
The Inheritance Tax Is Far Too Low - tysone
https://www.nytimes.com/2020/06/24/opinion/inheritance-tax-inequality.html
======
reese_john
It is said that 70% of families lose their wealth by the 2nd generation and
90% by the 3rd[1]

Inequality is not static, it is rather dynamic.

Nassim Taleb makes some good points about that here[2], for instance, ~ 70% of
Americans will spend a year in the top 20% and only ten percent of the
wealthiest five hundred American people or dynasties were so thirty years ago.

[1] [https://www.nasdaq.com/articles/generational-
wealth%3A-why-d...](https://www.nasdaq.com/articles/generational-
wealth%3A-why-do-70-of-families-lose-their-wealth-in-the-2nd-
generation-2018-10)

[2] [https://medium.com/incerto/inequality-and-skin-in-the-
game-d...](https://medium.com/incerto/inequality-and-skin-in-the-
game-d8f00bc0cb46)

~~~
seattle_spring
Seems like we're conflating wealth with income?

~~~
maerF0x0
Wealth is just the generative form of income expenditures.

How do you tax the "wealth" that is being able to get free food from a food
bank, or a monthly check from the government?

How do you tax a bunch of experiences and education?

I dont think we should tax "wealth" when it's just a choice of what to do with
post tax income. And pre tax investments are taxed on their exit (eg 401k)

~~~
JamesBarney
> Nassim Taleb makes some good points about that here[2], for instance, ~ 70%
> of Americans will spend a year in the top 20% and only ten percent of the
> wealthiest five hundred American people or dynasties were so thirty years
> ago.

In this specific instance wealth vs income matters because the above statement
is true of income, but very untrue of wealth.

~~~
AnthonyMouse
What makes you think it's untrue of wealth? 80th percentile wealth in the US
is a net worth of ~$500k. That's where most people are at retirement when your
house is basically paid off and there is money in your 401(k).

~~~
JamesBarney
[https://dqydj.com/net-worth-by-age-calculator-united-
states/](https://dqydj.com/net-worth-by-age-calculator-united-states/)

The median net worth for a 60-64 year old is 225k a far cry from 500k. And 66%
of the population have less than 500k at that age.

~~~
AnthonyMouse
You're assuming "retirement" is still at 65, but increasingly it isn't. The
median is actually highest at the oldest age group on that chart.

Everybody also forgets to include the net present value of social security
(basically an annuity you were forced to buy), which is a disproportionately
large amount of the net worth for lower income people both because they don't
have as many other assets and because the income cap limits how much it adds
to the net worth of the people at the top. (Though people would generally have
a higher net worth without it; it pays back less than you'd have from
investing the same money in an index fund.)

~~~
JamesBarney
The numbers don't change much at all for 80+.

Not to mention lots of people won't live until 80 much less 60.

And adding social security would increase the % of people who had 500k but
would also increase the net present value of individuals @ the top 20%.

------
supernova87a
Much as I take a more moderate view about taxation (some things that taxes go
to fund are in fact ineffective and wasteful), I respect strongly the
inheritance tax not just in revenue raising but in behavior influencing.
(those who are on the receiving end of the tax, for reasons others have given
here)

And I do not for one second buy the ridiculous argument, both on this tax and
other taxes, that "money shouldn't be double-taxed".

Money is taxed every time it changes hands! Money doesn't have a "history",
except where we create loopholes to allow it to, which disproportionately go
to those who have the means to track and create vehicles that have "history".
Poor people don't have capital gains.

The inheritance tax, though you may not think it intuitively, is a strong way
for our society to renew itself and find new talent. It takes work to fight
against those who would silently change the rules to start favoring the old
and idle. (who are the ones who most have the ability to change the rules)

~~~
DuskStar
> but in behavior influencing.

Ah, yes - because of course we want people to spend all their money before
they die instead of investing long-term for their children.

~~~
dmarchand90
I can't think of another mechanism from preventing a permanent aristocratic
class from passive investment

~~~
maerF0x0
Is there something wrong with someone making a choice that pays off repeatedly
(even up to near permanently) instead of only temporarily? Assuming no, then
there is nothing wrong with passive investment.

Now power via money in politics is another issue completely, but money isn't
the issue, corruption is. I would wholeheartedly agree we need to fix
corruption in the government. I just disagree that the fix to corruption is to
make everyone marginally poorer via taxation. (at least some margin is lost to
bureaucracy)

~~~
dmarchand90
For me it's a tough sell to convince me that any finite action can merit an
infinite reward. Maybe you can make the argument but it's a tough sell

------
graton
Interesting to me is that not-taxing inheritances is sort of a giant tax
break. If your parent dies and they had bought a house for $100,00 and now it
is worth $1,100,000. So a capital gain of $1,000,000. If they had sold the
house they would have had to pay capital gains on the house, minus an
exemption amount ($250,000 for single and $500,000 for married).

But you as the beneficiary get to take that house and immediately sell it and
pay $0 in capital gains on it. So that tax is actually forgiven on death. If
you held on to the house then you would pay capital gains on any gains from
the value of it upon inheritance.

