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Chuck Feeney Is Now Officially Broke (forbes.com/sites/stevenbertoni)
1336 points by pseudolus on Sept 15, 2020 | hide | past | favorite | 836 comments

I vaguely recall that there are classic levels in Jewish philosophy regarding philanthropy, and among the highest is to give with no expectation of any return whatsoever: that means not only giving where it matters, but to do so anonymously, to organizations that don't benefit you (no opera companies), and to people with no ties to you. In this respect Chuck Feeney has been incredible.

This is not to dismiss the likes of Bill Gates: he has been very public with his donations, but in some cases (notably celebrity) notoriety in your donations may create a multiplier effect as it encourages others to do likewise. Even so, I think this is still on a lower-rung, philanthropy-wise, than Feeney's approach.

Nonetheless, we're sitting here praising someone who reduced himself from billions to $2M, but we must remind ourselves that this is unimpressive compared to the poor person who donates $25 to others while starving herself. The value of money is nonlinear. I'm sure that Feeney would say this as well: he no doubt sees himself as saddled with the burden of billions of dollars rather than someone doing something amazing.

I wonder if I ever will have the strength to do what he has done.

Maimonides defines eight levels in giving charity (tzedakah), each one higher than the preceding one.

On an ascending level, they are as follows:

8. When donations are given grudgingly.

7. When one gives less than he should, but does so cheerfully.

6. When one gives directly to the poor upon being asked.

5. When one gives directly to the poor without being asked.

4. Donations when the recipient is aware of the donor's identity, but the donor still doesn't know the specific identity of the recipient.

3. Donations when the donor is aware to whom the charity is being given, but the recipient is unaware of the source.

2. Giving assistance in such a way that the giver and recipient are unknown to each other. Communal funds, administered by responsible people are also in this category.

1. The highest form of charity is to help sustain a person before they become impoverished by offering a substantial gift in a dignified manner, or by extending a suitable loan, or by helping them find employment or establish themselves in business so as to make it unnecessary for them to become dependent on others.

[0] https://www.jewishvirtuallibrary.org/eight-levels-of-charita...

Level one sounds suspiciously close to actually paying taxes and let the social net built on it work its magic.

Now come on, downvote me to hell.

On the one hand, I think your comment is correct, insightful and important.

On the other hand, I have a firm policy of always downvoting comments on HN that say things like "I know I'm going to get downvoted for posting this", because I think doing that should be strongly disincentivized.

I'm compromising by neither upvoting nor downvoting and leaving this reply.

Have my upvote as well. I was still frustrated by a similar observation I recently posted that went negative, much to my surprise, and made me imply a pretty libertarian bias.

Apologies for the bile, I‘ll engage in a more civil discussion tone going forward.

Similar effect, perhaps, but different cause.

Taxes aren't voluntary.

You don't choose how much you owe.

Not all taxes go towards improving people's lives- in the US, many safety nets only kick in once you are impoverished, and can disincentivise work. As an example, the recent coronavirus add-on payments to unemployment often meant people at the lowest levels of opportunity would make more by staying home than if they got a job.

This isnt to say tax funded social nets are bad; most aren't. They certainly shouldn't be confused with charity, though.

"often meant people at the lowest levels of opportunity would make more by staying home than if they got a job"

Considering how low the Coronavirus add-on payments are, doesn't your point really mean that those at the bottom of the scale, where minimum rates have barely budged in the US - are vastly underpaid on a normal basis?

Wasn't the payout an extra $600 / week? That's equivalent of an extra $20 / hour of a 40 hour workweek after tax withholdings. Around half of income earners in the US make less than that from working, my wife's included. It should also be noted that a little over 2% only make the federal minimum wage.

In fact, the NYT broke this down on a state-by-state basis: https://www.nytimes.com/interactive/2020/04/23/business/econ...

Aside from whether or not the minimum wage should be increased, it does seem to demonstrate easily enough that the stimulus is a perverse incentive.

Bringing this back to the original point I was replying to, it utterly fails the definition of the top level of charity by encouraging people to become dependent on the largess of others.

That's not to say it is therefore a bad thing, but it certainly isn't a reason to call paying taxes the highest level of charity.

No that's exactly it.

Don't give fish. Give fishing rod, fishing right and fishing classes to people who need it.

Only morons think they are better off in society full of poor oppressed people. In a was a social net system is ultimate selfish move as it lowers crime increases productivity and so on. Instead of living in permanent danger akin to current Rep of South Africa.

There's one major difference: taxes and the social net only help those in your country. And if you're in a western country (where most people with wealth are), the people who most need your help are elsewhere.

Concretely, you can help a lot more people with the same amount of money if you focus your giving on the global poor (ex. Africa), rather than those in the US. One way to do this is https://www.givedirectly.org/

It's kind of a weird escalation -- steps 8->2 incrementally make sense (the more anonymized you are, the 'better'). But then the difference between step 2 and step 1 is totally different, the distinction is no longer anonymity, but some measure of efficacy of the support.

Maybe the axis is not anonymity per se but the dignity preserved by the recipient. Anonymity is not the goal, it's a means to an end. And providing employment achieves that end even better than anonymity does.

In this light the lower levels also make sense, each progressive level allows the recipient to feel less guilty (the donor is not annoyed that they have to help, or doesn't even need to be asked, etc). The really interesting bit here is that the levels are not about how much the donor sacrifices but how good the recipient feels.

That's an interesting point. To add to it slightly, maybe the goal is to create a healthier community. Without the guilt or annoyance you mention, it is possible for both the donor and the recipient to maintain a positive relationship going forward (less of an ongoing power dynamic or bitterness).

My guess would be that when these levels developed, most giving was within a close knit community.

Excellent idea! I think you explained it.

Back in Maimonides' time it would be difficult to provide things other than a lump sum in an anonymous manner. If you employ someone, teach them a job or give them a loan they'll get to know you. So I think step 1 drops anonymity for long-term purpose.

I think the point is that the sustainability of preventing poverty and making someone self sufficient is nuanced and not just a simple transfer funds. It's such an improvement over the other donor -> recipient charity which _don't_ fix dependency that the anonymization and cheerfulness of the exchange doesn't even matter: fixing the core problem permanently is a higher goal by kind, not just degree.

9. When the donation wouldn’t occur without a tax break.

I never understood why people keep pointing out that charity donations "might" qualify as tax brakes, as if that's something bad or even worse - some way to cheat the system. Can someone explain this to me?

As far as I understand - by donating X amount of money, the most you can possibly get, is an X deduction from your taxes. But the total amount of money spent at the end is still X. You haven't saved anything anywhere. You have sort of re-routed your taxes from the government to someone else.

The only way I can see fraud in this is when people set up a charity owned by themselves, then donate money to it and simultaneously have it as a tax deduction - that's just fraud. But I still don't see what's wrong with simply getting a tax break for donating - it doesn't save you anything, in fact, it's an added hassle at your tax return time(if you live somewhere where you have to do those at all).

If you buy X you pay tax. If you donate to provider of X and get X in return as a gift you don't pay tax.

For example donating money to keep your local church running is paying for a service without paying taxes for it.

Another thing you can do is donate earmarked money that they will use to buy your products. For example Google donating chromebooks to schools. That is marketing dollars.

I didn't say it was "bad", I just classified it at the bottom of parent's list in terms of selflessness. I'm arguing that when you get the money back in tax it's less selfless than the other donation scenarios mentioned.

There's definitely an argument to be made about whether or not it's better for an individual to choose how to spend their tax dollars rather than a countries people to decide. It's definitely less democratic (I can't see how you can debate this), but I'm not sure the good of it is clear cut... That being said, as the class gap increases, individuals choosing how to spend a large portion of their taxes contributes to a concentration of power in the upper caste.

Libertarians seem to think that taxes and charity donations are two equally valid (but not necessarily equally effective) ways to help your community. They feel like they have a choice to assign a portion of their wealth to either. Oftentimes, they also believe that charity will be a more effective approach by bypassing the bureaucracy of the state.

Some people believe that taxes are the primary way to implement solidarity among citizens of a state. I believe that they are correct. Charity comes only second, and should in no way impact taxes. Charity, although a beautiful thing, is fundamentally in-egalitarian: it is not benefiting the Republic as a whole, but only a fraction of people who are in need, and typically fulfill certain criteria (e.g., being Christian, living in a given area, etc.). In most cases, charity targets very specific needs and people that are seen by the wealthy as being worthy of their help. It has a fundamental flaw insofar it keeps the power of wealth allocation to the wealthy.

Notwithstanding corruption and aggressive lobbyism, taxes are much more egalitarian and democratic.

10. When the donation gives you favors in return.

> 10. When the donation gives you favors in return.

What if the "favor in return" is a reward after death? For a lot of people of faith, their motivation to donate is often post-resurrection reward... (The Bible is fairly against this attitude though. As Jesus for instance says "But when you give to the needy, do not let your left hand know what your right hand is doing" -- https://www.bible.com/bible/59/MAT.6.3.ESV ; and the general message seems to be that everything you have is a gift from God, so you're actually only just giving away what you've been gifted.)

