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More than half of all private wealth has been inherited in most of Europe

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Re: More than half of all private wealth has been inherited in most of Europe

#21

Post by rtpg »

julian_1 wrote: post #16
crdoconnor wrote: post #9

Earlier quoted context omitted.

A massive part of people's motivation to work is to provide for their children. >That an increasing portion of wealth is inherited rather than build in an individual's working life-time is indicative that the system is function as intended. No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices. How you feel about that depends upon how you feel…

> the tax system treats unearned income and wealth more favourably than earned income. The income was taxed when it was earned. What reason is there to tax it twice? > how you feel about in increase in unearned income flowing to the wealthy I guess. Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's…

Double taxation doesn't mean anything in this context.

We tax transactions, not specific euros. Income tax when an employer pays their employee. Inheritance tax once the money goes from the deceased to the heirs.

These are separate things! And no different than, say, VAT on that iPhone. Sure it's between family members , but in the vast majority of cases all parties are independent adults.

The land you inherit is not "justly yours". It was the previous owner's thing. You are getting it but it is not your divine right, except that you won the birth lottery by being born into this family.

Of course a lot of families also have smaller domains, and it makes since to have some lower limit... But let's not forget people affected by inheritance tax are overwhelmingly very rich. Most of the population ends up with nothing.

Re: More than half of all private wealth has been inherited in most of Europe

#22

Post by user5994461 »

zokier wrote: post #7
TheSpiceIsLife wrote: post #4

> Fascinating chart: more than half of all private wealth has been inherited in Germany, UK, Switzerland, France — trend: rising fast! > Ever less private wealth is accumulated through own work, increasingly more through inheritance. A massive part of people's motivation to work is to provide for their children. That an increasing portion of wealth is inherited rather than build in an individual's working life-time i…

Modern inheritance should be inherently dissipative, as the estate is repeatedly divided among the heirs, amplified by death/inheritance/estate taxation. The problems arise when the wealth accumulation overpowers the dissipative effect of inheritance, combined with increasingly absurdly high wealth levels that go far beyond providing for children and grandchildren. As for the "golden area" you mentioned; yes, the war…

Wars, sickness and starvation have been great equalizers.

The last ones were decades ago and there is no sign of it coming back any time soon. We're living in unprecedented times.

Re: More than half of all private wealth has been inherited in most of Europe

#23

Post by ridgeguy »

jogjayr wrote: post #17
crdoconnor wrote: post #10

Earlier quoted context omitted.

Most of this wealth probably has nothing to do with merit. For every Steve Jobs there's a whole bunch of people who did nothing more than sit on property that appreciated in value and yielded rents. The tax system seems to prefer this to actually earning money for some reason.

> The tax system seems to prefer this to actually earning money for some reason. The tax system favors unearned income over earned income to adjust for risk. If you work a job you're guaranteed to be paid for the hours you worked (assuming an honest employer). Investments have no guarantees and you could lose all the money you put in. There's an argument to be made that the top tax rate for unearned income is too low…

There may be reasons unrelated to investment risk.

For example, the risk of losing an earned income stream because my (assumed honest) employer (fires me, goes bankrupt, etc.) seems much higher than the risk of losing an unearned income stream based on my investment in bonds backed by the US government.

Re: More than half of all private wealth has been inherited in most of Europe

#25

Post by cobookman »

nicolashahn wrote: post #20
perfmode wrote: post #18

Earlier quoted context omitted.

Is this the idea behind the estate tax?

Yes, but currently it's a % of the estate. I think right now the highest bracket is 40% (correct me if I'm wrong) so an inheritance of $500 million is still $300 million after the estate tax.

And don't forget that after ~13 years of 4% interest you'd have the full 500 million.

So long as you have a good financial advisor you're estate will go up in value over time.

Re: More than half of all private wealth has been inherited in most of Europe

#26

Post by ridgeguy »

humanrebar wrote: post #11
zokier wrote: post #7

Earlier quoted context omitted.

