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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

#201

Post by johnnyanmac »

bawolff wrote: post #199
johnnyanmac wrote: post #195

Earlier quoted context omitted.

In the general sense that people are using ways to give money to others when they die instead of spreading the weskth, yes. I'm sure there's dozens of methods used to harbor wealth but I'm more talking on the general concept. >Like what exactly? In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed. Investing it into assets like property will have that taxed, unless…

> In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed. Sure, but there is a very very big difference between capital gains tax and inheritence tax. Most proposals for inheritence tax are on the entire value of the property being inherited. Capital gains taxes are just on the difference in value between when you got it and when you sold it. If every transfer of prop…

Sure, the person is dead so they won't need the assets anymore. That's why inheritance tax is so large. Not so much for capital gains that still has a (concept of a ) human that has other utilities to pay off.

I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.

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

#202

Post by bawolff »

johnnyanmac wrote: post #201
bawolff wrote: post #199

Earlier quoted context omitted.

> In the very brodest sense, anything that involves turning I realizing gains into liquidity will be taxed. Sure, but there is a very very big difference between capital gains tax and inheritence tax. Most proposals for inheritence tax are on the entire value of the property being inherited. Capital gains taxes are just on the difference in value between when you got it and when you sold it. If every transfer of prop…

Sure, the person is dead so they won't need the assets anymore. That's why inheritance tax is so large. Not so much for capital gains that still has a (concept of a ) human that has other utilities to pay off. I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.

My point is more - if you make inheritence have a large tax but just giving things to family members a small tax, people will just gift their assets before death.

Any tax plan that requires people to be stupid in order to be taxed is a bad one because then the only people who get taxed are poor people who can't afford to hire an accountant to figure these things out for them.

The obvious way to close that loophole would be to tax capital gains at the same way as inheritence, but the side effects of that seem disasterous.

> I don't see the downside unless you think it's fine for children to simply millionaires for being related to one.

I think the downside is that the actual affect of the plan would be that really rich people would be unaffected, and if anyone was actually taxed it would be low-mid income people. Thus further cementing inequality.

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

#203

Post by kachapopopow »

bawolff wrote: post #167
kachapopopow wrote: post #86

Earlier quoted context omitted.

They aren't hoarding it directly, they have it in stocks or other appreciating assets such as gold.

Stocks is spending money. You are literally giving the money to someone else to help with their business venture.

with the sole purpose of making more money

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

#204

Post by insane_dreamer »

rufus_foreman wrote: post #194
insane_dreamer wrote: post #170

Earlier quoted context omitted.

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...

>> if returns on inherited wealth outperform growth, then the percentage of growth captured by the wealthy grows over time This is a non sequitur. There are many situations where returns on inherited wealth outperform growth, and the share of growth "captured" by the wealthy does not grow. For example, some people give away some or all of their wealth and instead of leaving it to an heir. Inherited wealth is not auto…

> For example, some people give away some or all of their wealth and instead of leaving it to an heir. Inherited wealth is not automatically invested, some of it is spent.

Sure, but that's a small fraction, doesn't really move the needle. Also, much of that is given to wealthy foundations (their own or others, such as colleges) who typically invest it (to make it perpetual). It rarely "trickles down" thus reducing inequality.

> Inherited wealth can be split among many heirs, in which case returns would need to be much larger to keep inherited wealth from diminishing.

How does that math work? If I invest $1M at 5% yield I get $50K. If I break it into 5 tranches of $200K, each yielding 5%, that's $10K each or $50K total.

Sure you may get 5 people with $1B instead of one person with $5B but that doesn't reduce inequality.

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

#205

Post by boxed »

kachapopopow wrote: post #85
boxed wrote: post #36

Earlier quoted context omitted.

I've heard this take a lot and it doesn't make much sense to me. How exactly are ultra rich "hoarding wealth instead of spending it"? Afaik most of the net worth of the ultra rich is in ownership of companies (stocks) or loans (eg bonds). That money is all out there in the world working. Isn't the fact that the ultra rich are using their wealth productively the reason we have growing wealth inequality? Because active…

It's more of a problem that the money is only used to make more money rather than being used for services or productive work.

But... money becomes more money precisely because it's invested into companies that sell products and services that people buy, and use most of that money to pay employees, office rent, factories etc.

Or in other words: money grows if you use it. If you just put it in a bank account it slowly erodes away under inflation.

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

#206

Post by boxed »

johnnyanmac wrote: post #184
boxed wrote: post #36

Earlier quoted context omitted.

I've heard this take a lot and it doesn't make much sense to me. How exactly are ultra rich "hoarding wealth instead of spending it"? Afaik most of the net worth of the ultra rich is in ownership of companies (stocks) or loans (eg bonds). That money is all out there in the world working. Isn't the fact that the ultra rich are using their wealth productively the reason we have growing wealth inequality? Because active…

Stock buyback is "spending" that does not in fact increase productivity nor stimulate the larger economy. But it makes them richer. Unrealized stocks that's hoarded isn't doing much of anything in the grand scheme of things. Billionaires have dozens of other things like the above that makes thos an issue

Ok, but after that buyback makes some person richer, what happens then? They can't put that money into a bank account and hoard it because then inflation will eat it slowly. They have to reinvest it into the stock market or something for it to grow.

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

#207

Post by blitzar »

sam_lowry_ wrote: post #160
blitzar wrote: post #132

Earlier quoted context omitted.

We can tax stock grants at 100%

You can also tax stocks yearly at a fixed rate, e.g. 2%.

You can also tax stocks yearly at a fixed rate, e.g. 100%.

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

#208

Post by blitzar »

disgruntledphd2 wrote: post #163
blitzar wrote: post #28

Earlier quoted context omitted.

UK. You have to pay your 40% within 6 months of death, even a main residence.

If your house is worth more than 500k and you're inheriting from your parents, otherwise 325k. That's a pretty absurd amount of money to be getting tax free. Like, assuming 50% marginal you'd need to earn 1mn to get that post tax.

The home you have lived in and shared with your parents for, 27 years (the current and increasing average "moving out of home" age), could be considered as much yours as theirs.

You are not "earning" something you are continuing to "own" something that was already yours, shared with people who were here and are no longer here.

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

#209

Post by sam_lowry_ »

blitzar wrote: post #207
sam_lowry_ wrote: post #160

Earlier quoted context omitted.

You can also tax stocks yearly at a fixed rate, e.g. 2%.

You can also tax stocks yearly at a fixed rate, e.g. 100%.

Nope, 2% because they grow by 6% on average for the last 30 years.

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

#210

Post by shoubidouwah »

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…

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

thus the importance of the sovereign fund.

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