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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

#41

Post by [deleted] »

standardUser wrote: post #26
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.

It's remarkable how many people oppose an increase to inheritance tax despite the fact that every proposal I have seen would exempt... almost everyone. At worst, the most aggressive proposals would simply skim a little off of the very largest wealth transfers. The very rich would remain very rich. Yet in our current political climate, even the mildest proposal is accused of being full blown communism.

[deleted]

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

#42

Post by standardUser »

sokoloff wrote: post #27
MarkMarine wrote: post #23

Earlier quoted context omitted.

People in the middle class don’t have 20 million, or 10 million.

That they don't is all the more reason to not tax what they do have at 18-40% when they die and pass it to their heirs.

Do you have a link to a proposal that suggests taxing inheritance for fortunes under $10 million at 40%? From what I understand, if the exemption reverts to previous levels, that would sit at about $6 million (an absurd amount of money to "middle class" families) and would only apply to the value beyond that $6 million. So even a fortune of $10 million would be taxed at well under 40%.

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

#43

Post by onlyrealcuzzo »

jxidjhdhdhdhfhf wrote: post #28
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.

It's not clear to me there needs to be any exemption at all on inheritances. It should all be taxable income IMO. Poor people having their inheritances taxed will just get it back later in enhanced government benefits. More in fact since rich people have way larger inheritances to tax. Another huge loophole is charitable deductions. There's absolutely no reason the government needs to be helping fund individual chari…

So you slave away your younger years and pay ~40%+ income tax.

You manage to afford 2 children and own a nice house outright by the time you're 65. You have a nest egg large enough to afford a high quality life in retirement (mostly to pay your property taxes & income taxes & capital gains on inflation [not even REAL capital gains]...)

You die with $1M to your name plus a $1M estate (this is top ~6% or so).

Now you want to take away 50% of that before passing it on to the kids?

I mean, sure, why not?

But also, that probably brings your effective tax rate for your life to close to ~66%...

All while the people with 50% of the money (the top 1%) continue to have an effective tax rate of ~30% or less.

Like, how about we solve the problem where the people with the majority of the money have the lowest effective tax rate before increasing taxes on regular folk to make up for that??

I wouldn't be surprised if the average lower-middle class person already has a close to ~60% effective tax rate...

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

#44

Post by BrotherBisquick »

theGnuMe wrote: post #40
bluedevil2k wrote: post #35

Earlier quoted context omitted.

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.

So?

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

#45

Post by sokoloff »

rayiner wrote: post #33
credit_guy wrote: post #20

Earlier quoted context omitted.

$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…

> At $12 million, the estate tax exemption excludes all but the top 1% of wealthy. There’s over a million households in that group.

Far fewer than 1% of estates pay an estate tax, but rather closer to a tenth of that. It's nowhere near a million households currently subject to it. https://www.taxpolicycenter.org/briefing-book/how-many-peopl...

You might use that fact to support the second half of your argument, of course.

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

#46

Post by bluedevil2k »

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.

I don’t think the chart is showing that Gen X is screwed at all. It’s just showing that as the Baby Boomer gen dies off, the inheritance will reach an inflection point. It’s looks bad compared to Millennials because the passed down wealth from the Boomers and the accumulated wealth from Gen X will compound into HUGE inheritances for Millennials. At some point, beyond the chart’s X-axis, it’ll start trending down too.

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

#47

Post by jxidjhdhdhdhfhf »

onlyrealcuzzo wrote: post #43
jxidjhdhdhdhfhf wrote: post #28

Earlier quoted context omitted.

It's not clear to me there needs to be any exemption at all on inheritances. It should all be taxable income IMO. Poor people having their inheritances taxed will just get it back later in enhanced government benefits. More in fact since rich people have way larger inheritances to tax. Another huge loophole is charitable deductions. There's absolutely no reason the government needs to be helping fund individual chari…

So you slave away your younger years and pay ~40%+ income tax. You manage to afford 2 children and own a nice house outright by the time you're 65. You have a nest egg large enough to afford a high quality life in retirement (mostly to pay your property taxes & income taxes & capital gains on inflation [not even REAL capital gains]...) You die with $1M to your name plus a $1M estate (this is top ~6% or so). Now you w…

So don't save up $2 million for inheritance... No one is forcing you to do that.

Not to mention the increased taxes will be paid back, at least to some extent, in enhanced services. Maybe your kids could get a free education and free healthcare instead of $1M each in inheritance.

Or instead of increased services, we could tax other things less such as the income of living people. I'd much rather have dead people, who have zero use for the money getting taxed more and living people, who actually can make use of the money getting taxed less.

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

#48

Post by steveBK123 »

CPLX wrote: post #32
steveBK123 wrote: post #11

Earlier quoted context omitted.

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.

Yeah. I think a lot of the non-founder, high-pay FAANG crowd is in the funny spot where we are all paid super well, pay a lot of taxes, but if we were richer.. we'd actually pay a lot less taxes.

Being paid salary by employers, we can't structure our compensation to the most tax efficient forms.

The guys (almost always guys) at the top structure their pay to forms like stock or pass-thru or carried-interest, or whatever tax arb of the decade. Then they carry it forward, use trusts, borrow against stocks, and then hand it off to their kids when they die w/o tax.

They probably own enough houses, and have control of their schedule that they can stay out of CA/NY for 183 nights/year and avoid high state income tax too (while mandating RTO to high tax city/states for the rest of us).

Kind of a millionaires vs billionaires (or even decamillionaires) thing.

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

#49

Post by fhd2 »

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.

If you spend that money you pay VAT. The company you paid pays their employees, who pay income tax. Whenever money exchanges hands, it's taxed - pretty much.

Seems fair to me, though as a father working to leave something for my kids, I fully understand the sentiment. In Germany, children already pay inheritance tax starting at 400k EUR (half a house where I live).

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

#50

Post by vel0city »

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 person who’s passsing the money down already paid tax on the money

Why should I pay sales tax? I already paid tax on the money as income tax.

Why should I pay income tax on that money? That money was already taxed through payroll taxes before the employer paid me.

Why should the employer pay payroll taxes on that money? They already paid income taxes on it.

Why should companies pay income taxes on that money? They already paid sales taxes.

You don't pay taxes on literally the serial numbers of the notes being moved, you usually pay taxes when those monies move between entities.

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