I think they are talking about the type of favors where your child with moderate grades suddenly gets accepted in Harvard.

Then you're on a very thin line between a donation and a bribe.

It's a large portion of major donations.

If Bob Johnson donates $20M to a hospital to create the Johnson Cancer Wing, he is in benefiting himself: he is buying his name on a building.

If Bob donates $20M to a local symphony orchestra that he attends, he is benefiting himself by buying better music for him to listen to.

If Bob donates $20M to a candidate for office whose policies would ultimately benefit Bob, well...

I wouldn't call these bribes. But they're less like donations and more like purchases.

Fair enough.

Thanks for the clarification.

Even though I disagree with the candidate for office. It may be legal and technically not a bribe, but it does have a really bad stench and is arguably one of the reasons why US politics are so fucked up.

11. When your donation is taken by force through taxes

There will always be force in the equation. Do you think that your payments to the armed bands that would replace government would be lower?

Not sure why you're being downvoted, you actually do have a good point... I guess people are uncomfortable with directly acknowledging that social programs are funded by "donations" that are taken by force (i.e. taxes).

They're not "donations".

They're taxes, period. There's no moral benefit to paying them in the same way there's no moral benefit to obeying traffic laws. It's not a charity as it's not voluntary. It's the cost of playing the game.

I would argue there is a moral obligation to obeying traffic laws.

Historically, most societies considered maintaining social order as a moral obligation. Guest Rights and Obligations etc seem to disappear as society and governments became more effective. That’s somehow translated into the idea that not paying taxes is somehow perfectly ok. https://en.wikipedia.org/wiki/Hospitium

"Every tax, however, is to the person who pays it a badge, not of slavery, but of liberty. It denotes that he is subject to government, indeed, but that, as he has some property, he cannot himself be the property of a master."

Adam Smith, Wealth of Nations.

It’s the cost for some. If you’re rich enough you pay far less tax because you have access to an army of people whose job it is to help you do that. They leave us suckers to pay.

That’s not right. I think more of people who pay their fair share. Feels like a moral issue for me.

>>They leave us suckers to pay.

Except that's not true at all. Vast majority of taxes come from the richest. They might pay less percentage wise than me and you, but they pay the most in absolute terms.

>>I think more of people who pay their fair share.

I think more of people who pay more tax, not of those who pay more percentage wise. Ie - someone who makes a million dollars and pays 100k in tax seems to be contributing far more to the system than someone who makes 20k and pays 4k in taxes - even though the second person paid more percentage wise. Which one of these is "a fair share"? Why is one person literally paying 25x as much in taxes? Do they use the roads and hospitals and prisons and the police 25x as much?

I mean, I can see both sides of this argument - but I do dislike when people just go "oh us suckers down here are paying all the taxes" - like, no, we just don't.

That’s far from accurate. Income taxes contribute ~$1.932 trillion, but payroll taxes add $1.373 trillion and are often ignored in these calculations. As social security is capped at relatively low income levels the tax burden on the rich is much lower than often suggested.

Further, the often quoted top 1% is hardly the rich in the US, if you compare the income vs taxes paid of the top 0.01% their paying a lower percentage of their income than the average programmer in federal taxes. State taxes have a similar breakdown with property taxes, fuel taxes, etc representing a vastly lower burden for the 0.01% of income earners.

This is further compounded when you consider tax free wealth accumulation of capital gains where taxing in sale mean zero tax on possibly decades of income, or possibly ever. You don’t deduct charitable donations from social security taxes.

PS: As to what the rich receive in taxes. They receive a functioning society which is economically worth far more to themselves than lower income earners.

CBO did an analysis of household income, all federal taxes paid, and transfers and services. On a net basis, the top 40% pay for everything at all levels of government. The bottom 40% pay for only a portion of what it takes to keep themselves alive. The middle 20% splits between the two groups, but the portion that are net payers, pay very little.

> They receive a functioning society which is economically worth far more to themselves than lower income earners.

This is not obvious. Historically, the lower classes have very little rights and are subjected to oppressive behaviors from the kings and nobles and other well to do.

That’s amazingly misleading, people receiving Social Security and Medicare benefits tend to have lower earnings than they did while working full time. Effectively, averaging people who pay lots of taxes and receive minimal benefits with others who are receiving massive benefits gives a very distorted view of what’s going on.

Similarly, lumping everyone in the top 40% with the Rich completely hides how little the rich pay by lumping them in with the highest effective tax rate groups.

PS: It gets even crazier than that when you consider Trump for example qualified as having zero income for multiple years.

>Do they use the roads and hospitals and prisons and the police 25x as much?

By use do you mean "physically interact with" or "reap the social benefits of?" Because for one of those it's a clear yes.

> They might pay less percentage wise than me and you

Isn't income tax higher for those that earn more?

Usually, yes, if you are paid like a normal employee. I'm jumping straight to the point that many people have an issue with - that once you're wealthy enough, you don't make most of your money through a salary, you make it through capital gains, dividends, and other financial tools that make your effective tax rate much lower than it would have been had you taken it as a salary.

In a huge oversimplification, let's say you're in UK and make £100k/year. If you take that as salary, you'll pay 20% tax on around £40k of it, then 40% tax on £50k, with the remaining £10k being tax free. On the other hand, if you open a limited company that makes £100k, well, you're only paying 10% corporation tax on any profits - but of course the way to play this game is to expense everything imaginable under the sun, so ideally you have close to zero profit at the end of the tax year. Yes, the money isn't "yours", it belongs to the company, but you can expense things like your rent, gas, electricity, "work meals" etc. Then take £10k salary from your own company which is within the tax-free allowance. Voila, in the eyes of someone external, you've made £100k but through "clever tricks" paid less than 10% tax on all of it. Of course most people don't realize that isn't not that simple, but things like this lead to very quick judgement.

It comes from the same pocket. The scale of charitable donations is usually inversely proportional to tax rates and redistribution in a country. When people are highly taxed in high redistribution countries, they feel less compelled to give directly since the state is doing it for them (in addition to having less disposable income).

Maybe there is also less need/causes to donate to if living in a high redistribution country (and yes proximity is important for a lot of people at least emotionally).

You should check out France to find out if high redistribution eliminates poverty (hint: it doesn’t).

But it does a very swell job at eliminating most of the worst of abject misery that comes with poverty in most other places.

Being poor in Latin America is an exponentially worse experience than being poor in France.

So wont private donations. I believe some forms of poverty are unavoidable if you want to have a free society (i am not saying I endorse either side). The country I live in has the rule you are not allowed to treat mentally ill people against their will (if they are considered harmless). There seems to be some evidence that quite a number end up homeless. So what can you do? Not realising being sick is one of the symptoms of some of these (treatable) diseases.

Adding more money wont solve anything.

Maimonides was a smart dude, but I must say I don't understand the highest level here: do you have to know they are about to be impoverished? If so, don't you know their identity to give them a job, a loan, or a gift? Payday lenders might qualify? Maybe I need to consult a rabbi.

I would guess a loan is extended mostly so the one taking it can save face. Some people would choose to live on the streets rather than take a handout and a loan makes it palatable. There’s a (possibly apocryphal) story about George Clooney offering 15 friends $1,000,000 but only if they all take it, so that the friends who would say no out of pride could justify it.

The idea is that helping people become self sufficient is more important than the concerns about who knows what. Even if both parties know who the other is, it is still the highest form of charity.

Though probably it is possible to do both. I suspect there are many modern charities that help people become self sufficient where neither the donors not the recipients know who each other are.

Disclaimer: IANAR (I am not a Rabbi)

> Payday lenders might qualify?

Jewish law prohibits lending with interest. There are many ways around that but Maimonides here is referring to a basic non-interest loan

This is sincerely meant, but if you consider 2 and 1, isn't that a description of progressive taxation in the modern, regulated-capitalist, social-democratic welfare state?

(btw, I made that description up to try and describe the kinds of states I'm referring to. e.g. the USA once was in that category and no longer is in my view, while many European countries probably are in that category).

EDIT: I'd like to point out, I'm assuming no/little corruption. i.e. the theoretical view of such a state.

Not really; taxation is compulsory. If you steal everything I own and distribute it to try to improve other people's lives, I don't suddenly have any kind of charitable moral high ground because of where my money went, and neither would I be complicit if it were used to hire puppy hitmen or whatever evildoers like to do these days. The end effect is similar, but intent matters.

I agree that intent matters, but insofar as a state governs with the consent of a majority (leaving aside questions of whether that consent is real), then taxation (incl. the level of taxation and its distribution e.g. welfare vs warfare) represents a broadly agreed mechanism of the state to provide the kind of safety net that OP described as levels 2 and 1.