~~~
Judson
IRS FAQ on inherited assets is pretty good here:

[https://www.irs.gov/faqs/interest-dividends-other-types-
of-i...](https://www.irs.gov/faqs/interest-dividends-other-types-of-
income/gifts-inheritances/gifts-inheritances)

Without any estate planning, you would pay $0 in capital gains because the
basis resets to FMV at the time of death and the sale would be taxed as
regular income (37% marginal bracket on $1,000,000 sale).

By my reading, this doesn't seem like a giant tax break.

Edit: Totally wrong. $0 taxes owed because basis is stepped up and sale is NOT
treated as income.

~~~
graton
Well I paid $0 in taxes on my parent's death. And when we sold it no income
tax was paid. Our accountant checked everything and made sure it was done
correctly.

From the page it does say: If you sell the property for more than your basis,
you have a taxable gain.

But your basis is set upon the FMV (Fair Market Value) of the property upon
death of the decedent.

The basis of property inherited from a decedent is generally one of the
following:

1\. The fair market value (FMV) of the property on the date of the decedent's
death (whether or not the executor of the estate files an estate tax return
(Form 706, United States Estate (and Generation-Skipping Transfer) Tax
Return)).

Also, selling a house is not typically considered income. It is considered a
capital gain. So you don't pay income tax on sale of a house. There might be
exceptions if you are a real estate investor, but I don't have any expertise
in that area.

~~~
voisin
You paid nothing but presumably your parents’ estate paid taxes on the deemed
disposition at FMV less its basis.

~~~
graton
No, it did not.

~~~
voisin
So there was a bump in tax basis to FMV that essentially creates a tax free
capital gain for the beneficiary?

~~~
lakis
Yes

------
thomasfromcdnjs
People who think billionaires are so rich have never seen a federal budget.

You could guillotine a billionaire a day and their money wouldn't pay for
nought. (Not even considering that their "networths" are always tied up in
stocks.

As for using the term 1%, people rarely stay in the bracket for long, people
change and move through different economic brackets all the time through their
lives.The biggest indicator of wealth is age.

Others have commented on it, but inter-generational wealth is important for
various reasons. Cultures that plan for their children's children make a lot
of sense. I'd wager the West has some weird hedonism/individuality and we
rarely just stop thinking of ourselves. Adding further estate taxes just
removes even more incentive to work towards creating an inter genertional
family. Rich families are also just better with money because it's what they
know. Redistributing that money to others could just make it end up in coin
machines.

~~~
psychometry
Clearly you didn't read the article, otherwise you'd know that even slight
increases in this tax would fund important public services. You'd also know
that the U.S. has among the lowest levels of class mobility among developed
nations. People born rich stay rich; people born poor stay poor.

~~~
thomasfromcdnjs
This is simply not true, read the other comments on how much wealth is
retained per generation.

As for the your last sentiment, I'd also remind people that wealthy inequality
is not a very big problem if the standards of living are also improving.

Most "poor" people have plasma televisions, iPhones, fridges, their own living
quarters and more choice of food than a king 300 years ago would have.

~~~
psychometry
Maybe try looking at objective indicators of wealth distribution instead of
peering into people's windows and noting what kind of TVs they own...

------
austincheney
I have always wondered what would happen if an inheritance tax were pushed to
100% for sums greater than 10 million. At that point the only way to hide the
money would be to move it off shore, but then that money would be permanently
off shore. The consequence of that is that it is mostly beyond reach of US
taxation but in order to access that money people would have to leave the US,
so it almost becomes a citizenship tax. I am basing a lot of this reasoning on
what happened to the billions in wealth when large tech companies tried to
dump it in Ireland to avoid taxes. The money doesn’t just disappear unless the
companies are willing to never get it back or move to Ireland (corporate
offices and primary investors).

There would also be economic consequences for those not wanting to evade tax
laws because there is now a compelling reason to perform the impossible: spend
all that damn money before the tax man gets it. That is one hell of an
economic stimulus, but also means large injections of cash into charities and
scientific research, and commercial investment.

To me all these options seem like a net positive.

~~~
josephcsible
> there is now a compelling reason to perform the impossible: spend all that
> damn money before the tax man gets it.

Isn't that a recipe for hyperinflation?

~~~
throwawaygh
_> > there is now a compelling reason to perform the impossible: spend all
that damn money before the tax man gets it._

 _> Isn't that a recipe for hyperinflation?_

But of prices on... what? Yaacts? It's not like people are going to start
buying 1000x more bread loaves and corollas.

On the contrary, it'd probably deflate prices of housing in major "investment"
markets, as families off-load second/third/fourth houses.

And for the luxury goods, it might even drive _down_ prices of certain goods.
More demand => economies of scale => more efficient production => lower prices
=> suddenly affordable to a larger market => more demand => ...

But the original premise is kinda depressing. There is an alternative to
blowing all your money on hedonism. You can substantially ramp up your
donations, for example. I think you'd see an explosion of small churches/local
colleges/community centers/etc. with $100M+ endowments.

~~~
josephcsible
> But of prices on... what? Yaacts? It's not like people are going to start
> buying 1000x more bread loaves and corollas.

And then what will the yacht company do with all of the money?

> it might even drive down prices of certain goods. More demand => economies
> of scale => lower prices => more demand => ...

That's not consistent with economic theory. Economies of scale don't work
"forever". At some point, the per-unit price will start to rise with quantity
again.

