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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

#121

Post by cassianoleal »

sokoloff wrote: post #37
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.

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).

Forgive my ignorance, but I see 2 possible scenarios for the assets to be passed on to the heirs:

- simply transfer possession - in this case, there is no realised gains, so no need to charge taxes. they can be charged when the gains are eventually realised.

- realise the gains and transfer the money - in this case, tax is charged on the realisation of the gains.

What have I missed?

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

#122

Post by prepend »

nnvvhh wrote: post #18
prepend wrote: post #3

> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…

Another aspect of this arrangement: you don't pay federal income tax on money you receive as a loan in the US. The money does not count as income because of the matching obligation to pay it back.

Is there any county where a loan is counted as income?

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

#123

Post by humanrebar »

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?

I think the argument is that certain kinds of inheritance, like real estate and ownership in small businesses, cannot survive the taxes. It's the "what about the family farm/store/restaurant?" argument.

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

#124

Post by CPLX »

bluedevil2k wrote: post #117
CPLX wrote: post #106

Earlier quoted context omitted.

They aren’t taxing love they’re taxing money. We always tax money when it transfers from one person or entity to another.

No we don’t. In fact we rarely tax intra-family money transfers. When I pay for my kids’ college, that’s not taxed. Buy then a car at 16 - untaxed.

Right and give them the car two years later and it is taxed, subject to the gift tax exceptions and so on.

Proving my point that the rule is that money is taxed when it changes hands and the exceptions are exceptions.

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

#125

Post by CPLX »

RhysU wrote: post #112
CPLX wrote: post #103

Earlier quoted context omitted.

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…

> It’s a heads I win tails you lose approach. All capital gains taxes are heads-govt-wins. The step up is simply not applying that insanity, for once, at death. That is, it's marginally sane.

Yes if you think we shouldn’t tax people and not have an healthy modern society with government services and let wealth pile up for tens of generations completely unmolested then you’re right.

The problem with that idea is that it’s wrong.

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

#126

Post by Jcowell »

cassianoleal wrote: post #121
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).

Forgive my ignorance, but I see 2 possible scenarios for the assets to be passed on to the heirs: - simply transfer possession - in this case, there is no realised gains, so no need to charge taxes. they can be charged when the gains are eventually realised. - realise the gains and transfer the money - in this case, tax is charged on the realisation of the gains. What have I missed?

I don’t know anything about taxes and stuff but in > simply transfer possession - in this case, there is no realised gains,

aren’t the inheritors gaining wealth they did not have before?

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

#127

Post by sokoloff »

CPLX wrote: post #124
bluedevil2k wrote: post #117

Earlier quoted context omitted.

No we don’t. In fact we rarely tax intra-family money transfers. When I pay for my kids’ college, that’s not taxed. Buy then a car at 16 - untaxed.

Right and give them the car two years later and it is taxed, subject to the gift tax exceptions and so on. Proving my point that the rule is that money is taxed when it changes hands and the exceptions are exceptions.

A couple gifting their 18 (or 38) year old kid a car is unlikely to exceed the gift tax exemption.

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

#128

Post by rayiner »

tptacek wrote: post #107
rayiner wrote: post #102

Earlier quoted context omitted.

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 a…

> don't think there's any meaningful connection between institutional DEI and economic justice

DEI is how the upper quantile has co-opted economic justice rhetoric while entrenching itself in economic sectors (finance, tech) and behind policies (immigration) that deepen economic divides. It’s Wall Street’s brilliant makeover (in response to 2008), which has created a national conversation wherein being a racist plumber in Michigan is somehow worse than working in private equity.

It’s immaterial what educated professionals purport to believe in. Politics isn’t just about supporting this policy or that policy. It’s about how you spend political capital to construct a majority coalition that can manifest policies. Upper quantile professionals have spent their political capital to create a majority capable of enacting their preferred social policies. When they wage trench warfare to make sure kids learn about race in history class, that’s political capital they didn’t spend making sure kids learn about the history of the labor movement. These are choices. And as a result of those choices, upper quantile professionals have created a Democratic Party that includes Wall Street, but excludes much of the working class (and excludes most of the white working class). As a result, that coalition is wholly incapable of addressing economic inequality.

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

#129

Post by tptacek »

rayiner wrote: post #128
tptacek wrote: post #107

Earlier quoted context omitted.

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 a…

> don't think there's any meaningful connection between institutional DEI and economic justice DEI is how the upper quantile has co-opted economic justice rhetoric while entrenching itself in economic sectors (finance, tech) and behind policies (immigration) that deepen economic divides. It’s Wall Street’s brilliant makeover (in response to 2008), which has created a national conversation wherein being a racist plumb…

Again: DEI's most vocal opponents are the ones legislatively blocking any reform to inheritance taxes; in fact, they're attempting to repeal the Estate Tax altogether, as they have been since the 1990s, when the effort was a plot point on The West Wing. There is no reasonable connection to draw between DEI and a resistance to taxing generational wealth.

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

#130

Post by steveBK123 »

RhysU wrote: post #119
steveBK123 wrote: post #109

Earlier quoted context omitted.

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 t…

I agree. But if we had a simple system people would be able to tell whether or not they get adequate value for their money. Obtuse and opaque are a defense against fair or just, take your pick.

I think people at the top miss that they get, in some sense, some of the most value for money from a modern functional society.

In the absence of a government monopoly on violence and functional government services, a highly paid business exec will need to live their life more like a mafioso or warlord. There's places in latin America where even what Americans would call "upper middle class" people need to hire security and worry about kidnapping and extortion plots.

Add to that things like rule of law, so that the government strongman can't suddenly declare your business anti-patriotic / illegal (China) & take your cash / put you in jail.

Then you have things like - copyright, trademark, etc systems that allow you & I to develop ideas as IP and the government allows us to protect it in court so that we can reap the benefits.

So no, I don't think "tax is theft" and that we should live in some Mad Max world.

People who denigrate high trust society & rule of law do not understand how messed up living in low trust societies is.

Nor am I thoroughly impressed with the idea that we need a permanent overclass who is able to pass wealth down untaxed across generations, especially given all the trust fund underachievers I've met in my life in NYC.

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