Personally, I live in such a state (not the US), that has a safety net, and am happy to contribute via taxation. Not all my fellow citizens are happy to contribute and I accept that. I earn a decent wage and don't jump through hoops to minimise my tax. At the end of the day, people vote for governments that are more or less taxing.

IMO then the people happy to contribute to such a system would mostly fall under 1/2 (under the assumption that one's motivations are altruistic and not centered on the communal benefits they also receive), but the people who aren't happy to contribute would not qualify (at least, not via their taxes alone -- there might be other reasons for rejecting taxes, and they might contribute elsewhere in a way that still puts them in the 1/2 category).

> The highest form of charity is to help sustain a person before they become impoverished by offering a substantial gift in a dignified manner, or by extending a suitable loan, or by helping them find employment or establish themselves in business so as to make it unnecessary for them to become dependent on others.

This is also pretty much one of the ways a certain Shi'a Islam community, Dawoodi Bohra, administers loans which they call Qardan Hasana (the diginifed loan).

[0] https://www.thedawoodibohras.com/2020/07/16/qardan-hasana-th...

I haven't studied the original text myself, but I believe that #1 is slightly off. It's not necessary to do the charitable action before a person becomes impoverished. Rather, the idea is that:

a) teaching a man to fish is better than giving a man a fish

b) the former is also more dignified for the person receiving help

This applies whether a person is going to become impoverished or is currently poor. And this idea of dignity is strong enough that it outweighs other considerations, such as anonymity on either side (of course, there's the question of whether giving someone a job anonymously is better than doing it with one or both parties' knowledge... and I don't know what Maimonides would have said).

I appreciate this kind of discussion. It's interesting to understand the moral philosophy of different cultures (and hopefully getting at some fundamental universal understanding, or at least a consensus), and it's important to talk explicitly about it. Informative and useful.

I love this. 8-2 is all about the donor (how he feels, how morally it is) and basically 1 is about the recepiant what would be best for him/her.

It is like results matter most (less than the process; big corps will disagree on that)

How did he rank these? Some are obvious (1, 8). Can't really differentiate the rest. Any good articles about it?

I mentioned this in another comment, but I believe (no source, just speculation) that each progressive level does a better job helping the recipient maintain their dignity. Charity is not only about helping someone financially but also helping them feel good, too.

The best one in my book is number 5:

5. When one gives directly to the poor without being asked.

Why would anything following that actually be better?

Just to take a specific example from the list: preventing people from becoming poor in the first place is better. How could it not be? They avoid the mental pain and stress of being poor and feeling like they are dependent on handouts to survive...

Seems a bit subjective. How do you know that they will become poor if not for your action?

If you need to do this over and over again, and we're talking about just that, it seems like giving to the poor is a pretty good algorithm.

> How do you know that they will become poor if not for your action?

Here's a simple example. A mine closes down. You can start giving the ex-miners money on an ongoing basis to let them keep paying their bills, maybe. Or you could fund training for them to learn a new career.

How do you know they will become poor if you don't fund the training? You don't. Maybe they would have managed to change careers anyway. But chances are you are in fact helping people avoid poverty.

> If you need to do this over and over again, and we're talking about just that,

Ah, maybe this is the disconnect. No, we are precisely _not_ talking about doing this over and over again for any given person.

Or put another way, this is the "give a man a fish vs teach a man to fish" thing. The latter, if it's an option, seems evidently better to me.

Giving money to people is the best way to help them. It turns out that most people are generally entrepreneurial and will spend the money on what they think is the most important need for them at the moment. Maybe the person doesn't need training; maybe they already have a skill, and what they really need is some capital to buy equipment or materials to pursue that activity.

This idea is behind a the success of the Earned Income Tax Credit in the USA. Giving people in need a substantial capital injection at a single point in time is a very impactful to people without the means to save.

This isn't about whether help is provided in-kind or in cash; there is indeed good evidence that the latter is better. And there is evidence that a lump sum is better than an extended dribble: that was more or less my point in the comment you are responding to.

But also, this is about the fact that if you provide help when a person just starts needing it, it might not take much to get them back to financial stability. If you instead wait until they have been out of the workforce for a while, lost their house, and maybe ended up with a substance-abuse problem as a coping mechanism, a much larger investment will be needed to get back to "normal". And that's not even counting the suffering involved in the interim in the second option.

Muslims also have a similar tier system of giving charity, but because Islam mandates charity from its followers at a fixed rate (a flat income tax for charity), it places the "communal funds" very low in the totem pole.

Actually the Prophet Muhammad said a similar thing to what Feeney has said here about wanting to give charity while alive rather than after his death:

> A man came to the Prophet and asked, "O Allah's Apostle! Which charity is the most superior in reward?" He replied, "The charity which you practice while you are healthy, niggardly and afraid of poverty and wish to become wealthy. Do not delay it to the time of approaching death and then say, 'Give so much to such and such, and so much to such and such.' And it has already belonged to such and such (as it is too late)."


I guess Jewish "tzedakah" and Arabian "zakat" have anyway both the same linguistic root, both being Semitic languages and everything related happening in the same small part of the world (if the word itself has some other origins).

There is specific arabic word for it "Sadaqah" which means charity. Zakat is actually one of the Islamic pillar about charity to purifies. There is specific percentage or amount for different zakat. Zakat is the form of charity.

> we must remind ourselves that this is unimpressive compared to the poor person who donates $25 to others while starving herself

Is it? This is a very Christian way of looking at donations: personal sacrifice / self-deprivation is what matters. [1]

However, utilitarians – notably Effective Altruists [2] – would make the opposite argument: what matters is the impact that you make with the dollars you donate (both in amount and allocation).

[1] https://en.wikipedia.org/wiki/Lesson_of_the_widow%27s_mite

[2] https://www.effectivealtruism.org/

Gates' wealth keeps increasing. Sure he gives a lot away but, but he is making 1+ billion per year above what he gives away.

It is great that money is going to charity, it is great that money previously belonging to Gates' is going to charity, but I would be far more impressed by you if you donated $100/year to the Internet Archive than I am if Bill Gates donated $100 million.

In other words, I don't think anyone claims that $100 will help more than $100 million, but there is no great personal moral achievement in giving away something you don't need and can't use.

Of course one could argue that we should not be dependent on the goodwill and grace of billionaires to choose to donate their wealth to good causes, but rather should tax fortunes at an onerous rate and put that money in public, democratic control, regardless. For each Chuck Feeny and Bill Gates how many Waltons OR Kochs do we have?

You could make that argument, and in doing so you are implicitly stating either:

(a) I believe that the government will use its money to impact the world in a better way than billionaires do, or

(b) I concede that (a) is false, but I don't care. It's not about the impact we make with the money, it's about dragging billionaires down.

Personally, I'm interested in impact. I have little faith that paying taxes to the US Government is a more effective way to generate positive impact in the world than personal charitable donations.

If I could pay my taxes to Bill Gates I would – my tax dollars would be used to eradicate polio or malaria, rather than on bureaucracy and starting wars.

You "concede" that (a) is false? That's quite a strong claim. At least with "the government" managing it, there's at least some degree of democratic control, accountability, scrutiny, and influence. When that management is left to private enterprise, that's not the case.

Then you're getting into a philosophical debate about how morally "right" democracy actually is. That's dangerous territory.

I'm not saying I have a better idea, I don't, but democracy has been the driving force behind some pretty heinous stuff over the centuries (most obviously the resistance to equality of race, gay rights and universal suffrage). It's just less terrible than the alternatives that exist in the world today (e.g. dictatorship).

At least in giving your money to a Buffett, a Gates or a Feeney you have some evidence that they intend to put it to good use.

> Then you're getting into a philosophical debate about how morally "right" democracy actually is.

Only insofar as you're getting into a debate about how morally right it is _compared to billionaires and/or corporations spending the same money_.

I certainly believe (a), but there is a 3rd option

(c) I believe in direct wealth distribution (e.g. via a basic income) and that you believe 100m people with $10 will spend that money in a better way than 1 person with $1bn.

As someone who leans towards a general rule of government == inefficient but doesn’t necessarily like the logic of “billionaire individuals will allocate it better”, I really like your option C re-frame here.

Yes. I'm far less worried about government == inefficient (I've learned too much about AI and the genetic algorithm to have faith in human-based optimization strategies, and this is one reason I'm enthusiastic about population-based optimization along Basic Income lines) but possibly even more offended by the logic that specifically billionaires will allocate wealth better.

I feel like the very existence of billionaires demonstrates that they are a self-selecting pool of abusers and/or criminals running exploits that place their interests above the system they're in. Even the idea of 'the wealthy allocate money better' is ridiculous. Towards what, themselves? It's like saying cancer allocates body resources better, because cancer can get into a position where it conclusively 'wins'.

(d) I believe 1 person will spend $1bn much better than 100m will spent $10.

But you've got to aggregate a) over all the billionaires, not just the ones giving. We're not comparing Bill Gates to the US Govt for impact per dollar, we're comparing all US billionaires vs the US Govt.

