

Too Rich to Live? - grellas
http://online.wsj.com/article/SB10001424052748703609004575355572928371574.html?mod=WSJ_hps_LEFTTopStories

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jdietrich
Many of the wealthiest people in America opposed the repeal of the tax in the
first place - <http://news.bbc.co.uk/1/hi/world/americas/1170874.stm>

Warren Buffet has been quoted as saying "The idea that you get a lifetime of
privately funded food stamps based on coming out of the right womb strikes at
my idea of fairness."

There's a strong argument for high estate taxes on the principle that the
inheritance of wealth is inherently anti-democratic. Most historical
dictatorships have been based on the simple principle of compound interest. In
Britain two thirds of our land is still owned by just 6,000 people, most of
them aristocrats. I think any American would be a fool to forget that their
nation was founded as a rejection of British serfdom, and that their nation is
perhaps the only one in history that has not lived under the tyranny of
oligarchy. It seems to me to be no coincidence that America is almost unique
in the world in not having a common cultural sense that economic wealth
inevitably translates into political power.

For a contemporary example of the perils of unearned wealth, we need look no
further than Russia - in less than two decades it has descended to a state of
pure plutocracy, based on little more than unchecked accumulation of wealth
and simple corruption. Those opposing campaign finance laws and regulation of
that sort would be wise to look at the career of Vladimir Putin as a
cautionary example of what happens when wealth is allowed to dominate
democracy.

I consider myself a classic liberal, on largely utilitarian grounds - I
believe that a free market is good for us all and that any regulation of that
market is likely to do more harm than good. However, I fail to see the harm
done to society by considering a dead person's assets to be essentially 'dead
money', beyond that which is necessary to sustain his family. If you truly
wish to have a lasting influence on the world after your death, trust laws
give you ample opportunity to leave a permanent economic legacy. The likes of
Gates, Buffet, Carnegie and Rockefeller seem to recognise this. I fail to see
what good comes of inheritance, but do see a long history of great wrongs
resulting from it. From the perspective of this Brit, inheritance seems to be
more fundamentally un-American than most things condemned as such.

~~~
adbge
The majority of the harm, as I see it, stems from the government attempting to
regulate the market and the unintended consequences of that regulation.

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hop
Very wealthy people have the resources and probably the smarts find ways to
lessen tax liability - setting up trusts, moving money offshore, etc.

~~~
jquery
Yes, very wealthy people... like a two-income family of programmers that saved
20% of their money and invested prudently.

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yalurker
And with this law passing, the death of the family farm is complete. Now
instead of the midwest being full of family farms passed from father to son,
we'll only have corporate farms, since the typical family can't come up with
the cash to cover half the value of their land that now belongs to the
government.

I have little sympathy for the mega-millionaire trust fund kids this impacts,
however, the estate tax completely destroys a way of life for millions of
people in fly-over-country that has existed for generations. Sad.

~~~
JoeAltmaier
Family farms in Iowa have been dead for a generation. My brother is the
youngest member of his "future farmers" group - he's 55. Corporations manage
most of the land in my county, and its not very different elsewhere.

~~~
JoeAltmaier
Anyway, most canny farmers have incorporated. The heirs get stock, not the
farm. So taxes are avoided/deferred.

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msie
What's the hit on passing your estate to your kin BEFORE you die?

~~~
shasta
Gift tax is similar (has been 45%, might go up), on amounts over $10,000.

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theli0nheart
It's now $13,000 as of last year, I believe.

~~~
IdeaHamster
Charitable giving is exempt, though...

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kmfrk
To counterbalance the tone of impending doom in some of these comments and the
article, it's worth remembering that the article is from WSJ and might bear
the _slighest_ hint of bias. J

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sliverstorm
a 45% estate tax? That seems kind of insane! Is that on all your assets, or
the property you own, or what?

I can't believe the government gets half of everything you've got when you
die. What ever happened to wills?

~~~
kierank
The argument for this is that you're getting a large windfall (and in most
cases you haven't done anything to earn it) so you must be taxed on it.

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amh
That argument happens to be full of shit. Even if you win $36 million in the
lottery (surely the stereotypical "windfall"), the feds won't tax you 55%. The
highest marginal tax rate is 35%.

Estate taxes are morally repugnant. If the idea of people passing along large
fortunes to bratty kids is so bothersome, take comfort in the fact that money
tends to "find its level". Spendthrift fools will eventually lose it all to
mismanagement anyway. It might take more than one generation, but it'll
happen.

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jacobolus
Estate taxes are only morally repugnant if you believe that the children of
the elite have a unique right to the accumulated wealth of the society (which
tends to build up in those who own property and capital). Why should all of us
whose ancestors for generations actually built this society with their hands
end up with nothing while the man whose ancestor was a robber baron, land
speculator, or plantation owner receives a handout of a giant pile of cash?
Especially when such dramatic wealth inequalities severely distort people’s
economic behavior, depressing the overall growth of the whole economy and
wealth of the whole society?