~~~
throwawaygh
_> And then what will the yacht company do with all of the money?_

Employ people. Reinvest. Raise wages. Expand to new markets. Throw better
Christmas parties. Buy the CEO another yacht. You know, run their business.

 _> That's not consistent with economic theory. Economies of scale don't work
"forever". At some point, the per-unit price will start to rise with quantity
again._

You mean we won't get $10 yacht?! ;-)

Anyways, that part of my original pose was supposed to be tounge-in-cheek. The
point is, I don't think bidding up the prices of real estate in a few super-
upper-class retirement snowbird communities is the end of the world. Yes,
inflation will happen. But only in certain asset classes that I don't care
much about.

------
programmarchy
Yes, especially for the top 1% and 0.1%. However, they're the ones who have
enough money to pay for ways to hide their wealth from taxation, so an
inheritance tax would be a high + low attack on the middle, further cementing
the inequality divide.

~~~
Loughla
100% with you on this. I am set to inherit a large sum of money when my
grandfather dies (150-200k). And yes, 'large sum' is what I said. I honestly
thought about writing 'life-changing' sum, because that will allow me to
eliminate all of my debt, and substantially change my lifestyle.

I'm exactly who this would bite in the ass. I have neither the know-how, nor
the real money to spend on moving things around to hide it from taxation.

Edit: I know the first million, as illustrated in the scenario this article
presents, is exempted. I'm using myself as an example. The point still stands
- extreme wealth would be hidden, and the rest of us would have to pay.

~~~
mercutio2
Are you sure you understand the estate tax?

Even before Bush-era increases to the estate tax exemption, estate taxes only
cut in on $1 million and larger estates.

These days, the exemption is $5 million.

Putting the exemption back down to $1 million doesn’t sound like it would
heavily impact you unless your grandfather had a __lot __of beneficiaries.

~~~
saalweachter
> Putting the exemption back down to $1 million doesn’t sound like it would
> heavily impact you unless your grandfather had a lot of beneficiaries.

This is also the difference between an estate and an inheritance tax.

If someone has a $25 million estate and divides it evenly among 25 heirs,
under an estate tax with a $23 million exemption and a 40% tax above that,
each heir gets $968k. Under an estate tax with a $1 million exemption, each
heir gets $616k. Under an inheritance tax with a $1 million exemption, each
heir gets $1 million.

~~~
sgt101
The main thing is to encourage it to be distributed to a large number of heirs
because if 10 people get $1m they will spend far more than 1 person getting
$1m and will pay sales tax, property tax and so on with it, also the people
they spend it with will do the same and so on. The problem comes when folks
pass $10m + pools down through generations.

~~~
rpiguy
Large accumulators of wealth simply dodge estate taxes all together. They put
the money in a foundation and their heirs get a draw on the foundation for the
rest of their lives.

Whatever reforms are put in place should focus on minimizing that ability to
dodge the taxes.

Estate taxes are strange things in that they don't affect the poor and middle
class because few people inherit more than 1 million dollars and we have
exemptions for family farms and inherited small businesses.

It also doesn't hurt the ultra-rich, who easily evade inheritance taxes.

It hits a very narrow band of wealthy between the middle class and the ultra-
rich.

~~~
saalweachter
I wonder if some sort of "non-person wealth tax" is mechanically feasible.

The goal is "big piles of money eventually go away"; estate/inheritance taxes
stand at the boundary of individual ownership to try to chip away at the big
piles of money when it is passed from one generation to the next.

The "loophole" is that non-person entities, in the form of corporations or
trusts, do not die. Your family establishes a trust, dumps money into it, and
within that trust it can be invested and grow indefinitely, even if money is
taxed as it is taken out.

Assuming we don't want to just make non-corporate entities mortal -- require
them to "die" and be replaced by a successor organization every 60 or 80 or
100 years -- the problem becomes "how do we keep an immortal entity from just
sitting on an ever-growing pile of money, indefinitely".

So what if we just created a wealth tax and applied it to these immortal
entities, of, say, 3% per year?

Could you apply it to all non-person entities, family trusts, for-profit
corporations, non-profits, universities, etc? (If there is an exempt category,
you're obviously going to suddenly have a lot of family chapels with billion
dollar endowments.)

What would be the side effects, and which would be positive and which would be
negative?

Assuming you taxed for-profit corporations on their wealth, and adjusted
corporate income taxes appropriately, which sectors would benefit and which
would go away? Would it be a good or bad thing for those sectors to become
non-viable?