You are forgetting or ignoring the damage to society caused by multi-generation accumulation of wealth and the consolidation of power that arises from that. These were the primary concerns when the founding fathers were debating estate tax..

If you give more money to the government, doesn’t that implicitly mean you are giving/donating about 15% of that money to the military industrial complex?

Then vote for officials who wont put that money into the military industrial complex.

If you live in a real democratic country, then you have no excuse. YOU* chose that government.

* obviously a generalization, but in the end enough people chose that outcome.

Billionaires act against the interest of the working class more than they act in favor of it. That's how they became billionaires.

Billionaireness is profoundly extractive by definition. Leave class out of it and billionaires inherently benefit themselves against any and every system they are in, and that's including other billionaires (they're exceedingly competitive).

That means that billionaires also act against the interests of the donor class as a matter of course. If they were not the very definition of unaccountable power, you wouldn't see anybody defending them or their typical behaviors.

That is quite a short sighted and funny evaluation.

It is so benignly restricted since it excludes the possibility of charity and government funding can have a positive impact. Instead it is some fight against good and evil.

I don't know what it has to do with Christianity, but you are free to visit a church, maybe they can tell you something about the gospel you linked.

One could argue that there is probably some correlation between great wealth and good judgement about the effective use of money.

In that regard, perhaps it’s good to have social intervention performed by a mixture of democratic and individualistic entities. Perhaps one will address things that the other might miss.

I find some of the arguments in https://slatestarcodex.com/2019/07/29/against-against-billio... rather compelling.

> Two of the billionaires whose philanthropy I most respect, Dustin Moskovitz and Cari Tuna, have done a lot of work on criminal justice reform. The organizations they fund determined that many innocent people are languishing in jail for months because they don’t have enough money to pay bail; others are pleading guilty to crimes they didn’t commit because they have to get out of jail in time to get to work or care for their children, even if it gives them a criminal record. They funded a short-term effort to help these people afford bail, and a long-term effort to reform the bail system. One of the charities they donate to, The Bronx Freedom Fund, found that 92% of suspects without bail assistance will plead guilty and get a criminal record. But if given enough bail assistance to make it to trial, over half would have all charges dropped. This is exactly the kind of fighting-mass-incarceration and stopping-the-cycle-of-poverty work everyone says we need, and it works really well.

> If Moskovitz and Tuna’s money instead flowed to the government, would it accomplish the same goal in some kind of more democratic, more publically-guided way? No. It would go to locking these people up, paying for more prosecutors to trick them into pleading guilty, more prison guards to abuse and harass them. The government already spends $100 billion – seven times Tuna and Moskovitz’s combined fortunes – on maintaining the carceral state each year. This utterly dwarfs any trickle of money it spends on undoing the harms of the carceral state, even supposing such a trickle exists.

Many other examples are provided.

How do you know what the Walton's and Koch's are doing with their wealth? Perhaps they are doing the same thing as Feeny but without the fanfare. I think they are. Are you singling them out because of political differences?

Waltons and Kochs actually give a lot. I am very close to an organization that receives money from both of their foundations. They do have a political agenda with much or their giving but in certain areas it could be considered apolitical.

It is impressive that he and his wife cleaned themselves out and live frugally.

> This is a very Christian way of looking at donations: personal sacrifice / self-deprivation is what matters.

I don't think it's what matters necessarily, but I do think that this is why he is receiving praise here and elsewhere. That's a problem, because if we're going to praise him for his sacrifice, we should remind ourselves that his sacrifice is minor compared to other donations due to the nonlinear effect of money.

Now Feeney certainly has had more of an impact, and that's great, but he had that impact because he was fortunate enough to have billions of dollars to give away in the first place. Being lucky is not a valid reason to be praised, I think.

Indeed I don't think Feeney wants to be praised: he just wants to be rid of his wealth in a meaningful way.

Why praise sacrifice at all? Personal suffering/sacrifice adds no value to the community, and in fact reduces it.

Maximizing positive impact should be the goal.

Perhaps someone with 25 to their name better serves the community by keeping it?

> Perhaps someone with 25 to their name better serves the community by keeping it?

We have to assume that in the given scenario the other person needed it more and nobody else was stepping up.

> Why praise sacrifice at all?

You don't even have to praise the concept of sacrificing in general to praise caring enough to help those less fortunate even when helping has a cost. The alternative is for nobody to help except those for whom money no longer has any meaning, ie billionaires, and I don't see Jeff Bezos building homes for the homeless.

> Personal suffering/sacrifice adds no value to the community, and in fact reduces it. Maximizing positive impact should be the goal.

The first sentence is false. Donation is zero-sum in absolute dollar terms, no money is gained or lost, but money _does_ have diminishing utility to the individual, so the raised person can gain more than the lowered person loses. So a person can sacrifice AND maximize positive impact.

For what it's worth, I think the right approach is to eat the billionaires instead of waiting for the person with $25 to sacrifice even further for the person with $5. Clearly eating all of the billionaires would maximize positive impact.

This is a very utilitarian view, and it’s only considering the economic aspect at that. I’m not trying to argue that you’re wrong—I just want to suggest that there are other ways of looking at sacrifice that lead to the opposite conclusion.

Giving to help someone worse-off than you—ideally—engenders a feeling of gratitude and humility that makes our society a better place. Experiencing a greater sense of gratitude can help more than just money: gratitude helps one keep a positive mental outlook and can carry one through difficult times.

As a man of faith myself, I believe in divine blessings—both during and after this life—for sacrifice and generosity. That’s not my motivation for doing good, but I do believe that sacrifice does make a better community and a happier individual.

Now, as for the limit case of being utterly destitute (e.g. $25 to their name), a wise man once said “it is not requisite that you run faster than you have strength”—looking after yourself is noble, provided you continue to do what you can.

I don’t see how sacrifice and suffering is necessary tied to charity, gratitude, humility and brotherhood.

Sacrifice can be a demonstration of love and caring, but is the latter that is important. Sacrifice is just evidence. Would you agree?

Some people see risk and sacrifice of the self as the foundation of heroism.

A fire code inspector might save more lives than a fire fighter, but nobody sells calendars of sexy fire code inspectors, or hands out medals for bravely insisting that tower block's staircase have a sprinkler system fitted.

Of course, an Effective Altruist / utilitarian would say who cares about feelings and medals? After all, altruism by definition isn't seeking medals.

I agree that sacrifice can be evidence of love and compassion. I would go a step further and argue that sacrifice is requisite for these things, especially in their highest forms.

Sacrifice exposes what is important to a person—both to external observers as well as the individual in question. A marital relationship—for example—requires immense sacrifice on both spouses’ sides for it to work out. Without sacrifice, affection wanes.

I don’t think sacrifice necessarily equals suffering. Sometimes it can. But based on my experience, when the sacrifice is made willingly and for a good cause, it serves more as a source of joy that I can get outside myself and aid someone in need.

Now, waisted or senseless sacrifice—yes, that doesn’t make much sense. I see a distinction between the two, but that could just be me. Does that make sense?

> Personal suffering/sacrifice adds no value to the community, and in fact reduces it.

What? How? If you see this extremely locally, like the community being, your country, sure, but I don't think that's apply when you consider the community has being the whole world.

> Perhaps someone with 25 to their name better serves the community by keeping it?

Does it though? We see this as a first world country, where even for the one starving a bit, still get a life much better than a good proportion of the world. That means that keeping that 25$ will help you surely, but would serve much better a few others, if given correctly.

I guess HN is probably a place where disproportionate ego exist in a higher percentage than anywhere else, that many believe that they are the 10x programmer which is worth more than everyone else, but I'm a firm believer that given the same opportunity as me, anyone else could have done the same as me, thus helping many reach the same opportunities as me, will help more than helping myself.

Sadly I'm still a bit selfish and still want a better life for myself. I still do self sacrifice, but it's extremely local.

As we are trying to judge someone's character or morality I would consider it along the lines of - if that poor person were in Feeney's shoes would they have done the same? If Feeney were in that poor persons shoes would he have done the same?

The forces on a wealthy person giving up almost all of his wealth are also pretty great, but in a different way, when compared to a poor person doing the same.

As #1 in the original list implies, it may be most important to be lifted out of poverty as this is what creates fulfilling civilisation. So one might argue that the poor person should invest what little money they have into their own future first, in a way which will improve their lot, as this will give them the opportunity to help many others (like Feeney did).

Bill Gates' sacrifice includes the years of hard work, perseverance and self realization which produced the money.

Also stealing CP/M.

Time whitewashes everything. Bill Gates has spent many years doing good work as a philanthropist. I'm not sure this undoes the fact that much of his gain was from blatant cloning, ruthless abuse of monopoly, and substandard products.

I am very happy he donated all that money, and I greatly respect him for doing it without calling too much attention to himself, especially compared to others.

