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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

#31

Post by walshemj »

ridgeguy wrote: post #23
jogjayr wrote: post #17

Earlier quoted context omitted.

> 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.

I think they where talking not about tbills, guilts or consols but riskier shares

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

#32

Post by walshemj »

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.

I think you mean capital not income

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

#33

Post by goliatone »

ridgeguy wrote: post #26
humanrebar wrote: post #11

Earlier quoted context omitted.

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

OT but I grew up in a place where first borns would inherit the land that was good for farming and other siblings would get the less desirable land, usually on the coast. Apparently it would make siblings tear each other apart because the difference in land had a huge impact on a family’s wellbeing. Eventually, with tourism, the value of land flipped, making families that owned land by the coast become wealthy. Talk about external factors affecting upward mobility.

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

#34

Post by julian_1 »

rtpg wrote: post #21
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…

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…

> 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 those arguments apply to governments as well, since they don't derive their law-making authority by claim to divinity - at least in modern times. Why should a government be specially privileged over a citizens wishes to provide for their family and/or community after death?

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

#35

Post by RhysU »

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.

But then it does not make sense to consider the size of the deceased's estate when deciding if the inheritance should be taxed. And the US does precisely that.

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

#37

Post by 6502nerdface »

A theory... It takes time to create wealth, and a lot more time elapsed before the current generations than has elapsed (or will) during the current generations, thus perhaps it’s not surprising that as time goes on, most of the accumulated wealth around us is from previous generations.

Furthermore, when a person dies, their wealth can either be destroyed/lost, inherited by heirs, bequeathed to some institution, or absorbed into the state/public... by measuring only “private wealth” as TFA does, we don’t see those latter two routes for the flow of wealth across generations, thus biasing our view toward the inherited component of wealth.

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

#38

Post by yks »

nicolashahn wrote: post #6

I was just discussing this as a result of watching this video: https://www.youtube.com/watch?v=-asltUUvcGU in which they discuss the result of the western capitalist system loosely resembling a meritocracy, except in the case of inherited wealth. An exceptionally productive individual can generate billions, but then when he dies the money goes to his heirs which may not have done anything to deserve commanding that m…

Exactly, there is nothing wrong with individuals not doing anything useful and just modestly living on inheritance but it's a serious problem (if not the most serious for mankind) when people who just happen to win the birth lottery are able to bend societies to their will via lobbying, propaganda or outright hereditary rule.

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

#39

Post by marxwasright »

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…

Each individual pays income tax once, when they obtain the income.

There’s no double taxation any more than it’s double taxation to tax my income then to tax the entrepreneurs who I do business with.

And while I agree that money staying with a family and creating economic inefficiencies and pointless disparities is better than war, that’s an absurd false dichotomy.

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

#40

Post by twblalock »

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…

Wealth grows fast enough due to investment that splitting it up between children won't dissipate it.
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