How hard would it be to reconcile internationally, could you tax entities
sanely for the portion of their wealth resident in a jurisdiction, or would it
be impossible to do fairly without leaving big tax havens?

~~~
sgt101
With corporations and other vehicles there is a mechanism where by the
ownership and beneficial rights are passed - shares are exchanged. If shares
in family trusts were valued accurately - perhaps by compulsory audit for
entities > $nnM then the transfer of ownership could be taxed.

------
czbond
Chaps my hide with broke journalist mentality: "This means that 40 percent of
why some Americans are extraordinarily well off has nothing to do with smarts,
hard work, frugality, lucky gambles or entrepreneurial ingenuity. It is simply
because they were born to rich parents."

In the US at least, it isn't hard if in lower middle class or above to invest
small sums over long periods to get large amounts. It is simply that they are
not doing it, or do not know why one should. To blame that one's own parents
or grandparents did not do it, yet anothers did is victim blaming another's
actions when they should look at their own descendants action.

~~~
czbond
Furthermore, why is an inheritance tax needed? The income was taxed upon
earning, and any growth in that sum was taxed via capital gains. To then take
even more via 'inheritance tax' is just government thievery.

~~~
tom_mellior
This "multiple taxation" nonsense is nonsense. _Everything_ is taxed multiple
times: I pay income tax on my salary. I spend my salary buying apples, and I
pay sales tax on this. From the money I paid for apples, the store pays the
cashier's salary, and part of this goes to income tax. The cashier spends
their salary on software from my employer, and part of this goes to the state
as sales tax. My employer uses the cashier's money to pay my salary, and I pay
income tax _again_ to close the circle.

Money flows in circles, and every single transaction in the chain is subject
to taxation. Picking out one particular tax on one particular kind of
transaction -- surprisingly, one that only affects rich people -- and claiming
that it is somehow extraordinary is intellectually dishonest. _Abolishing_ the
inheritance tax is what would create an exception from the general rule.

As for:

> why is an inheritance tax needed?

As a method of redistribution from the very rich to the very poor, to create a
more level playing field for everyone. (I'm not claiming that there _is_ a
particularly level playing field anywhere, especially not in the US. But
abolishing inheritance taxes would _certainly_ not make it more level.)

~~~
zionic
>As a method of redistribution from the very rich to the very poor, to create
a more level playing field for everyone.

That's a nice theory, but the absolute top don't pay inheritance taxes as
their wealth is tied up in huge complex financial instruments that they can
transfer avoiding taxation. The goal is to make sure that doctor making
$300k/year never breaks out of the middle/upper-middle class cage. The super-
wealthy have many schemes to prevent the lowers from ascending to their level,
this is just one of them.

~~~
tom_mellior
It will surprise you that I very firmly believe that this kind of loophole
should be abolished.

------
noja
I doubt any sufficiently wealthy family "inherits" anything, the owning is
done by a trust or company with obscured cross-border ownership.

Inheritance is for the rest of us.

~~~
elliekelly
Indeed. This is why I also take issue with the “wealth is lost in three
generations” line that’s often repeated. When I worked for a Bank & Trust
Company we had a lot of clients who were “broke” on paper but had a
substantial trust (controlled by the bank) that paid for just about every
conceivable expense.

------
avernon
There is a simple fix to this. You have to get rid of the stepped-up basis.
Then anything passed down will be taxed at the prevailing tax rates. All these
extra rules and tricks wouldn't be needed.

This is extremely unpopular because the upper 20% of society wouldn't be able
to pass down their homes and what is left of their retirement accounts tax-
free. That is why you have a stepped-up basis with an exclusion limit that has
an extremely punitive tax rate that encourages gaming the system.

But you can see the political equilibrium. Regular folk think big inheritances
are being taxed while they get to pass on their house tax free and the big
inheritances go through all kinds of loopholes to avoid actual taxation. It is
very American.

~~~
toast0
The step-up in basis is super useful though, because you can't ask the
decedant what their cost basis was, and it's not always easy to find that out
(especially if their record keeping was poor).

The current exemption amounts are rediculous though. Something closer to $1M
with inflation adjustment and a lein/payment plan option for illiquid assets
such as the family business/farm would make a lot more sense.

~~~
avernon
If they can't obtain the cost basis then it should be zero. The vast majority
of people have assets like stocks and property where records are maintained by
third parties. And if its so old or so disorganized to not know, then a cost
basis of zero probably isn't too far off.

------
auganov
The notion that there's even significant wealth held by private individuals is
total fiction. Compare yearly flows of money to private wealth. The global GDP
is estimated at around $150T, and total global private wealth at perhaps
$200T.

You could literally confiscate all private wealth in the world and it would
run out in a few years.

Most people just don't realize this simple fact. We hear about how just a few
people hold most of the world's wealth and it creates this image of enormous
control and influence. But when you compare it to flows of money you realize
how little of world's economic output these "super rich" people have captured
for themselves.

~~~
throwawaygh
_> But when you compare it to flows of money you realize how little of world's
economic output these "super rich" people have captured for themselves._

Alternatively: starting with a lot of wealth allows you to allocate your time
and resources to the accumulation of power and cultural influence, often
without ever experiencing life as an average person. So you end up with super
powerful people who never experienced the anxiety of waiting for payday or
wondering about job security with a new baby on the way.

The corrupting influence of _that_ \-- even more than the opportunity cost of
the wealth -- is a good reason for a wealth tax on the very, very, very
wealthy. Would Trump be president if he didn't have a $400MM head start? Would
the Koch brothers have been able to exert so much influence over state policy
in places like Kansas if they didn't inherit their father's wealth? And, if
so, would they have the same policy preferences and demeanors? Nothing is
impossible, by I wager the odds are closer to zero than to one on both counts.