But it says a whole lot about Forbes that having at least $2M -- and I'm betting maybe a small apartment and a modest car and possibly even health insurance -- counts as "officially broke" in America.

Well he lost 98%+ of his wealth, that could be considered as going broke in relative terms.

Not just Christian, but other religions and philosophy as well. Utilitarianism isn't necessarily the default and is easy to subvert for selfishness. "See, really, me getting as rich as possible is justified because someday I'll be able to use this to solve some abstract problem I've decided is the REAL issue that needs to be solved..."

As long as you convince yourself that the returns to compound interest are higher than the returns to charity at any one point, it's easy to justify just pushing off your donation time to sometime arbitrarily far in the future, and high luxuries can be justified as "self-care" that enhance your own productivity or whatever. Utilitarianism can too easily become perverted to just being self-serving.

Impact is important, of course, but making an impact when you have everything is not difficult. Things that are not difficult are not impressive.

Ease is not always related to importance. Edit: I misread, by bad.

Op specifically used the word "unimpressive", not "unimportant".

He did not start with everything.

That's wonderful and not relevant to whether giving away an amount that still leaves you with everything is impressive.

In what way does he still have everything? It looks like he’s got enough to sustainably generate about a median household income in my state. That’s a long walk from everything in my book.

> It looks like he’s got enough to sustainably generate about a median household income

Oh come on. He's 89 years old and has millions of dollars still. How long do you expect him to live? "Sustainably generating" a median household income in perpetuity is an interesting bar to set. You're aware that most of the country doesn't have any savings at all, yeah? That the current median _at_retirement_age_ savings for the US is around 150K? That he's still getting an actual income from social security payments because why not?

My challenge was to your hyperbolic claim that he "still has everything" and an insinuation that that makes giving away $8 billion (with a B) over his lifetime not as impressive because he didn't give away the last 0.025% of his wealth.

That he's getting payments from Social Security after a lifetime of contributions to Social Security is also of no concern to me (I view it as the overwhelming default and entirely proper).

Charity in Hinduism falls under 3 modes, as with pretty much everything else in Hinduism - Tamas, Rajas & Sattva

Tamas - given at wrong place/time, to wrong (unworthy) person, without respect/decency, with contempt.

Rajas - given with reluctance, expecting return (either from recipient, or praise)

Sattva - given at right time/place, to right (worthy) person, with humility, without expectation of return.

Note that while others religions mainly dwell on not expecting return and anonymity, Hinduism stresses not expecting return but does not stress anonymity as much as it stresses finding the right patra (bowl) i.e. right recipient.

Donating $100 to a poor person, who also happens to be wicked, and/or will definitely spend it on vices, is actually a bad donation, because it causes more harm to the recipient and society, than good.

Also, timing - a litre of blood donated to a save a life in urgent time, is worth more than a litre of blood spilled in war to gain territory.

Also, place - a donation done in holy land or temple is worth more than a donation from a local philanthropy club.

Also, the reward for donation is gaining goodwill in the heart of Bhagavan (God). And He dishes out goodwill proportional to the 'effort' rather than 'amount' - a $100 wage earner donating $10 is judged the same as $100 million donated by a billionaire.

Source : Bhagavad Gita, Chapter 17, verses 20,21,22

That's a good point. And 'broke' isn't 100% broke just yet, he's not going to have to sleep under a bridge. But he's broke enough that the wrong accident can put him on the far side of the line easily enough. Obviously this goes for many people but they tend to end up in that situation by accident, not by design and as an example to other billionaires he's pretty impressive.

Try imagining Larry Ellison doing this.

it's really hard to imagine someone at age 89, with 2 social security incomes and $2M, who is apparently more frugal than most technology workers, being one "wrong accident" away from "the far side of the line easily enough".

an 80% loss of that $2M cash leaves him with a paltry $400K which, assuming a rate of return == inflation, is 10 years of $40K/yr spending, to say nothing of 2x SS income.

people's idea of "being broke" is just ridiculous.

Healthcare in the United States is perfectly designed to take your every last penny in the last 6 months of your life. If Chuck Feeney isn't actually broke today, there is a fair chance that he will be on his death bed.

He'll never be "broke", because with his money he acquired something way more long lasting than cash, which is social acquaintances. Philanthropy has been used to this exact end throughout history, and is still today.

So of course his billionnaires friends will bail him out in the highly improbable event he should really need the money. The level of networking he reached means he doesn't need to spend a dollar until his last breath if he so wished.

>If Chuck Feeney isn't actually broke today, there is a fair chance that he will be on his death bed.

Aren't you forgetting that that he already "lost" the vast majority of his wealth? If he actually cared about the money he would have given it to his children. If he loses his last $2 million on healthcare he probably wouldn't care.

At his age healthcare is covered by taxpayers, just like in most other countries.

Nursing homes are only covered longterm if you are destitute. Good places will take your assets and use them all up until it’s gone then apply for Medicaid.

Won’t pay for personal in-home nurses either.

But 2 million should buy him plenty of elder care. I would have kept 10 million just in case.

Nursing home is not “healthcare.”

If you don't go, you die. How is that not?

Based on the famous Trinity study [0], $2M would be enough for he and his wife to draw $80k/year plus social security. That's certainly more than most people are able to retire on, but I wouldn't call it lavish, and I imagine the remainder will be donated after death. I find it hard to fault him for wanting to make sure he and his wife can enjoy their last few years without having to worry too much about the exorbitant cost of end of life care in this country.

0: https://en.wikipedia.org/wiki/Trinity_study

You shouldn't compare expenses for someone at this level of networking with a standard one. At his level of social bonds, he can live without money anyway.

Wouldn't Chuck just receive donations from the thousands of people he personally knew and helped? I doubt people would let him go broke under any scenario... the man spent time with Bill Gates and Warren Buffet.

Maybe. But maybe not. He doesn't know, and we don't know. And therefore he is taking a big risk.

I'd presume (perhaps incorrectly, so perhaps hope), that he's pretty insured up to avoid that fate.

> but we must remind ourselves that this is unimpressive compared to the poor person who donates $25 to others while starving herself. The value of money is nonlinear.

There are other perspectives on this. Often, the very poor person does not hope he will ever get out of poverty, and that makes it much easier to have a sharing/charitable mindset. Keeping the $25 will help him for a few days, after which he'll be broke again and no better off. Giving it away will have the same end result, albeit a few days earlier - but it will be a charitable act he'll feel good about for life, and may also make a friend.

The person for whom it is most difficult to give is usually the one at the edge of poverty. If he keeps the money, he has a chance he'll escape the cycle of poverty. If he gives it away, he'll never change his station in life. For this somewhat wealthier person, that $25 has a lot more value (As an aside, I'm not sure I would respect him much if he gave it away).

To paraphrase from a popular movie: Put people in a pit with no hope of escape and what you get is fairly boring. But give them a glimmer of hope that they can escape, and then watch how they will destroy one another in their attempts to get out. Charity is generally cheap for those who have nothing: They know they are not losing much when they give it away.

Although the 'Billions' Chuck Feeney gave away would likely be the focus of his story, his greatest achievement IMO is creating the 'actionable model for philanthropy' which others have since followed creating a much larger impact from what was done through his wealth alone.

>this is unimpressive compared to the poor person who donates $25 to others while starving herself

I absolutely agree and think of this often when I see the philanthropy figures published each year when the top Billionaires have donated <0.2% of their wealth where as there are individuals like this gentleman[1] who donates 80% of his earnings from road side tea stall to educate underprivileged children[1].


I could easily retire on $2M so I think it wouldn't be that hard to give away $1998M if I get to keep $2M. It's not like $2M is poor, given it's post tax it's like being able to live on a salary of $75k a year for 40yrs and, he likely owns a house already (or is that part of the $2M, though even if it is he can sell it and live off the money).

I'm not trying to downplay him in anyway. I'm just saying that $2M in the bank is still an extremely comfortable life so there is not much hardship to be had in giving up everything over that.

Also, as for donating anonymously vs non-anonymously I do it non-anonymously as trying to add social proof that you should donate. The more it appears normal to donate the more people will donate, or so I believe. If I could do that anonymously I would but people read me (my blog or other things), they don't read anon's blog/tweets, whatever.

Very true...

And He looked up and saw the rich putting their gifts into the treasury, and He saw also a certain poor widow putting in two mites. So He said, “Truly I say to you that this poor widow has put in more than all; for all these out of their abundance have put in offerings for God, but she out of her poverty put in all the livelihood that she had.”

Luke 21:1-4

I don't think that seeking to be starving and on the street should be the ultimate end goal of philanthropy. I much prefer to limit my generosity via the First Rule of Rescue: be careful not give away so much that now you need charity yourself.

This whole idea kinda loops back on itself and I wonder if wanting to donate your wealth in order to achieve “higher rungs” isn’t itself a perverse incentive than a rung system ought to penalize!

Why is it good that we let one, unelected man decide how wealth is distributed in the community?