~~~
sliverstorm
It's not that the children are entitled to it, but the deceased wanted to give
it to them. It's their assets, shouldn't they be allowed to decide what to do
with them?

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jacobolus
Why? By common cultural and legal convention (and in my firm opinion), the
accumulated wealth of most countries partly belongs to all who are citizens.
You’re suggesting that the rest of us cede complete social and economic
control to those who own property. Such is the typical libertarian utopian
ideal, but in practice the result is a sort of quasi-aristocratic society with
sharply limited opportunities for those at the bottom.

If you change your perspective, recognize that every fortune depends just as
much on the context and the society it was built in as it does on the
individual who built it, that our definitions of wealth and property are
essentially arbitrary human constructions, defined to be whatever we can
mostly agree on (through our institutions of government), and decide that the
accumulated wealth created by all our ancestors should "rightfully" (another
human construction) belong somewhat to all of us, then suddenly inheritance in
general becomes a way for some people (the rich) to take our property (that
is, your property and mine and everyone's) and give it to a few people that
they personally selected.

Now, in practice, there's some kind of balance between these positions (full
inheritance or no inheritance), because again, our culture and laws in a
republican society are based on what we can agree on. In America, there's more
of a cultural and legal emphasis on inheritance and personal wealth than in
any of the Scandinavian countries, for example.

But for someone to say that the very concept of broader societal input into
inheritance is "morally repugnant" is in my opinion a pretty narrow and
socially destructive morality, and I’m glad I don’t live in a country where a
small elite has enough power and influence to impose such cultural definitions
through force.

~~~
TGJ
As with all these funny little arguments I'd like to ask a simple question.

Do you mind sending me some money that you have since it somewhat belongs to
all of us? I mean really, like cut me a check and mail it? Or instead are you
going to be like every other person sane person out there that says, I earned
it, I keep it?

Your argument is invalid because during the accumulation of wealth by people,
there are taxes at each stage where society claims it's cut. In essence, a
death tax is double taxation.

~~~
jacobolus
I send "you" a check every time I do any work, in the form of an income tax,
paid to the government. I can both believe that you have a partial stake in
the portion I send to the government, and also not see the social benefit in
sending _you personally_ a check.

What's your point?

> _every other person sane person out there that says, I earned it, I keep
> it?_

These naive and self-important “sane” people have not thought very hard about
the problems of running a society, or at least don’t have much experience with
its practical constraints (and I would guess also have little close experience
with non-functional governments/societies such as those in most of the
developing world).

> _Your argument is invalid because [inheritance tax] is double taxation._

There is no "law of the universe" which prevents our duly elected
representative government from deciding to tax both income and inheritance. My
"argument" is that we make these essentially arbitrary decisions about how to
organize ourselves (our economies, our property systems, our governments) via
a process which involves agreement and compromise (and a fair amount of
disagreement and controversy too, of course; no one ever said governing
ourselves would be easy).

Since you haven't addressed "my argument" _at all_ (as far as I can tell from
your response you didn’t even read/comprehend it), I do not understand the
basis by which you have decided that it is invalid.

~~~
TGJ
_people have not thought very hard about the problems of running a society_

It depends on what type of society you are trying to run. Are you trying to
run a society full of social benefits (handouts) or a society of individual
accomplishments?

 _My "argument" is_

What is your argument? The following sentence is simply a description of how
we arrive at where we are and not why.

~~~
jacobolus
> _Are you trying to run a society full of social benefits (handouts) or a
> society of individual accomplishments?_

Neither is a good characterization (both are shrill bullshit buzzwords
intended in this context to limit discussion).

Trying to run a society with reasonable physical infrastructure
(transportation, public utilities, public health, etc.), a functioning
economy, a low unemployment rate, a decent standard of living, a lack of
structural violence, a support for individual freedoms, protections against
fraud and abuse of information asymmetries, a legal framework under which to
peacefully resolve disputes, an ability to respond to disasters and foreign
invasions, a government which is responsive to the changing needs and
circumstances of its citizens and responsive at a local level to local
differences, etc.

* * *

The why is in my opinion best described in Machiavelli’s _Discourses on Livy_
, Montesquieu’s _Spirit of the Laws_ , Tocqueville’s _Democracy in America_ ,
and Madison/Hamilton/Jefferson’s _Federalist Papers_ (and you might look at
Locke, Rousseau, Hobbes, etc. too if you’re feeling extra ambitious). The
complexities are somewhat longer and more involved than is appropriate for
this venue.