~~~
auganov
Bloomberg and Steyer have pretty much disproved the notion that you can easily
buy your way into politics.

Most people don't even know who Steyer is. How many Steyers are out there?
When a rich person tries to become notable and fails you just don't hear about
them. When a rich person does something big you assume it's because of their
wealth being their most apparent unique characteristic.

President Trump is one of the few who made it. And he actually didn't spend
that much money on the campaign at all. Switched to regular fundraising pretty
fast. Sure, there's no question that his wealth is a big part of who he is. If
anything he leveraged people's obsession with wealth rather than his wealth
itself.

You're still going to deal with nation state and corporate lobbying without
private wealth. Successful private lobbying efforts get all attention because
of how uncommon it is.

How long have Koch brother[s] been at it? They pretty much were life long
political activists. And most of that is out of personal conviction. Doesn't
seem to me like they have attained any concerning levels of power at all given
their dedication.

~~~
throwawaygh
_> How long have Koch brother[s] been at it? They pretty much were life long
political activists._

That's... an understatement. They were life long members of the donor class.
It's not like they spent their 20s-40s knocking on doors and then hit it big.

 _> And most of that is out of personal conviction._

Well, yes... that's what I meant by "would they have the same policy
preferences and demeanors?" \-- I think there are striking policy differences
between Bloomberg and Kochs/Trump that are probably in part explained by the
differences in their life experiences.

 _> Doesn't seem to me like they have attained any concerning levels of power
at all given their dedication._

I can tell you're not in Kansas anymore ;)

From David Koch's very level-headed obit in the Wichita Eagle: _" David and
Charles Koch unmistakably altered the political scene"_
[https://www.kansas.com/news/business/article234301367.html#s...](https://www.kansas.com/news/business/article234301367.html#storylink=cpy)

Democrats in Kansas can get a bit over the top, but pretty much everyone on
all sides of the political spectrum agree that the Kochs are synonymous with
Kansas politics.

Anyways, yes, rich people both by inheritance and self-made will get involved
in politics with varying levels of types of success. But I think it's
corrupting for people to spend their entire lives in the donor class.
Ascending to that position breeds a different type that inheriting that
position. And, to be clear, this isn't even ideological; Trump and the Kochs
aren't exactly the best of friends.

------
tengbretson
Imagine how much it would stimulate the economy if we did this! Instead of
building up wealth to ensure the success of future generations, old people
would be forced to use it or lose it. The Buicks, 0-entry bathtubs and high-
end mobility scooters would be flying off the shelves with all this unlocked
capital being forced to consume. Think of all the new JOBS!

 _Now that 's what I call progress!™️_

~~~
bennysonething
Milton Friedman makes a good point (he completely disagrees with yours):
parents passing on wealth to children is a good thing as it makes them invest.
Not in trinkets of frivolous utility, but actual investments that puts money
in important thinks like factories etc. If you'd. Prefer people to divert
their wealth into pointless waste before the tax man gets it, then heavy
inheritance tax is the way to do it.

~~~
rwcarlsen
I think the gp was making the same point via sarcasm.

------
octaveguin
A lot of people here are concerned that taxing the rich will just make them
hide their money offshore.

It should be noted, then, that it's gotten a lot harder for Americans to go
offshore with their money due to two recent things:

1\. Expatriation tax -
[https://en.wikipedia.org/wiki/Expatriation_tax](https://en.wikipedia.org/wiki/Expatriation_tax)

2\. Foreign tax compliance act -
[https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...](https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act)

When taken together, it means that Americans are basically unable to ever
leave American taxation. No other nation has the ability to restrict their
citizens like Americans do while their citizens are abroad.

This is bad news if you want to own a company while living abroad (you can't
unless it's American or you'll be double taxed), live in a lower taxed
country, or renounce your citizenship if you make more than something like
139k a year.

Any tax applied to America's rich would not result in money leaving the
country - it's no longer really possible.

I wholeheartedly support strong inheritance tax. Dynasties are bad things and
create bad systems. The US is uniquely positioned to enforce it even if it
means that citizens are basically serfs to their country.

~~~
sesuximo
This is definitely what America is going for and definitely not the way things
are right now. It’s very much possible to leave and or or move money legally.

~~~
octaveguin
Please explain because every bank in the world needs to report to the US about
their American account holders.

If you own a holding company in another country, you need to declare that and
be taxed on it in addition to that country's tax.

I know this because I own a business and wish to live abroad so I really would
like to leave but I can't.

~~~
sesuximo
You could not make the money in your own name.

I agree once you’ve built up a bank account as a us citizen it’s quite hard
to. But if you saw this coming, you could easily have an XYZ USA, an XYZ
China, etc.