If we had taxed him at the rate we have taxed people in the 40's and 50's maybe there would not be such a need for all these "philanthropists" to give "their" money away.

And give me a break, he is NOT broke. I live on 20K a year and I do not even think I am broke. When he is living like St. Francis of Assisi let me know.

>we must remind ourselves that this is unimpressive compared to the poor person who donates $25 to others while starving herself

While it is truly selfless, I'm not sure what is __really__ harder; for a person living a multi-billion-dollar lifestyle to change to a million-dollar lifestyle, or someone who is used to living on the penny, to give away most of what they have....

Is Chuck Feeney Jewish?

Feeney is a pretty dang irish surname

"This is an anglicized form of an Olde Gaelic name O Fiannaidh - composed of the elements 'O' meaning a 'grandson (of)' or 'male descendant' and 'Fianna' - a 'soldier'. The main O Fiannaidh clan was located in the parish of Easkey, Co. Sligo."

Not related to the article, however the third paragraph of your comment touches on a controversial idea, so I'll add another perspective.

On the idea of sacrifice as virtuous.

Sacrifice is only compatible with selfishness. This is because for an action to be a sacrifice, there is two criteria in which it must meet.

The first criteria are that the individual must love themselves.

She who has no value of her own life, cannot sacrifice it, just as she could not sacrifice a rock found in a cave. Vice versa, an individual which holds her own life as immensely valuable, is able to sacrifice it for an ideal, however this leads to the second criterion.

The second criteria are that the individual must hold no value in the ideal or cause in which they contribute towards.

This is because if you hold something as valuable, and you give it up for something of equal or greater value, you are not sacrificing, but rather trading.

Each trade has its own currency, and what that is I leave to the reader to investigate, but sacrifice is only possible for the woman that loves herself and does not hold any value in the ideal in which she sacrifices herself for.

Thus, if you do see virtue in sacrifice, it is only possible because of selfishness, and this is problematic.

Trades are not all selfish. A person trades selfishly if they are trying to get some benefit for themselves. Trying to benefit only other people is not selfish.

Every rational choice is made based on some personal values. A person with unselfish personal values can take action on those values. Do you think their action occurs because of their selfishness?

Are all rational actions selfish?

I think that is not a useful way to think.

The comment I was replying to mentioned it being noble for a woman to starve herself to give $25 to a stranger.

I disagree, and I pointed out the contradiction of praising sacrifice while disparaging self-interest, when the two are not possible without each other. If you disagree with that, I would be interested in hearing why.

Trades are not all selfish.

I never made the point that trades are inherently selfish, only that in some trades monetary gain is not the only form of currency.

Are all rational actions selfish?

Yes. You state in your second paragraph that "Every rational choice is made based on some personal values". I agree. If you act on your own personal values, this is selfish. And as all rational choice must be in service of personal values, then all rational action is selfish.

I'm very open to the idea that I'm wrong on all of this, but I can not see how, so I thank you for engaging with my comment.

I’ve long argued for massive estate tax rates on large estates in order to incentivize behavior like this. I have no problem at all with Bezos being worth $200 billion (or whatever it is now), but it’s this dynastic wealth that I find borderline sickening. Why in the hell should the Rockefeller’s of today be billionaires??? Also, these giant charitable foundations/family offices are similarly off-putting, as they are setup as semi-perpetual institutions that often only make the minimum 5% distribution annually. (Another fix would be to jack that up to 25% upon death) Big estate taxes seem to solve for a lot of problems with appropriate compromises.

An Open Letter from Economists on the Estate Tax

To whom it may concern:

Spend your money on riotous living – no tax; leave your money to your children – the tax collector gets paid first. That is the message sent by the estate tax. It is a bad message and the estate tax is a bad tax.

The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth. It discourages saving and asset accumulation and encourages wasteful spending. It wastes the talent of able people, both those engaged in enforcing the tax and the probably even greater number engaged in devising arrangements to escape the tax.

The income used to accumulate the assets left at death was taxed when it was received; the earnings on the assets were taxed year after year; so, the estate tax is a second or third layer of taxation on the same assets.

The tax raises little direct revenue- partly because the estate planners have been so successful in devising ways to escape the tax. Costs of collection and compliance are high, perhaps of the same order as direct tax receipts. The encouragement of spending reduces national wealth and thereby the flow of aggregate taxable income. These indirect effects mean that eliminating the tax is likely to increase rather than decrease the net revenue yield to the federal government.

The estate tax is justified as a means of reducing the concentration of wealth. However, the truly wealthy and their estate planners avoid the tax. The low yield of the tax is a testament to the ineffectiveness of the tax as a force for reshaping the distribution of wealth.

The primary defense made for the estate tax is that it encourages charity. If so, there are better and less costly ways to encourage charity. Eliminating the estate tax will lead to higher economic growth, which is the most important variable in determining the level of charitable giving.

Death should not be a taxable event. The estate tax should be repealed.


Milton Friedman

> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth

Only insofar as you believe taxation to be a moral commentary. If one thinks taxation is punishment for a decision, then I can see why one might see it this way.

I don't agree, though. Taxation is reinvestment into the society that makes the usage of that tool–money–possible in the first place. I think it's morally wrong to sequester a social tool in the hands of a few people who never made the investment to get that return in the first place, i.e. children of wealthy parents. I think it's morally wrong for anyone to get to pick and choose who will start out having already won the race. This is different from me being a bad business owner and people choosing not to do business with me.

Should parents be able to spend their earned money on their childrens' upbringing? Of course. If a wealthy parent dies should they be able to leave money behind for their children to have a decent shot at life? Absolutely. Does that require millions or billions of dollars to be hoarded, unused, passed from hand to hand, contributing to a skewed money supply that forces the fed to print more, play with interest rates etc to try to keep the system stable? No, I think there's a reasonable amount that the government can request returned.

Now, the _amount_ of tax is certainly debatable. But to take the extremist position of repealing the tax altogether is absurd IMO.

The thing is that it's both. In more appropriately neutral language we would say that any tax creates incentives and disincentives, and as a society we should be very mindful of what incentives and disincentives we are creating.

I would actually argue the government has a pretty bad track record when it comes to creating good incentives and "good" disincentives, so usually a better approach would be to try hard and avoid creating incentives or disincentives at all. Proponents of things like VAT, or other very broad, general, and hard to avoid taxes usually see it in those terms.

> If one thinks taxation is punishment for a decision,

Moral or not it is a deterrent

>Does that require millions or billions of dollars to be hoarded, unused, passed from hand to hand, contributing to a skewed money supply that forces the fed to print more, play with interest rates etc to try to keep the system stable?

I think you got cause and effect mixed up. Every dollar that the fed is printing is being hoarded because the fed decided to only give dollars to people that hoard money.

> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth.

Is there something virtuous about hoarding wealth?


There's something virtuous about living beneath your means and ensuring that you can be self-sufficient in your retirement.

There's something virtuous about living beneath your means and ensuring that, at a minimum, you are not a burden to your family, but that ideally you provide them support rather than siphoning support from them. In order to do that, it's almost a given that you will die with money left over. (The alternative being feeding the bloodsuckers who sell annuities.)

One person's "hoarding of wealth" is another person's "natural outcome of frugal living and appropriate planning".

You speak of frugal living, but why live frugally amassing great wealth? There is a difference between having money to be self sufficient and sitting on billions of dollars

I think the frugal living they're talking about is not in the venn diagram overlap of those accumulating Billions of Dollars.

My understanding is that the point would be to not tax someone leaving a much less significant amount to their children, in the case of either an untimely or expected death, and rather using more targeted methods to prevent the accumulation of billions, like taxing those who accumulate billions.

Typically those billions aren't liquid, they're usually shares in some business you've built which you may not want to sell because it'll dilute your control in the business.

We used to call those fiefdoms.

It’s wrong to own your own business longer than conception deems necessary?

My money, my choice.

As long as taxes are paid, it's nobody's business what I do with my money, as long as what I do is not illegal.

But you don’t decide how much tax to pay.

Obviously many poor people will decide that few rich people must pay more.

No, but our democratic institutions do. If I ended up parking my riches in a particular country, I'm OK with whatever I have to pay (or there're enough legal mechanism to make it less painful).

FWIW, it's not "obvious" that many poor people would decide that rich much pay a lot. That's not the case in US, for example. Sure, there're people who want to "make rich pay", but in general US system is already fair enough [1] (page links to multiple bipartisan sources).

[1]: https://www.dailysignal.com/2019/10/15/the-new-york-times-is...

> many poor people will decide that few rich people must pay more

I fail to see the problem, if you have more money than you could possibly use in a lifetime, why shouldn't that be redistributed through programs that benefit all of society, instead of whatever pet projects the rich person favors.

If the wealth was accumulated legally and fairly, as a result of creating such vast value for society that society willingly parted with their money for the goods/services from the company/ies that the wealthy person invested in and retained an ownership stake in, I don't find it obvious that society should have a further claim on the proceeds from the result of those transactions just because the owner "has too much money".

