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> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…
If you taxed boomer-> millennial inheritances at just 25% you could completely eliminate the black-white wealth gap in the next couple of decades. There’s a reason that affluent white people are talking about DEI, and not raising our absurdly low inheritance taxes.
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.
If you taxed boomer-> millennial inheritances at just 25% you could completely eliminate the black-white wealth gap in the next couple of decades. There’s a reason that affluent white people are talking about DEI, and not raising our absurdly low inheritance taxes.
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Neither did the government. Why shouldn’t the person who did earn it get to decide what happens to it? After all, they could choose to donate some to the government. No one does though, voluntarily, because we all know that money would get wasted.
“The government” isn’t a fixed entity. It is what people want to be funded. Wealthy Americans donate enormous amounts of money to entities that would be publicly funded in many other countries: universities, hospitals, concert halls… Everybody wants to give money to something where they get their name on a wall and the envy of their rich peers. Meanwhile projects that could be more beneficial to society but don’t hav…
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.
I think you need to go back to eighth grade math.
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I think you need to go back to eighth grade math.
Fine, lose (1 - 0.75^4) = 68% of everything. Plus what is lost to inflation. Thank you for such meaningful criticism.
Your comment suggesting that losing 68% after 100 years is similar to keeping 0% is very strange to me, those don't seem similar at all. And then the 68% doesn't even account for growth, which has always been greater than inflation in the past.
Generally the idea that people 100 years from now should be able to live off the labor their ancestors did 100+ years ago seems absurd to me. Those people did nothing to deserve that wealth.
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.
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Fine, lose (1 - 0.75^4) = 68% of everything. Plus what is lost to inflation. Thank you for such meaningful criticism.
IMO the government is responsible for more than 25% of the vast majority of people's savings, so a 25% inheritance tax sounds fair. Maybe a few people really were innovative enough to have earned more than 75% without the government but that number is small enough to not matter. Your comment suggesting that losing 68% after 100 years is similar to keeping 0% is very strange to me, those don't seem similar at all. And…
OK, how about this: I pay zero taxes in my lifetime, and then government can take 25% of the estate after I die. What do you think of that?
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Right, but to my understanding there are related games that are played with trusts for example such that the loan passes onto the next generation too. To make matters worse, theres a concept called "step up in basis" such that if structured correctly, the inheritors can pretend the cost basis of their portfolio is the current market value. So the parents shield the gains from taxes in life, pass on the portfolio, and…
You’ve zeroed in on the most egregious problem. Step up basis is insane as a policy choice. It basically means that we just don’t tax the primary means of income used by wealthy people AT ALL. If a company pays you you have to pay taxes on it. Unless the company pays you by inflating the value of stock in that company, in which case you just… don’t.
IIUC, the very wealthy have limited exposure to step up in basis because they use trusts.
Everyone else doesn't want to owe taxes when selling a house at market value they, e.g., inherited from a recently deceased loved one.
The policy is not insane. It's sufficiently popular that no politician touches it.
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IMO the government is responsible for more than 25% of the vast majority of people's savings, so a 25% inheritance tax sounds fair. Maybe a few people really were innovative enough to have earned more than 75% without the government but that number is small enough to not matter. Your comment suggesting that losing 68% after 100 years is similar to keeping 0% is very strange to me, those don't seem similar at all. And…
> IMO the government is responsible for more than 25% of the vast majority of people's savings OK, how about this: I pay zero taxes in my lifetime, and then government can take 25% of the estate after I die. What do you think of that?