even when/if they eventually sell.
Similarly all sorts of interesting stuff that can be done with trusts. Again stuff that's only accessible / worth the hassle to 1%.
In a world with extreme outcomes due to scaling, we might accidentally be re-inventing the hereditary aristocracy if the assets can accumulate outside the tax system.
There's so many indirect ways of influencing politics given lots of money - alternative media, buying out local news, controlling national news.. making entertainment media of your own ideology. Fund interesting groups around particular topics. Give poor Ivy League grads a job and groom them for higher office.. oh wait.
- Bob Menendez (Senator)
- Randy Cunningham (Congressman)
- William J. Jefferson (Congressman)
- James Traficant (Congressman)
And a bunch more at more "local" level...
Useless non-nepo babies abound. Useless rich people abound. Useless poor people abound. And?
Or look at monarchies and titles of nobility. In the past direct inheritance of political assets was common, and acting on that natural desire, the people involve claimed that parents deserved to direct what they (and their ancestors) had accumulated on to the next generation of their own family.
Yet nowadays most countries and people have decided it is immoral, and they also took steps to make common forms of it extremely illegal.
My point is that economic inheritance today is just as much a social-construct as political inheritance was then. It exists because we permit it to exist, don't be fooled by anyone claiming it's an intrinsic law of the universe or a divine mandate by god that must be obeyed.
If we're going to talk about morality, I think we need to talk about the government as one of the moral actors.
Imagine this scenario, exaggerated to make a point:
1. Alice receives $X. It's from her boss, for laboring in the mines every day. Government man says: "Give me 20% to pay for the shared roads, or you go to jail."
2. Bob receives $X. It's from his parents, for doing nothing other than being born related to them. Government man says: "Gee, I just can't do anything here, I guess I'll have to shake down Alice even harder next time."
Isn't there something off about the morality of Government Man's choices?
If I had diabetes, taking insulin is an acceptable remedy even if there is no cure for diabetes.
So what taxes aren't "morally wrong"?
Taxes on somebody else.
Tariffs, various usage taxes and fees.
Need a mechanism to address the regressiveness of some of this but that's an implementation detail.
Capital gains taxes, on the other hand, are completely moral, and should be much, much higher. Capital investment benefits enormously from the State protecting their property "rights" (you don't need to hire a private army to prevent the workers from just deciding to run your factory for their own benefit, that's what the cops are for), and at a minimum the state would be justified in collecting that dividend for itself. Bootlickers and profession bootlickers (i.e., economists) would complain that a high capital gains tax disincentives investment, but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
So if I spend $5000 on groceries because I'm eating wagyu steak and lobster everyday, is that a fair "expense" too? You might retort that's obviously a luxury and there should be some baseline that's tax free, but then you're just describing the standard deduction.
>but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
...or they take their money elsewhere instead.
If we want to tax "luxury" expenses, we have excise taxes for that.
Right, but consumption for a business is fundamentally different than a person consuming. When you eat lobster (vs eating ground beef), any extra benefit goes down the toilet, so to speak. Whereas for a business, it's presumably to further the enterprise. Maybe getting a purer reagent will make the product better and drive more sales. After all, a business itself can't have any needs or wants. In any case a business can't have wants to get the $300 reagent just because, unlike a person. The employees can get benefits, but there are strict policies set by the IRS on what you can count as a business expense, specifically to prevent you from putting lobsters as a business expense.
Moreover such favorable tax treatment isn't restricted to businesses only. It's available to anyone that conducts business. If you're self employed you can deduct the cost of your F-150 truck, if it's used as part of your job.
Consumption tax is sales/VAT tax excluding some necessities and capital goods. Yes, there are some awkward edge cases: in the UK the exclusions were food and children's clothes, which leads to battles over prepared cold food (e.g. sandwich), takeaway and restaurant dining.
Sin taxes are obviously things society might want to discourage, mainly for health reasons, like alcohol and smoking, but also gambling and externalities, like pollution. Some might stretch that to all carbon emissions to moderate climate change.
Don't tax things you want: working / income and investment / capital gains.
Inheritance tax is doubly wrong because the wealth is already taxed, and death is unavoidable (but emigration is possible, which might help in some countries).
> Don't tax things you want: working / income and investment / capital gains.
What if I don't want hoarding of wealth?
I don't think it's fair that someone who earns $400k and spends $400k is paying roughly the same taxes as someone earning $400k and spending $100k. You should pay more taxes the more luxurious your life is, not the more productive you are.
God, if only!
In the actual world, it's more about what the powerful want.
Why do you think billionaires spent more fighting Mamdani than they stood to lose in new taxes?
But the individual would be a subsistence farmer at best without society supporting it, hardly worth taxing. In reality millionaires are only possible with a large state and societal network around them. Wealth is societies gift, and its right to take back.
It's misleading to cite that since it basically never happens.
The tax doesn't even come into the picture for fortunes below $30 million dollars (for two parents), and the rest of the time it averages ~14%.
https://www.cbpp.org/research/federal-tax/the-federal-estate...
I cannot understand what though-process led you to suggest repealing "it", whether that means the entire tax or whether it means reducing the number of brackets.
Why have a tax that never happens?
However it also true that 99% of the time the estate tax is $0, but that just tells you 99% of Americans die without being that rich. It doesn't mean that piece of the system is not effective or necessary at doing a job. If we had no estate tax, that would create a massive loophole people would abuse so that other taxes stop working as intended.
It's like how the vast majority of cars will not hit the railing that stands between them and a deadly plunge off the edge of the cliff... but we still need to keep it for when it matters.
So instead he'll just act like he didn't read that "basically" that you wrote, despite quoting it and then pretend like he doesn't really understand what you just wrote above.
The only tax that is fair to everyone is a sales tax.
When I was little and playing SimCity 2000 I looked at the tax rates for the city and noticed that the sales tax rate was like 2%, and based on our 14% VAT at the time, it seemed super low to me so I upped it to 12% and was surprised at how unhappy the citizens were.
This gave me the impression that Americans wouldn’t be happy with a significant sales tax, or perhaps this was a city sales tax on an existing state sales tax, which yes, would be outrageous, or maybe Americans get taxed in some other way which makes up for our VAT.
Anyway, I look back and chuckle at my own lack of knowledge at the time.
Americans are stupid. They see a higher tax on an iPhone they don't need, they will cry about it.
But they pay more at the end of the year on income tax, property tax, car registration, etc., they could care less.
Most Americans don't even look at their pay stub, and are more than happy to overpay their income taxes every paycheck so they get a bigger tax return at the end of the year.
They don't realize that money was theirs to begin with.
They complain about not being able to become wealthy while they give the government an interest free loan, when they could be investing that money and earning on it.