That person/family has shown some evidence that they're capable of investing money to generate an outsized return on that investment. I would tend to think they might be able to repeat that effect with the way they choose to reinvest the money, be it for societal value or charitable endeavors. I don't see evidence in balance sheets that governments have that same track record.

Something being legal doesnt mean it was moral.

True. They’re not entirely independent though.

Society has made murder, theft, and rape illegal largely because of a fairly broad-based agreement that those are immoral.

Where there isn’t broad agreement on morality, I would prefer to avoid passing laws to regulate behavior and allow choice. (Roe v Wade/abortion being just one crystal clear case of this tension which I believe is generally best resolved in favor of individual freedom. I am free to follow my own morals where they are stricter than the law; I do not force others to follow them.)

> I fail to see the problem, if you have more money than you could possibly use in a lifetime, why shouldn't that be redistributed through programs that benefit all of society, instead of whatever pet projects the rich person favors.

Who decides that? The great and scholarly politicians we elect?

Historically, a mob of angry people after their pleas go unheard for too long, like the French Revolution.

Sound familiar?

So let us appease mob violence.

What if I live frugally and buy investments with the rest. Have I wasted all thst money on assets or am I providing a loan to enable growth?

How many generations deep does "your family" run? Do you really think people with multiple billions of wealth were living beneath their means?

(I agree with your point if they are upper middle class or even have 10-50 million dollars of wealth). But when you are part of the top 0.1% of the population, there is no way you are living beneat your means to be self sufficient in retirement.

> Do you really think people with multiple billions of wealth were living beneath their means?

Well it's hard to argue that anyone who has positive wealth is living beyond their means.

Those who "hoard" wealth do not do so by filling a swimming pool with gold coins like Scrooge McDuck. They invest in companies that provide jobs and the goods and services that the rest of us enjoy. Yes that is virtuous.

Sitting on billions of dollars in stock in a publicly traded company isn't really all that different from having a swimming pool full of gold coins. The day-to-day functioning of that company is not going to be affected if the billionaire sells shares to pay taxes rather than giving the shares to their children. An initial investment in a company is virtuous but once you have billions keeping that money in the family isn't really virtuous given that the alternative is contributing to the society that made the initial investment possible.

Investing in companies is contributing to society. Government is not society. Investing in Walmart so that the rural poor have more access to affordable goods is virtuous. And a whole lot of the contributions to government are absolutely not. Like the money that goes to build bombs to kill people in Yemen, or the money that funds your local police department's efforts to suppress protests against their unaccountable violence.

Those who "invest in companies" need somewhere to put their excess money. That demand for credit is likely responsible for downstream financial crises. https://link.springer.com/article/10.1186/s40854-019-0136-2

I like Milton Friedman too, he had a cool show on PBS, but history isn't going to be good for that guy.

Do you mean supply of credit? Because additional money wouldn't drive demand for credit, it would drive supply as those with money look for places to lend it.

If you are saying an excess supply of credit leads to financial crises, I agree with you. But the federal reserve that intentionally pumps money into the big banks to make credit easy is a far bigger contributor.

I agree that Milton Friedman had his flaws, one of which is this very topic, he never properly connected the federal reserve, money expansion and easy credit to economic instability.

> They invest in companies that provide jobs and the goods and services that the rest of us enjoy. Yes that is virtuous.

They invest in companies and expect a return! If money was directly redistributed, then the people running and working for those companies might able to keep that value that they have created.

This is true to an extent, but in no way is someone worth $200 billion amassing the wealth the same way someone earning and saving $2 million over a lifetime.

This also implies that only the person investing would provide that function of providing goods, jobs and services. Since he government does the same (produce goods, jobs and services), does that the government is also moral? Why is one more moral than the other?

Not all jobs or service contribute to society. But if you invest in a company that provides goods and services that people don't want, that money is lost and you lose your ability to invest further.

When government provides a service that people don't want, that service can continue indefinitely, especially if the few who benefit can contribute back to the politicians who keep it going. Lockheed Martin and Boeing can contribute to some politicians to make sure that wars continue and they reap back way more than they contributed from the taxpayer who's only option is to vote between two pro-war candidates. Those jobs making bombs for Saudi Arabia to drop on Yemen don't contribute to society, they are a determent to society, yet they continue without end because nobody loses on that investment as long as the taxpayer can be forced to pay for it.

Turning greed into a virtue, feels like something only an American economist could do!

The same could be said about people who want to take other's money away. People are spend-thrifts enough as it is, a wealth tax just dis-incentivizes being fiscally responsible.

How about a wealth tax on everything above $10MM?

Suddenly 99% of the world is no longer discouraged from being fiscally responsible. Do I really care if a billionaire is fiscally irresponsible? Maybe for a single generation. After that, we're good.

This is already how things work in the US: you only need to file if your estate is greater than 11.5MM as of 2020 [1].

"As a result, only about 2,000 estates per year in the US are currently liable for federal estate tax." [2]

The argument that it "discourages living frugally" is just complete nonsense.

[1]: https://www.irs.gov/businesses/small-businesses-self-employe...

[2]: https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_Sta...

What GP proposed was a Wealth Tax which is an additional tax on _living_ people who have a net worth over a certain amount.

What you linked is an Estate Tax (aka death/inheritance tax) which only applies when someone passes wealth on after death. If they decide to give all their money away to charity or otherwise spend it while they're alive it does not apply.

What we now recognize (and decry) as greed looks very similar to the force that created intelligent life from primordial soup. Greed, ambition, and Darwinian fitness seem close to synonymous.

Also, there's nothing uniquely American about considering greed virtuous[0].

0. https://en.wikipedia.org/wiki/Ayn_Rand

Virtuous is subjective, but there is the age old goal of leaving the next generation better off than yours. It seems like a personal choice of whether to spend money responsibly, spend frivolously, give it away, or pass it on to whoever you want at any time to do any of those options.

I'm not sure where I stand on a wealth tax, but I would always be hesitant to tax money that in theory was already taxed when earned. I could certainly see the idea becoming more acceptable if the importance of community and a traditional, tight-knit family structure continues to erode.

> but there is the age old goal of leaving the next generation better off than yours

Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off.

> I would always be hesitant to tax money that in theory was already taxed when earned

This is incompatible with having an income tax and any other tax. Although, income tax isn't exactly well loved by economists, so maybe there is something to that.

>Hopefully we can strike a balance between leaving only your direct descendants better off and leaving everyone in the next generation better off.

You're thinking that taxing the wealth of a billionaire is guaranteed upon death. Therefore from your perspective there are two options: taxing the wealth or not taxing the wealth. Except taxation is the exception, not the rule.

If you know your wealth will disappear then you will try to get rid of it before it can disappear. With the estate tax there is a strong incentive to just hand over your wealth to your children before you die or by spending it all on donations so the government can't take it.

I was just thinking in terms of the morality / virtuosity discussion there. In practical terms, there are of course massive problems with enforcement and the flight of wealth, for both estate taxes and wealth taxes.

There is lots of virtue in giving far more to society (remember that rational free markets are value exchanges, each party thinks they got a good deal).

Someone who has a lot of stored up value has given lots to society without receipt of anything but some electronic digits (yet). Plus if the government's rules were working they'd also have paid at least some taxes on all that stored wealth, leading to additional societal value.

in rational free markets sone does not need to give twice because the contribution to society is in the provision of things people want.

IMO most of the debate is missing that America doesnt have free markets and keeps trying to duct tape around it without fixing the actual bug.

I think it is virtuous to plan and prepare for your own security and the security of those who depend on you. But beyond that (like if you are rich enough for financial security to not matter much) I don't think it is inherently virtuous to save.

People used to argue that saving (investing) is better for the economy than spending (consumption). That's an argument for a lower capital gains tax. But you could argue the US has gone too far in favor of investors, at the expense of consumption. Presumably more $ in the hands of the 1% = more investment, more $ in the hands of the lower 50% = more consumption.

I don't have an answer, but to flip that question: If the very wealthy can live on passive income from accumulated wealth, then why can't all of society?

Let's liquidate all US billionaires and spread that money to every person in the US. Let's also set aside the question of how one could legally liquidate the billionaires.

Per https://www.forbes.com/sites/tommybeer/2020/05/21/the-net-wo... the combined net worth of every US billionaire was 3.4 trillion in May of this year. Per https://www.pbs.org/newshour/nation/3-ways-that-the-u-s-popu... there were 331 million Americans in January of this year.

Dividing that out: $10,271.90 per person. Not enough to live on the passive income even in the cheapest parts of the globe.

OR, just parcel out land and give people seeds and allow them to trade with nearby neighbors... There's no longer a need for money and everyone gets to eat - which is all we really need. Beyond that, people can help each other build homes in smallish communities. Money, even on a planet with this many people, isn't necessary, because it's like people driving cars - the system works because everyone is operating to keep themselves alive. HN is not a fan of this take.

