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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

#131

Post by [deleted] »

mcntsh wrote: post #69
vel0city wrote: post #50

Earlier quoted context omitted.

> 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? T…

For me, this comment just highlights how egregious taxation already is.

[deleted]

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

#132

Post by hrunt »

Jcowell wrote: post #126
cassianoleal wrote: post #121

Earlier quoted context omitted.

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?

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

In terms of stocks and land, yes and no. They are receiving assets they did not have before, and those assets have a market value that is not realized until they sell them. They are receiving paper wealth, and while paper wealth can be beneficial (you can borrow against it), it is not the same as actual spendable cash. A government could tax them on the value of those assets at the time of transfer, but that may require the inheritor to dispose of some or all of the assets in order to pay the tax bill. Governments typically require their citizens to pay taxes in currency, not assets.

Note that governments do sometimes treat asset transfers this way (e.g. restricted stock awards), but they typically view unrealized gains as something to be taxed when they are realized (ie. converted to currency).

What's really beneficial with inheritance is the step-up basis. When assets get inherited, the cost basis is reset to the market value at the time of the transfer, which means taxes are never paid on any gains made between acquiring the asset and the death of the owner. So even if the inheritor sells them at a later date, they still pay substantially less in taxes than they would normally pay.

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

#133

Post by Incipient »

readthenotes1 wrote: post #89
Incipient wrote: post #82

Earlier quoted context omitted.

Yet how woefully it has failed to curtail growing inequality. The well off have proven for millennia they won't support the hardest hit on society. Governments have to do that.

And yet what is a government except people who are doing what they can to maintain the power they have?

Oh yeah when thy rich can mostly openly, or at least legally, buy politicians nothing will change.

I hope the US can pull themselves out, but everyone seems stuck quibbling over the extremes of minor issues, rather than important difficult topics.

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

#134

Post by notacoward »

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.

This "double taxation" argument has nothing to do with fairness. It's rules lawyering, not ethical reasoning. It also ignores the fact that money is usually taxed when it changes hands - income tax, sales tax, etc. Yes, again and again and again. The one notable exception - which the article even mentions - is certain kinds of inheritance. Thanks to the basis step-up, a lot of wealth has evaded the kind of taxation that every other kind of transfer typically incurs.

> Especially when we see how inefficient the government is at spending money for the public good.

Pure political cant, unrelated to the matter at hand and particularly to any issue of fairness. It does, however, underscore the ideological motivation behind an otherwise ridiculous argument.

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

#135

Post by RhysU »

CPLX wrote: post #125
RhysU wrote: post #112

Earlier quoted context omitted.

> 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.

How did we go from discussing the step up basis to assuming I want an "unhealthy modern society"?

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

#136

Post by Turing_Machine »

egonschiele wrote: post #76
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.

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.

It's not "fair" that I'm only slightly above average height and will therefor never be an NBA star. It's not "fair" that I'm a competent musician at best -- far, far below professional level.

Are you arguing that no one should be allowed to be a pro basketball player or musician?

You should go read a story called Harrison Bergeron by Kurt Vonnegut.

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

#137

Post by Turing_Machine »

notacoward wrote: post #134
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.

This "double taxation" argument has nothing to do with fairness. It's rules lawyering, not ethical reasoning. It also ignores the fact that money is usually taxed when it changes hands - income tax, sales tax, etc. Yes, again and again and again. The one notable exception - which the article even mentions - is certain kinds of inheritance. Thanks to the basis step-up, a lot of wealth has evaded the kind of taxation t…

> It also ignores the fact that money is usually taxed when it changes hands - income tax, sales tax, etc.

I don't think they're "ignoring the fact". I think they're arguing that it's wrong. Those aren't the same thing.

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

#138

Post by Bran_son »

dctoedt wrote: post #118
Bran_son wrote: post #73

Earlier quoted context omitted.

A 25% inheritance tax, i.e. lose everything your family worked for in just four generations. That's ignoring inflation. The logical conclusion of the idea that where you are born is just an "accident", and you have no legitimate link to your ancestors.

> lose everything your family worked for You're assuming your family is entitled to keep forever everything that it happens to have received in its economic activities. Elizabeth Warren famously said in her first Senate campaign, "There is nobody in this country who got rich on his own. Nobody. You built a factory out there—good for you! But I want to be clear. You moved your goods to market on the roads the rest of…

> You're assuming your family is entitled to keep forever everything that it happens to have received in its economic activities.

That would be ignoring income taxes and VAT. And I'm well aware of the failures of the free market. But they do not make inheritance illegitimate, as this article tries to frame it.

It's that framing that is most offensive, more than a reasonable (i.e. much much less than 25%) inheritance tax: that taxation is not a compromise between property rights and free trade on one hand, and the public good on the other, with both being desirable values that are sometimes in opposition, but that it is a punishment for unearned wealth. With the hate for the wealthy expanded far beyond the 1%, to everyone that bought a house before the housing market explosion.

I'm sure if the target of this hateful rhetoric was some other group, you'd quickly see its danger.

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

#139

Post by rayiner »

tptacek wrote: post #129
rayiner wrote: post #128

Earlier quoted context omitted.

> 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.

The most vocal opponents of DEI are working class white people—who are indispensable to any liberal coalition worth the label. They are not trying to repeal the estate tax.

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

#140

Post by tylerhou »

Turing_Machine wrote: post #136
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.

It's not "fair" that I'm only slightly above average height and will therefor never be an NBA star. It's not "fair" that I'm a competent musician at best -- far, far below professional level. Are you arguing that no one should be allowed to be a pro basketball player or musician? You should go read a story called Harrison Bergeron by Kurt Vonnegut.

Yes, it isn't fair that some people are taller than others, or more talented.

The way we account for that is is not by outlawing behaviors. Rather, we levy progressive income taxes so that people who are lucky can help people who are less lucky. The most talented basketball players pay a large income tax that helps provide services to those who were not born lucky.

I don't see why estate taxes are any different. It is not fair that some people are born into rich families while others are born into poor families. Nobody is suggesting we outlaw inheritance. But levying an appropriate tax on inheritance and preventing tax avoidance schemes is one way to compensate the unlucky.

Vonnegut was also a socialist (according to Wikipedia).

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