------
lmoml
I'd posit that the passing of substantial wealth and capital between
generations is one of the chief drivers of social decay. In the long term, it
causes an immense amount of power to devolve into the hands of a small group
of people who have done nothing to prove that they have the wisdom necessary
to wield such power for the benefit of humanity.

~~~
JamesBarney
The vast majority of the super wealthy right now did not inherit the bulk of
their wealth.

I don't think this would even rank in my top 5 list of causes of social decay.

------
dhosek
I've never understood why people think that just because, e.g., their parents
created a business worth millions of dollars, they should get that for free.

~~~
soccerdave
I've never understood why the government thinks that just because someone has
died, they deserve 40+% of money that has already been taxed.

~~~
elric
I'll give you the benefit of the doubt and answer the question honestly.
Assuming we're talking about a country where "The Government" is pretty well
behaved, said government doesn't put that money in its pockets. It makes it
work for the people it represents. Working for your money and becoming filthy
rich is fine. But when you die, you die. None of that money is yours anymore,
because you no longer exist. We, as a society, are free to decide what we do
with what's left of you and your belongings. In an ideal world, we can use
that to better the lives of others.

Unless you were a truly stingy person in life, your affluence will have
already have had huge positive impacts on those near and dear to you. Once
you're dead, why should they be any more important than any other person?

~~~
nitsky
> But when you die, you die. None of that money is yours anymore, because you
> no longer exist. We, as a society, are free to decide with what's left of
> you and your belongings.

Most governments enforce a person’s will after they die. People generally
elect to distribute their property to particular people, specifically to avoid
it ending up in the hands of “we, as a society”.

~~~
elric
As a society it's fine to execute a will, as long as it doesn't harm society.
Entrenching generational wealth and furthering poverty seems like it's
harmful. This is understood, after all that's why there is an inheritance tax
in the first place. I'm argueing that it needs to be _way_ higher.

~~~
nitsky
I disagree with your assumption that entrenching generational wealth furthers
poverty. When inventors believe that they can build generational wealth, they
are motivated to produce better products and services, which they are able to
offer at far lower prices than their value to all of us, so we all become
richer. For example, I am writing this on a smartphone that cost just a couple
hundred dollars. With it, I can access all of the world's knowledge and
communicate with anyone instantaneously. For just a couple hundred more
dollars, I sit beside an air conditioner that keeps me comfortably cool even
though it is boiling outside. The barons of the gilded age could not have
purchased such products for any price. So who is richer, me or them? The
inventors of these products are rich, but what do I care? I am lucky to have
been born into a world where these products are available for such a low
price. While it hasn't been proven conclusively, anecdotal evidence suggests
that more invention occurs in countries which defend generational wealth, and
we all benefit.

------
ralmidani
Inheritance tax is not a wealth tax (the person who accumulated the wealth has
died), it's just another income tax (which NYT wants to raise to an absurdly
high rate).

Taxing wealth is far more equitable than taxing income; taxing wealth gives
low-medium earners more discretion to spend on needs like housing, clothing,
food, child care, education, transportation, etc (needs that differ between
families, and which families are better equipped to assess than the
government), while taxing income gives the government a share of people's
money before they can decide what to do with it. Tax wealth while people are
alive (on an annual basis), rather than destroy a company/farm/estate by
having the government swoop in and take an enormous share of it (do we really
want the government in the business of taking over companies and farms?)

Of course, wealthy people who don't want to pay taxes could buy yachts and
fancy cars, but that could be remedied easily by instituting high sales taxes
on luxury items.

~~~
sesuximo
Wealthy people could also leave America

~~~
sachdevap
This is a big myth. Wealthy people are not going to just get up and leave
America. Where do you think they would go?

~~~
sesuximo
Look at france. It added a wealth tax. A year later, it made international
news when a billionaire stayed!

I think they would go quite literally everywhere.

~~~
taxtionistheft
Don't lie. They left. Read about Gerard Depardieu and many other rich people
who left the country.

~~~
sesuximo
I think you misunderstood what I meant— almost all of them left except one
which was newsworthy

------
dbcurtis
High inheritance taxes tend to single out individual proprietorship businesses
for punishment. I remember when I was young, watching newly-widowed farm wives
lose everything to inheritance taxes. It was heartbreaking. The tax code
changed so that stopped happening -- too late for some.

In the end, frequent tweaks to the inheritance tax code is just a full
employment act for trust & estate lawyers.

What we need instead of our current convoluted taxation scheme is a
progressive consumption tax -- but that is a rant for another day. (No, I
don't mean a sales tax or a VAT. The government already gets all the data on
your income and your total savings/investments. consumption = income -
net_savings. Apply progressive table. Done.)

~~~
JamesBarney
When was this?

I don't remember there ever being an inheritance tax on property left to ones
spouse.

~~~
dbcurtis
1970's. The limit on what you could leave to a spouse was low enough that
during a period of rapid inflation it got badly out of whack with farm land
values. It caught main-street businesses, too.

------
jimbob45
Transferable copyright is way worse imho. I have no idea why we subsidize
rent-seeking by the kids of inventors (or sometimes, people who had nothing to
do with the original invention).

~~~
throwawaygh
Transferable copyright and transferable real estate are the same thing imo.
Not a huge fan of either, but I don't see how being the landlord's kid is any
different from being an writers's kid.

