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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

#101

Post by HDThoreaun »

xyzzyz wrote: post #98
HDThoreaun wrote: post #96

Earlier quoted context omitted.

IMO the government is responsible for more than 25% of the vast majority of people's savings, so a 25% inheritance tax sounds fair. Maybe a few people really were innovative enough to have earned more than 75% without the government but that number is small enough to not matter. Your comment suggesting that losing 68% after 100 years is similar to keeping 0% is very strange to me, those don't seem similar at all. And…

> IMO the government is responsible for more than 25% of the vast majority of people's savings OK, how about this: I pay zero taxes in my lifetime, and then government can take 25% of the estate after I die. What do you think of that?

I think income taxes should be zero. The government should be funded mainly from land value tax, since land belongs to society as a whole and not some individual who was passed it by someone who never had the right to claim it in the first place. VAT and Pigouvian taxes are good options too.

In the end the government has to be funded somehow, the only question is how? Taking money from those who did not earn it seems the best option to me.

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

#102

Post by rayiner »

tptacek wrote: post #93
rayiner wrote: post #39

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.

People advocating DEI programs overwhelmingly support increased inheritance taxes; it isn't even close. The argument you're attempting to make here is farcical.

Not in any meaningful way—as evidenced by where they spend their political, social, and institutional capital.

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

#103

Post by CPLX »

RhysU wrote: post #99
CPLX wrote: post #32

Earlier quoted context omitted.

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.

The step up applies only to assets in one's estate at death, not assets in trust. IIUC, the very wealthy have limited exposure to step up in basis because they use trusts. Everyone else doesn't want to owe taxes when selling a house at market value they, e.g., inherited from a recently deceased loved one. The policy is not insane. It's sufficiently popular that no politician touches it.

No it’s insane. Like any tax it could be made progressive, make the tax lower or nonexistent for smaller amounts of money.

But stepping up the basis is insane and indefensible. It’s a heads I win tails you lose approach.

Basically you’re saying oh we know there are capital gains here but they are not realized so it’s not time to tax them yet and then the person dies they say just kidding those capital gains never happened.

It’s nonsense. Tax them at whatever rate makes sense if you want but don’t make a complete mockery of the concept of basis.

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

#104

Post by CPLX »

readthenotes1 wrote: post #90
sokoloff wrote: post #37

Earlier quoted context omitted.

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).

That sounds fair and reasonable when you're talking about stocks, but if you talk about a small family farm who's owners typically have very little capital other than the land, are you proposing that they sell the farm in order to keep it?

Exempt the farm from taxes if you like farms. Whatever. That’s a public policy choice.

But don’t say we’re talking about a fucking farm when you’re advocating for no taxes on a diverse network of private equity positions and real estate holdings.

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

#105

Post by CPLX »

voisin wrote: post #64
googlerx wrote: post #62

Earlier quoted context omitted.

> The person who’s passsing the money down already paid tax on the money. If they're passing down cash yes, but if they pass on assets like stocks or real estate, the cost basis gets stepped up to the fair market value at the time of death (in the US at least). So any capital gains accrued on those assets prior to the death of the person passing them on are just never taxed.

There isn’t a deemed disposition at the fair market value at the time of death? I thought the estate paid that capital gain which is why the inheritor receives it at the new FMV?

No. It’s completely fucking indefensible and sitting there in plain sight.

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

#106

Post by CPLX »

bluedevil2k wrote: post #88
egonschiele wrote: post #76

Earlier quoted context omitted.

Getting a leg up in life because your parents left you a big inheritance, is unfair to those who don't. There are many different types of fairness, not just one.

This is one of the silliest comments I’ve read on HN: it’s not fair to have successful parents that love you, therefore the government must step in and fix that.

They aren’t taxing love they’re taxing money.

We always tax money when it transfers from one person or entity to another.

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

#107

Post by tptacek »

rayiner wrote: post #102
tptacek wrote: post #93

Earlier quoted context omitted.

People advocating DEI programs overwhelmingly support increased inheritance taxes; it isn't even close. The argument you're attempting to make here is farcical.

Not in any meaningful way—as evidenced by where they spend their political, social, and institutional capital.

No. The issue you're advocating for is coded in literally the opposite way as you suggest it is. The opponents of DEI are the principal opponents of inheritance taxation. Well-educated and/or top-quintile professionals are also drastically more likely to support inheritance taxation (as a consequence of 21st century educational polarization). I don't think there's any meaningful connection between institutional DEI and economic justice, but you can't just make things up to drag DEI into unrelated arguments.

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

#108

Post by sokoloff »

readthenotes1 wrote: post #90
sokoloff wrote: post #37

Earlier quoted context omitted.

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).

That sounds fair and reasonable when you're talking about stocks, but if you talk about a small family farm who's owners typically have very little capital other than the land, are you proposing that they sell the farm in order to keep it?

I'm merely correcting an objectively incorrect claim: "The person who’s passsing the money down already paid tax on the money, whether income tax or capital gains tax."

I'm not advocating for increasing the estate tax (nor even necessarily closing the capital gains stepped-up-basis upon death). I am advocating for having our facts straight.

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

#109

Post by steveBK123 »

CPLX wrote: post #103
RhysU wrote: post #99

Earlier quoted context omitted.

The step up applies only to assets in one's estate at death, not assets in trust. IIUC, the very wealthy have limited exposure to step up in basis because they use trusts. Everyone else doesn't want to owe taxes when selling a house at market value they, e.g., inherited from a recently deceased loved one. The policy is not insane. It's sufficiently popular that no politician touches it.

No it’s insane. Like any tax it could be made progressive, make the tax lower or nonexistent for smaller amounts of money. But stepping up the basis is insane and indefensible. It’s a heads I win tails you lose approach. Basically you’re saying oh we know there are capital gains here but they are not realized so it’s not time to tax them yet and then the person dies they say just kidding those capital gains never hap…

My simple tax take is that we should just treat all income streams as regular income, and have whatever progressive rate on that income and be done with it.

By creating different classifications of income and constantly tweaking the rules, we setup entire tax evasion industries catering to those who have control of their income streams & money to pay advisors.

There's lots of BS that estate tax exemptions are there to protect small farmers, but they constitute something like 0.002% of estate tax payers.

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

#110

Post by Clubber »

jlokier wrote: post #78
Clubber wrote: post #59

Earlier quoted context omitted.

It will probably be good for GenX during retirement. Nursing homes, elder care and such will be much less burdened than they are now for the baby boomers.

As far as I can tell, retirement for many gen X who didn't manage to get a property and won't inherit means poverty and homelessness unless they can miraculously keep high-paying work to cover the cost of rent until they die. Their too small pension won't cover the rent by then because rent has risen and is still rising much faster. Nursing home? They can't afford long term stay due to lack of assets, but what about…

I was specifically talking about the cost of elder care when GenX hits their 70s and 80s due to supply and demand, the demand being lower since GenX is a much smaller generation than the baby boomers. You went down a rabbit hole.

If you are a GenX and you are still renting, you're gonna have a rough time, unless you move to a much lower cost of living location upon retirement.

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