Modern inheritance should be inherently dissipative, as the estate is repeatedly divided among the heirs, amplified by death/inheritance/estate taxation. The problems arise when the wealth accumulation overpowers the dissipative effect of inheritance, combined with increasingly absurdly high wealth levels that go far beyond providing for children and grandchildren. As for the "golden area" you mentioned; yes, the war…

Wealth naturally dissipates through the generations. What has changed the most is the birth rate of the wealthy. If they went back to having a dozen children apiece, wealth would dissipate at least an order of magnitude per generation.

Depends on laws and customs.

Primogeniture concentrates inherited wealth in firstborn (usually male) offspring. [1]

[1] https://en.wikipedia.org/wiki/Primogeniture

Re: More than half of all private wealth has been inherited in most of Europe

#27

Post by kiliantics »

Piketty showed in Capital that most modern work about the trends in economic inequality was flawed. We usually think of the industrial revolution and modern era as periods where power and wealth became much more fairly distributed. However, if you go far back enough into the records, as he did, you can see a clear trend of concentration of wealth even now in the current system. The trend was briefly disrupted by the two world wars which were so destructive to our economies. The necessary reconstruction led to massive wealth redistribution and evened the playing field somewhat.

It seems that the graphs in this tweet are another confirmation of Piketty's observation.

Re: More than half of all private wealth has been inherited in most of Europe

#28

Post by MisterBastahrd »

julian_1 wrote: post #16
crdoconnor wrote: post #9

Earlier quoted context omitted.

A massive part of people's motivation to work is to provide for their children. >That an increasing portion of wealth is inherited rather than build in an individual's working life-time is indicative that the system is function as intended. No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices. How you feel about that depends upon how you feel…

> the tax system treats unearned income and wealth more favourably than earned income. The income was taxed when it was earned. What reason is there to tax it twice? > how you feel about in increase in unearned income flowing to the wealthy I guess. Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's…

The income by the inheritor was never earned. Hence it's perfectly logical to tax it.

Re: More than half of all private wealth has been inherited in most of Europe

#29

Post by isostatic »

julian_1 wrote: post #16
crdoconnor wrote: post #9

Earlier quoted context omitted.

A massive part of people's motivation to work is to provide for their children. >That an increasing portion of wealth is inherited rather than build in an individual's working life-time is indicative that the system is function as intended. No, it just signals that the tax system treats unearned income and wealth more favourably than earned income. Political choices. How you feel about that depends upon how you feel…

> the tax system treats unearned income and wealth more favourably than earned income. The income was taxed when it was earned. What reason is there to tax it twice? > how you feel about in increase in unearned income flowing to the wealthy I guess. Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's…

Why do you tax income? That's a disincentive to be productive, that's not good - we want people to be productive.

Taxing wealth is basically paying a rent to the society that allows that wealth to exist. Your land in manhattan is only worth $10m because society hasn't gone all Syrian. Your copyright holding over your film is only worth anything because we don't let people freely copy it.

When the wealth is owned by the people who aren't productive, you have a problem. It may be that those that are productive Leave and move elsewhere - who runs your hospital/golf course/power station then.

It may be that the productive say "enough is enough" and decide to invent the guileteen.

Either way when people have less to lose than you, it's a dangerous place to be.

Re: More than half of all private wealth has been inherited in most of Europe

#30

Post by julian_1 »

MisterBastahrd wrote: post #28
julian_1 wrote: post #16

Earlier quoted context omitted.

> the tax system treats unearned income and wealth more favourably than earned income. The income was taxed when it was earned. What reason is there to tax it twice? > how you feel about in increase in unearned income flowing to the wealthy I guess. Or about how you feel about the government's use of it's citizen's resources. Why should wealth earned by the breadwinner of the family, not remain with the family? It's…

The income by the inheritor was never earned. Hence it's perfectly logical to tax it.

So you would be in favor of taxing someone's social security or charitable receipts - since the benefits are not earned?
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