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The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

nytimes.com

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Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#31

Post by thriftwy »

thejackgoode wrote: post #30
thriftwy wrote: post #24

In Russia, if you are born in Moscow and inherit a granny's flat¥, it gives you an enormous boost. You are free to choose any occupation and dabble in any kind of weird lifestyles or rent it out and live abroad with very modest effort. Meanwhile, if you did not inherit one and don't work in IT, expect to work hard and spend the majority of earnings on rent/mortgage. This applies nontheless even if all of your ancesto…

Well, that's about to change for the midterm perspective, but that's also not good news for everyone, if you know what I mean

I was hoping to buy an apartment from under some porrige fleeing from Russia as the war progressed, but apparently the Rouble-denominated¥ prices only shoot up. I bought the old one on very good terms at the height of Covid uncertainity, though.

¥ USD is considered to be too volatile to price property in it, so property prices are usually expressed in roubles

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#32

Post by CPLX »

steveBK123 wrote: post #11
prepend wrote: post #8

Earlier quoted context omitted.

Right, that’s how I imagined it. But that’s not avoiding taxes so much as delaying taxes. Taxes are still paid but just slowly as you liquidate only enough to pay payment and pay taxes. Gaining in value isn’t an issue with avoiding taxes and, I suppose, eventually will result in more taxes being paid.

Right, but to my understanding there are related games that are played with trusts for example such that the loan passes onto the next generation too. To make matters worse, theres a concept called "step up in basis" such that if structured correctly, the inheritors can pretend the cost basis of their portfolio is the current market value. So the parents shield the gains from taxes in life, pass on the portfolio, and…

You’ve zeroed in on the most egregious problem.

Step up basis is insane as a policy choice. It basically means that we just don’t tax the primary means of income used by wealthy people AT ALL.

If a company pays you you have to pay taxes on it. Unless the company pays you by inflating the value of stock in that company, in which case you just… don’t.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#33

Post by rayiner »

credit_guy wrote: post #20
pavlov wrote: post #6

Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual. A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.

$12.9 is per estate, not per heir. If someone has one spouse and 3 kids and also leaves by will some stuff to 6 other relatives, then the exemption is split between the 10. Each benefits on average from an exemption of $1.3 MM. At the highest tax bracket, they get a one time tax deduction of about half a million. When people talk about wealth gap, they mean the ultra-rich, the multi-millionaires. For someone with a n…

> When people talk about wealth gap, they mean the ultra-rich, the multi-millionaires. For someone with a net worth of $20 million, a one time half-a-million does not make such a difference.

These people are being snookered by the upper middle class. At $12 million, the estate tax exemption excludes all but the top 1% of wealthy. There’s over a million households in that group.

The top 10% own 70% of the wealth. The top 1% holds over 30%. But billionaires hold only about 3%. To meaningfully address wealth inequality, it’s not enough just to heavily tax Bill Gates. You have to heavily tax people like his father, a law firm partner. You need to heavily tax many of the folks here on HN.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#34

Post by gedy »

tempsy wrote: post #10

It is sort of interesting how Gen X is screwed here. Also the children of Gen X eg under 18s and younger Gen Z today.

Worse is some younger folks are lumping anyone over 50 into "boomers". Sorry I'm Gen X and we certainly didn't have it easy.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#35

Post by bluedevil2k »

pavlov wrote: post #6

Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual. A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.

What’s the argument FOR an inheritance tax, when it comes to fairness? The person who’s passsing the money down already paid tax on the money, whether income tax or capital gains tax. The government already got a hefty chunk of that earned money. Why should it be taxed again? Especially when we see how inefficient the government is at spending money for the public good.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#36

Post by Throw73849 »

thriftwy wrote: post #24

In Russia, if you are born in Moscow and inherit a granny's flat¥, it gives you an enormous boost. You are free to choose any occupation and dabble in any kind of weird lifestyles or rent it out and live abroad with very modest effort. Meanwhile, if you did not inherit one and don't work in IT, expect to work hard and spend the majority of earnings on rent/mortgage. This applies nontheless even if all of your ancesto…

That is kind of outdated for Russia. Many new buildings, salaries increased. Rent is reasonable with cheap energy. And metro goes everywhere.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#37

Post by sokoloff »

bluedevil2k wrote: post #35
pavlov wrote: post #6

Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual. A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.

What’s the argument FOR an inheritance tax, when it comes to fairness? The person who’s passsing the money down already paid tax on the money, whether income tax or capital gains tax. The government already got a hefty chunk of that earned money. Why should it be taxed again? Especially when we see how inefficient the government is at spending money for the public good.

At the moment of death, capital gains tax on unrealized gains has not yet been incurred. The estate tax is one way to force those gains to be taxed (but not the only way, of course).

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#38

Post by conductr »

thriftwy wrote: post #24

In Russia, if you are born in Moscow and inherit a granny's flat¥, it gives you an enormous boost. You are free to choose any occupation and dabble in any kind of weird lifestyles or rent it out and live abroad with very modest effort. Meanwhile, if you did not inherit one and don't work in IT, expect to work hard and spend the majority of earnings on rent/mortgage. This applies nontheless even if all of your ancesto…

Same happens in US. Inheriting RE is a huge advantage. There’s been a huge influx to my home state for over a decade and, multiple reasons, but a common story I hear is they inherited a house in CA/NY or other Higher COL place. They come here and have driven up our COL.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#39

Post by rayiner »

If you taxed boomer-> millennial inheritances at just 25% you could completely eliminate the black-white wealth gap in the next couple of decades. There’s a reason that affluent white people are talking about DEI, and not raising our absurdly low inheritance taxes.

Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners

#40

Post by theGnuMe »

bluedevil2k wrote: post #35
pavlov wrote: post #6

Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual. A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.

What’s the argument FOR an inheritance tax, when it comes to fairness? The person who’s passsing the money down already paid tax on the money, whether income tax or capital gains tax. The government already got a hefty chunk of that earned money. Why should it be taxed again? Especially when we see how inefficient the government is at spending money for the public good.

The inheritors didn't earn it.
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