 _> kids of inventors_

Inventions are protected by patent or by trade secret, not by copyright.
Patents have short shelf lives compared to copyright, mostly because mickey
mouse was copyrighted but not patented.

~~~
jimbob45
The difference I see is that a landlord’s kid has to do 100% of the job his
parent did or risk losing his landlordship. The writer’s kid doesn’t have to
do anything at all.

Also yes, you’re right. I should have said “work of art” rather than
“invention” to emphasize that I mean copyright and not patent. Parents have
far more reasonable durations.

~~~
throwawaygh
_> The difference I see is that a landlord’s kid has to do 100% of the job his
parent did or risk losing his landlordship_

Lots of people who own small numbers of properties just hire a broker/property
management company to do all the work for them. Also, renting out even a
single family home requires damn close to zero labor even without hiring out
the work. I rent one out and spend approximately one day a year on managing
the property. Property management is a job. Property ownership isn't. The
former does not pay nearly as well as the latter, and for most property
classes, the former mostly amounts to paying other people to do the actual
work once every few years.

TBH I imagine that maintaining a copyright with significant associated
royalties also requires as much or more work than managing a property. You'd
probably just hire a law firm or publisher to do all the work for you. If you
didn't then you'd have to be monitoring for abuse, handling lawsuits,
collecting royalties on contracts with publishers/distributors, etc.

I think you probably over-estimate the labor involved in most property
management, under-estimate the labor involved in IP management, and under-
estimate how divorced management and ownership are in typical cases.

------
tenpoundhammer
The first question I have to ask myself about increasing taxes is,

can the government do a better job of distributing these resources than
whoever is doing that Job now?

and what does better mean?

Living in the US with the government that is currently in place I feel
confident that the government can't do a better job than the current system in
place to handle inheritance, no matter what the definition of better is. So
giving the government more money via inheritance tax is a bad idea.

------
sesuximo
I think America could start by simplifying the tax code so the richest
Americans/American corporations still pay taxes.

Then America could stop spending so much on subsidies and global policing.

Once America has done this (this == approach a budget more similar to the rest
of the developed world), if it still needs to, then I think a simple wealth
tax makes sense.

I don’t see the argument for taxing inheritance which is already fraught with
loopholes and complicated edge cases.

------
pintxo
I am inclined to believe it comes down to a fundamental error in our current
way of taxation. Which is that we primarily tax work or the added value. While
luck (the lottery, having rich parents) is not taxed at all or at measurable
lower rates.

Question is why is that? And wouldn't it be fairer to tax work (effort) less
and luck more?

~~~
apta
> I am inclined to believe it comes down to a fundamental error in our current
> way of taxation.

This is exactly it, what almost everyone fails to notice. If you look at other
civilizations that do not impose income taxes, yet were successful, they did
not have this entire mess that is the US taxation system. Islam dictates a
"charity tax" called Zakat, that is calculated based on net worth, or produce
(e.g. for farms and cattle). It is much, much easier system to calculate, and
is strictly superior to whatever the US has going, as proof by how they have
to keep revising the tax code and "closing loopholes", and proposing new taxes
every time.

There are several factors at play here. The most important other factor is
that the modern economic system is based on parasitic, and morally bankrupt
practices, most important of which is interest/usury. Take these out and the
wealth inequality gap will fix itself very quickly.

------
closeparen
The important inter-generational wealth transfer these days are a) moving to a
neighborhood with good schools, and b) paying for college. To intercept this
inequality with taxation, you’d need to tax the beneficiaries of these gifts
enough to wipe out the lifetime earnings advantages associated with skilled
labor.

------
underdeserver
Definitely. People build their wealth, partially, on the achievements of
others. They should be taxed on property.

~~~
maerF0x0
If compounding returns are subject to additional taxation then why wouldnt the
government be responsible for such a property itself (compounding returns on
tax base for investments). For example an investment in irrigation ought to
increase the output of agriculture and therefore increase their tax base...

------
gadders
But for those who have children, isn't this the whole point? i.e. ensuring
your children have a better life than you did yourself.

In that view, surely passing on an inheritance is a good thing.

Obviously, passing on $5bn to your kids is different than leaving them a $800k
house mortgage free.

------
flerchin
I have a hard time figuring what the purpose of taxes is with our huge
deficits. It's almost like taxes exist only to redistribute wealth? Recovering
even 50% of all inheritances via taxes does not make a dent in the deficit.

------
taxtionistheft
France and many other countries already increased taxes before with
devastating consequences. Don't think you can outsmart rich people and take
their property without their permission.

------
Markoff
i can't believe how many posters here defend this immoral nonsense taxing
already taxed legally gained money

if the rich obtain the money legal way and taxed them why they should be
punished for being more successful than others and responsibly leaving the
money to children? basically what defendants of inheritance tax say you should
not try to be successful because you will be punished by losers for it, it's
income tax all over again (unless your country has flat rate for everyone)

------
lazyjones
Obligatory reading for believers in inheritance tax:

[https://iea.org.uk/blog/how-high-tax-sweden-abolished-its-
di...](https://iea.org.uk/blog/how-high-tax-sweden-abolished-its-disastrous-
inheritance-tax)

~~~
klmadfejno
This post is about sweden. Off the bat, they don't seem especially comparable
because they note that spouses needing to pay inheritance tax was one of the
primary problems. Spouses don't do that in the United States (for good
reason).

------
danvoell
Would be interesting to see what would happen if the tax were increased. Would
there be a mass transfer before it went into affect? I wonder how the current
age categories of wealth accumulation compare with previous generations.

