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Over $70T of inherited wealth over next decade will widen inequality, economists

theguardian.com

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Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#171

Post by johnnyanmac »

JAlexoid wrote: post #42
shoubidouwah wrote: post #16

1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence) 2) tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit

There's a reason why countries, like Sweden, have scrapped the inheritance tax - it doesn't work like that anymore. The benefits of wealth are exercised long before the inheritance can be applied. Your first home down payment, your education, your wealth generation while being on support by your parents, etc. - will push you off the ground faster, than any inheritance in a world where people easily live to 80-90. Mos…

I don't see the problem with GP' solution here, though. Unless socialism is to be frowned upon. It won't fix upbringing, but knowing there's some income coming when you cone of age can help shape your post secondary education and housing habits.

You can perform a "child fund to the parents instead if you need earlier impact. And maybe we will need that as an incentive as 1st world populations decline. But it might not make a difference based on the spending habits of the parent.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#172

Post by johnnyanmac »

ryandrake wrote: post #152
JAlexoid wrote: post #42

Earlier quoted context omitted.

There's a reason why countries, like Sweden, have scrapped the inheritance tax - it doesn't work like that anymore. The benefits of wealth are exercised long before the inheritance can be applied. Your first home down payment, your education, your wealth generation while being on support by your parents, etc. - will push you off the ground faster, than any inheritance in a world where people easily live to 80-90. Mos…

By the time the treasure hoard gets passed on to the next generation, the inequality "damage" has already been done. If an inheritance tax has to be applied, this means society has already failed to stop runaway wealth accumulation and inequality. I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritanc…

>If an inheritance tax has to be applied, this means society has already failed to stop runaway wealth accumulation and inequality.

Yes. And we are already on "too late" mode. So we should go with the 2nd best solution because the best one (actually taxing billionaires) won't work retroactively.

>I'd much rather we have checks in place to stop individuals from accumulating megawealth in the first place (or at least slow it down), rather than relying on an inheritance tax which takes effect long after the accumulation happened.

Both would be nice. I don't see this as mutually exclusive. Though proper wealth taxes will lessen the need for inheritance tax. But not in all cases.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#173

Post by bawolff »

insane_dreamer wrote: post #170
bawolff wrote: post #44

Why would this increase inequality? Inheritence generally goes from rich person to rich person. I would normally assume the rate of equality would stay roughly constant in the face of inheritence.

because r > g (see Piketty[0]) if returns on inherited wealth outperform growth, then the percentage of growth captured by the wealthy grows over time, exacerbating inequality estate taxes can help mitigate that, but they are "anti-American" [0] https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...

Yes, but how does inheritence affect that?

Its not like inheritence makes money appear out of nowhere. Every inherited dollar is taken from a rich person who died. The amount of inequality should stay roughly the same as you are just transfering money between rich people. You aren't creating any new money, nor are you concentrating it in fewer hands. Why would inequality increase after inheritence instead of just staying the same?

The returns on wealth after it is inherited isn't going to be higher then the returns that same wealth would have gotten prior to it being inherited. Its still the same amount of money.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#174

Post by johnnyanmac »

JAlexoid wrote: post #113
boxed wrote: post #97

Earlier quoted context omitted.

> The benefits of wealth are exercised long before the inheritance can be applied. Agreed. But isn't that an argument FOR a strong inheritance tax? Because inheritance doesn't actually help your children anyway? That seems like it was your argument. With that argument taking 100% of the inheritance as tax and taking 0% is exactly the same, as the wealth transfer was done before anyway.

The only thing that I personally care about is the ability of ordinary people to build and retain wealth. Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not, it grows because the rest can't build and retain their wealth. This isn't a zero sum game. PS: I would also not trust the government or any political body to handle income from the inheritance taxes. So I…

>Wealth disparity doesn't grow because wealthy people are allowed to retain their generational wealth or not,

Yeah it does. The way compounding interest works means at some point that your passive accumulation of savings will outpace what most workers can earn as a salary. You can't really combat that by throwing more money at workers.

It's just mathematically impossible to let wealth run rampant in an individual like that and expect everyone to keep up with their limited hours of energy.

>This isn't a zero sum game.

It isn't. But with modern labor habits the billionaires want to make it one. That's why there isn't such thing as an 'earned billionaire'. They take from workers, lobby government to pay less, engage on anti-competitive behavior, or outright commit crimes to get to that point. The best case billionaire merely inherits the wealth and lets it accumulate, but I don't see many people like that these days who also don't fall into the other points.

>I would also not trust the government or any political body to handle income from the inheritance taxes.

Well someone has to. The us government has most things in record, so they are the easiest to audit.