If you haven’t read it, Tocqueville’s book is truly fantastic, highly
recommended to anyone interested in democracy or American government, and just
about as relevant today as anything written since.

~~~
TGJ
Of course it's to limit the discussion. That's the reason to ask. If you
believe in individual accomplishment then a death tax is abhorrent to that
cause. If you believe in social benefits and wealth redistribution based on
society having a part in the deceased's property then it's legit. I'm simply
asking where you stand, and from how you respond, you don't stand for anything
and it's impossible to carry on in such a case. Don't give me some list of
books to read as if I'm some peasant trying to talk to some magnate. You have
a definite flourish but there is no point to your jab.

~~~
jacobolus
> _If you believe in individual accomplishment then a death tax is abhorrent
> to that cause._

You keep repeating that like a mantra (which would be unsurprising for a
Republican political candidate given that it is part of the official party
platform and talking points for the last couple decades, and is pushed
endlessly by the Heritage Foundation, Club for Growth, and similar
organizations), but you haven’t (and they never do either) actually explained
the logical connection between the two parts of that statement (and you keep
dodging every other question and ignoring every other answer).

I believe in individual accomplishment, and I believe that estate taxes are
quite reasonable and well justified by essentially all of the commonly
accepted moral principles of mainstream philosophical liberalism on which the
society and legal system of this country (i.e. the US) are based.

Basically, you are attempting to establish your logical claim with no logic,
and no explanation of any kind, simply through inane repetition. That's not a
discussion. That's a religious crusade.

By the way, “abhorrent” is usually reserved for things like torture and mass
killing. Its use in relation to changes in the marginal tax rate are absurd.

~~~
TGJ
Then you don't really believe in individual accomplishment. I've stated that
the wealth that is created is taxed as it is made. Taxing wealth more after a
person dies just to transfer it to the inheritor is a slap in the face to the
person that created the wealth in the first place. Society has no claim on a
dead mans property as the property has been paid for by the income taxes each
year, sales tax of the state, property taxes, SS, and all the other little
taxes out there. By taxing property/wealth after death and ignoring the
taxation that already occurred on that wealth you simply support
redistribution and do not support individual accomplishment. I have to repeat
because you don't seem to acknowledge this.

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IdeaHamster
I'm sorry, I have zero sympathy for anyone distraught over this issue. If
you're contemplating whether to live or die based on how much tax will be
collected from your estate, then I have an easy answer for you: your life
obviously isn't worth even a penny, so might as well get it over with.

As for the issue of the tax itself, there is something to be said for using
estate taxes to prevent the establishment of an aristocracy. I wonder how
strong the correlation is between the estate tax rate and the wealth divide...

~~~
sliverstorm
If you had children and a lot of money, were old and racked with health
problems that left you bedridden, and the date of your death was by all
accounts sometime in the next two years, would you actually insist on living
an extra year and saddling your children with hundreds of thousands of dollars
in taxes on the things you pass on to them?

There may not be a clear answer, but is it so insane to even _contemplate_
these things? The elderly are not being greedy- they don't benefit monetarily.
They are trying to care for their children in the last way they can, similar
to those who choose to take out life insurance. Would you similarly condemn a
parent who dies protecting their children from danger?

~~~
jballanc
So you're comparing dying in order to protect a life with dying in order to
avoid excess taxes?

The question is not "life == money" vs "life < money" vs "life > money", the
question is why are you attempting to compare life and money in the first
place?!?

~~~
sliverstorm
I'm not equating dying to protect life with dying to avoid taxes. The first
point was, it can be seen as reasonable to die to help your children. The
second point is my stipulation that to say it's only _ever_ reasonable in the
case that your children are in mortal danger is silly.

If you value your life very low (for example, you are bedridden in the
hospital, terminally ill, on the verge of death and will be in excruciating
pain for the rest of your short life) and the well-being of your children very
high, why is that so crazy? Soldiers in a country being invaded can go to war
and die to protect their families from enslavement, rape, pillaging, and so
forth, not just from death, and no one (well, usually) criticizes and demeans
them for that. Are soldiers the only ones allowed to do that?

I can sense you're balking at the part money plays in the equation, and you do
not like when money is assigned value beyond pieces of paper. Consider that
the people making these decisions are likely not thinking of the dollar amount
of the inheritance. I would bet they are thinking of the amount of good
(whether getting lots of money = good can be debated, but let's assume it
does, or at least assume they believe it does) they can do for their children
when they pass. Being taxed on that money means giving up a lot of that good.