~~~
jacobush
The biggest inidicator of wealth is if your parents were wealthy. At least in
the US.

------
gdubs
I hope that we could carve out exemptions for first-generation wealth.
Reparations may never happen in the US, but if a family went from slavery to
wealth in a few generations, perhaps the _least_ we could do is exempt them
from the inheritance tax. Maybe this is a controversial take, I don’t know,
but it seems like it might make a small step towards lessening inequality.

~~~
Someone1234
So you want to carve out an exemption that will largely benefit non-minorities
and increase wealth inequality, in the name of helping minorities and closing
the wealth inequality gap? That's quite some spin there.

How about we take in more tax from the wealthy, regardless of their ethnic
origins, and use that money to provide better social safety nets for the
poorest who are also disproportionately minorities due to system and
historical racism? You know, close the wealth gap, instead of further
increasing it.

Or heck, if you're really serious about this then tax the wealthy and pay
actual reparations.

It doesn't make any rational sense to pass a tax cut for the wealthiest in the
name of "some of them could be minorities too!" It makes far more sense to tax
all the wealthy, then help minority populations who would benefit more
greatly.

The top 1%'s kids will have to survive without that third house or yacht, even
if they're minorities.

~~~
gdubs
Why such an antagonistic reply? An honest reading of my comment is that I’m
speaking primarily of black millionaires — while leaving the door open that
there are other groups also deserving of exemptions.

It’s fine to disagree — but the tone is rather over-the-top considering. Let’s
have a conversation. I’m open to hearing why it’s a stupid idea. But if we
attack each other for posting ideas — then people won’t put forward ideas out
of fear of being attacked.

~~~
thomasfromcdnjs
I like your original post not because I agree with it but I think it outlines
an important point. Allowing families to work uninhibited without fear of
government coming and taking everything allows these families (cultures) to
get ahead.

------
lurquer
Rich people don't pay inheritance taxes. There are a gazillion ways to pass on
money without falling prey to estate taxes. The only people effected are
middle-class folks not savvy enough to avoid the tax.

The richest of the rich simply leave everything to a charity or foundation
that their children draw salaries from (as well as having the use of the
foundations estates, planes, etc.) Case in point... Warren Buffet; he's always
going on about he isn't leaving anything to his children, but plans on giving
it away to charity. What isn't frequently mentioned is that the kids 'own' the
charities.

[https://www.nbcnews.com/businessmain/warren-buffett-his-
birt...](https://www.nbcnews.com/businessmain/warren-buffett-his-birthday-
gives-kids-600m-972645)

~~~
ceejayoz
Middle-class folks are affected by a tax that starts at $23M of assets? I
suspect not.

It's fascinating how much propaganda has shaped this debate. People with a few
hundred thousand dollars in their 401(k) somehow got tricked into thinking the
"Death Tax" had anything to do with them.

~~~
lurquer
The rates vary depending on who is in power. They've been low, they've been
high. You have no idea what the rate will be when you die.

The point is, regardless of the rate, the rich -- people with access to good
lawyers and accountants -- don't be pay it. It's a political 'soak-the-rich'
tactic used by progressive politicians to get votes... it never 'soaks the
rich'.

~~~
ceejayoz
That's an argument for fixing the loopholes.

~~~
lurquer
It is unfixable. This isn't a political issue. It's just a fact. Absent a
complete totalitarian economy where every transaction is acrurinized, it will
always be an easy tax to avoid.

Consider income tax... consider the massive involvement of the govt required
to enforce this tax. That is, employers are required to deduct the tax from
every paycheck, reams if forms, thousands of agents... all that for one simple
transaction: namely, paying someone for services.

You can't have the same type of scrutiny for the totality of transactions that
can effectuate the tranfer of money from one person to another.

~~~
ceejayoz
> It is unfixable. This isn't a political issue. It's just a fact.

Other countries have functioning inheritance tax systems.

> Consider income tax... consider the massive involvement of the govt required
> to enforce this tax.

The IRS makes about $5 for every additional $1 it spends on enforcement. It
more than pays for itself.

~~~
lurquer
I don't know what you mean by functioning. The US had an estate tax systems.
It functions. The issue is whether it serves the purpose for which it was
created.

I suspect that European billionaires find it just as trivial to legally avoid
estate taxes as they do here.

There seems to be a naive understanding of the manner in which the 'rich' hold
their money and wealth. It's not sitting in a nice and tidy 401(k) that is
easy to identify and tax. Instead -- if they know what they are doing -- it's
a convoluted web of interests in international companies, foundations, and
contractual rights. If he wished, for instance, Bill Gates (just to use an
example) could easily arrange things so that he 'owned' nothing, yet still
lived like a billionaire.