This is more a sign that we need to pay more attention to politics and trustworthy figures who will self regulate. As in, pass laws that hold them and future policy makers in check.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#175

Post by johnnyanmac »

silexia wrote: post #116
JAlexoid wrote: post #42

Earlier quoted context omitted.

There's a reason why countries, like Sweden, have scrapped the inheritance tax - it doesn't work like that anymore. The benefits of wealth are exercised long before the inheritance can be applied. Your first home down payment, your education, your wealth generation while being on support by your parents, etc. - will push you off the ground faster, than any inheritance in a world where people easily live to 80-90. Mos…

Pointing out here this comment wants to hold the successful back, not advance the poor. It's not a zero sum game.

Look at the modern labor market and tell me they aren't trying their darndest to make it one.

And yes, we should "hold back the successful". Taking 99% of a billion dollars still lands someone with a career's worth of savings to tap into. That's how utterly ahead they are. And it's clear they used that power to ransack the nation. So be luck "holding them back" is the only stipulation here.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#176

Post by johnnyanmac »

JAlexoid wrote: post #83
boxed wrote: post #58

Earlier quoted context omitted.

I'm pretty sure we scrapped it because the conservatives got into power.

Cool. Inheritance tax doesn't work anymore, in any case. It's not the 19th century and we shouldn't try fixing 21 century issues with 19th century remedies.

If you have a better idea then I'm all ears. But dismissing a long established solution without an alternative makes it sound like you prefer the status quo.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#177

Post by johnnyanmac »

bawolff wrote: post #60
shoubidouwah wrote: post #16

1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence) 2) tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit

I think you'd have to be a bit more complex than that. Most 80 year olds know they arent going to live forever and would probably just transfer their assets a little early.

Sounds good to me. Moving that level of money already has so many stupulations. Inheritance is used because of tradition and because it's the one foolproof way to maintain generational wealth.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#178

Post by johnnyanmac »

brianwawok wrote: post #73
shoubidouwah wrote: post #16

1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence) 2) tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit

So people put the money in a trust or use another way to dodge it. I don’t think it’s nearly as easy to collect ad you hand wave.

GP probably spent 5 minutes writing that comment. I'm sure a proper policy naker will put more thought into it and consult lawyers/economists when making a fleshed out plan.

There's always loopholes. An internet forum isn't the best place to try and close every hole.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#179

Post by johnnyanmac »

koolba wrote: post #79
shoubidouwah wrote: post #16

1) set a generous threshold over which your inheritance gets taxed, inflation adjusted (e.g, 2M not including the principal residence) 2) tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit

> tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit If you think you’ve seen zany tax schemes, just wait till they try implementing something as crazy as a 100% tax. There’s also a moral question of why you feel entitled to not just a majority of the fru…

No one earns a billion dollars. By that point you aren't "earning" money anymore. Tax it 99% for all I care. You or someone else should be spending that by thatpoin. If you're a multi-billion aire then that's rough, but o don't think your QoL will be impacted.

Also, your loins did hot "earn" that money either by popping out of a uterus. Inheritance tax is probably the easiest to push of you can convince people that children aren't entitled to be billionaires by existing.

Re: Over $70T of inherited wealth over next decade will widen inequality, economists

#180

Post by johnnyanmac »

slowmovintarget wrote: post #148
koolba wrote: post #79

Earlier quoted context omitted.

> tax 100% above it. (should only concern a fraction of a fraction of cases) 3) put all this tax's proceeds in a sovereign wealth fund 4) at 21, a citizen gets access to her redistributed generational wealth 5) profit If you think you’ve seen zany tax schemes, just wait till they try implementing something as crazy as a 100% tax. There’s also a moral question of why you feel entitled to not just a majority of the fru…

This. There's an unproven assumption that somehow the inequality of outcome is 1) unjust, and 2) something to be "corrected." The first has no foundation other than appeal to emotion to create in-group / out-group tribes ("eat the rich!") to then suggest what end up being power grabs that destroy the middle class and do nothing to the wealthy. The second item requires destroying value. All economic activity comes fro…

>There's an unproven assumption that somehow the inequality of outcome is 1) unjust, and 2) something to be "corrected."

There's decades of research into this if you care to look up wage theft, worker productivity vs compensation, the lobbying against unions and minimum wage and any other labor protections, and the fact that we ruled that it's okay for billionaires to buy politicians.you talk about enabling opportunities, but lobbyists have used it to pull up all the ladders and pay less back to the people. So yes, we're due for a correction.

If you're a millionaire this doesn't really apply to you. Your taxes go up maybe 2-3%. "Wealth tax" is in the realm of 100m and definitely by 1b.

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