>HN is not a fan of this take.

Probably because it sounds like utopian nonsense.

Not enough to live on the passive income even in the cheapest parts of the globe.

Why do you think that is the right metric? 3.4T is obviously a vast amount of money.

It's not really. That would fund the US Government for about 9 months.

They were probably just responding to how I framed the question.

Because most people in society, across all wealth levels, refuse to live within their means. I was quite disappointed when I discovered this, because I thought that if I made enough money, I'd be able to support all my family. But then I started noticing that the people who were broke generally had newer cars and computers than I did, and that families with multiple six-figure incomes were spending their way into bankruptcy. And the government does it too, accumulating ever more debt.

The very highest wealth level does live within their means. It's hard to spend 10 billion dollars on houses and cars.

You need a large amount of capital for it to do enough good for others (e.g. via investments into companies) that the returns you receive are enough to live on.

I guess the counter question is whether there is something virtuous about spending all your money before you die.

Well, you are putting your money back into society, creating jobs. So yes. That is better then not doing those things.

People with money don't put it all under a mattress. It's active in the economy, creating jobs.

I can assure you the vast majority of billionaires did not become that by caring about creating jobs. They cared about the return. A return that does not have to come matched with creating good jobs.

Assuming you're American I believe you still have people in gov that got rich because of their family starting a pyramid scheme. I wouldn't call that a benefit to society.

Remember those guys in the 90's tanking company stocks and reputations then buying em up under the guise of saving them only to dismantle em and make their profit on the sale of the scraps? yeah they made money removing jobs.

The list goes on and on.

Organizing is difficult. Wealth is created because they are able to appropriately organize people into the jobs they are most efficient. They are able to get people to work harder, produce more, and more efficiently use resources. You might not think efficiency is moral but it does result in a higher quality of life across the board. Why are tech companies currently the darlings? Because each was able to find efficient ways to do things, communicate, search, or combine or improve existing technologies. Instead of printing every book they can just be downloaded and on the same device you make calls. It isn’t a natural process, it requires leaders to make things efficient in order to make money. No one should care about “jobs” because they mean nothing. If one person could produce all the food needed to feed the world then we don’t need jobs. That is the progress these people bring and that is the only reason they are able to make money, by improving efficiency. If you are saying their are ways to make money that don’t improve efficiency, obviously that is true but rare, and even if the case where someone tanking company reputations, the owners of the company are not required to sell, look at Tesla which had the most short sellers of any company and a constant barrage of negative articles but that was all able to be overcome by Tesla’s owner Elon Musk.

Most wealth already is in the economy, providing capital to companies and jobs to their growing workforces.

It's not sitting around collecting dust.

Do you really think people have a pool filled with gold coins like Scrooge McDuck?

Yeah what am I missing here?

Is there something virtuous about not creating wealth?

Virtue should be paying your goddamn taxes, and donating the rest to the government (i.e. destroying it, to offset other inflationary measures the people elect to enact).

Anything else is either an affront to democracy, or at best is is morally neutral. E.g. what this guy did is morally neutral, and only good relative to the Carnegie knockoffs trying to launder their reputation.

I sort of agree with this in the sense that the estate tax seems like a distraction from the larger and vastly more important challenge of implementing a broadly fair, progressive, and efficient system of taxation.

With a better system, we shouldn't have to introduce one-off taxes for "special events" like death because extreme concentrations of wealth should already be heavily and unavoidably taxed--passing wealth to one's children (or anyone else... in any other country) shouldn't make a difference one way or the other.

Estate taxes stir up an irrelevant debate about the morality of inheritance, and puts the government in the role of deciding this moral question for everyone, when that debate isn't necessary and doesn't really matter.

All that really matters is 1 - how much we need to fund the prerequisites for a modern and decent civilization (which includes things like basic income, healthcare for all, housing for all, education for all, etc., imho), and 2 - what is the most progressive, efficient, and sustainable way to raise this money.

I highly doubt the answer to #2 is an estate tax.

> extreme concentrations of wealth should already be heavily and unavoidably taxed

Unfortunately, government is already the most extreme concentration of wealth in the history of mankind, spending $8 trillion dollars a year in the USA alone, of which $1 trillion (that's 1,000 billionaire fortunes, or bankrupting Jeff Bezos 5x over, every year) goes straight to the military.

But Government is owned by its people, who are effectively shareholders of a corporation.

That's a good analogy, and explains how we ended up with banana republics. They were just hostile takeovers of competing companies in Central America, leveraging our superior military assets. When you phrase it in those terms, Jeff Bezos looks much more like David than Goliath.

And it's why I want government to use its monopoly on violence to stick to keeping the peace, and create an environment where actual companies can compete without violence.

Because when the men with bombs also own the means of production, they do whatever they want, and you get mountains of skulls.

That's a fair perspective, but there are also many essential or mundane aspects of life which don't lend themselves to competition.

Local roads, for example. You can have companies compete for contracts to perform the work, but ultimately the asset needs to be owned by the people, otherwise you inevitably get rent-seeking behaviour—which effectively replaces an elected Government with dozens of smaller unelected ones. Same goes for water, sewerage, and electricity distribution.

Public healthcare service delivery is another example. You can have companies compete for invention, manufacturing and certain boutique services, but for dealing with measles and broken arms, the profit motive does a hilariously poor job. Wealthy people get the absolute best service on this planet; poor people seem to get the most expensive service on this planet. (Yes, that's after factoring in the "cost" paid through taxes.)

Society works best when we all have healthy bodies, clean water and a decent education. Whether we all make good use of these resources is entirely up to the individual—Governments shouldn't mandate equality of outcome—but a functioning society is one where everyone has the opportunity to get a good education and not be a walking disease vector.

To have an economist leading off with a moral argument tells you how strong the economic argument is. (not strong)

A view toward growing the economy would prefer the riotous living, because it moves more money around. Note that in almost any other context, Friedman is concerned with impediments to economic activity. Yet here, we are led to believe that high levels of economic activity are bad or immoral for some reason?

And of course "riotous living" throws off all sorts of tax revenue in addition to revenue and profits. And since such tax revenue is realized earlier than the death tax, it is more efficient.

The irony of this letter is that Friedman gets it right--the death tax exists to encourage the expenditure of wealth during life--but somehow thinks that is a bad thing.

> To have an economist leading off with a moral argument > tells you how strong the economic argument is.

This is an ad hominem argument.

Is it really? Seemed to be more of an ironic point.

The idea that inheritance tax is a 'death tax' seems like an inaccurate pejorative. The recipient of wealth is the one being taxed, there is no extant individual whose death is being taxed. In almost all large transfers of wealth we have some amount of taxation. If inheritance tax is the exception, it encourage dynasties to hoard wealth to confer the associate power and status on their families.

This wealth would be more efficiently allocated by the innovators of new generations. It is true that the economy isn't a zero sum game, but we can't pretend that so much new pie is created each generation that dynasties hogging the majority doesn't preclude new, more innovative money, from establishing the positions they might otherwise we allowed to, for the benefit of all participants in the economy. The velocity of money matters, and allowing dynasties to guard their wealth indefinitely is bad for everyone.

This also pretends that capital confers no significant power. The reality is that the inheritors of the ultra rich will also inherit their ability to influence society. While not ideal that the ultra rich themselves have this ability to the extent that they do, to be able confer it on an almost arbitrary set of individuals is additionally hazardous, as they have not set themselves apart from other individuals on any meritorious basis.

Why should wealth be taxed? Because inequality is a bad thing and society would be better with less of it. Inequality is bad because the marginal utility of $100 to a billionaire is nothing, but to the homeless it is everything. Egregious inequality is an inefficient distribution of humanity's collective wealth.

Wasteful spending should also be taxed. There is no dichotomy. Yes please, put tax on carbon, on plastic, on all the other things that are bad for society. Ideally the most wasteful spenders should be taxed the most - the ten-millionth dollar someone spends on a carbon-emitting activity should be taxed at 90%.

> Spend your money on riotous living

The letter is BS with the first line. It makes it sound like the options are giving money to your kids or getting drunk. But that makes no sense for the range of money we’re talking about.

Jeff Bezos could throw a $10 million party every night for a year and his net worth would go down 2%.

Thats not how networth works. No one has enough liquid capital to spend money like that. As soon as people found out Bezos was wasteful like that, his network would drop just based on stock price.

Maybe? That doesn’t counter my point. If anything it only enhances it. Estate taxes do not contribute to “riotous living” because cash on hand is not at all a limiting factor on how much they party. There are more important things, like the perception and how that affects them (like you pointed out).

“If I leave this hundred billion dollars to my kids, the government will take a portion. Better to spend it on hookers and blow instead!”

That makes about zero sense, so I don’t at all believe that’s the message the estate tax is sending or it would even matter if it was. The thing that keeps billionaires from partying isn’t the price tag.

Maybe it was the case, a long time ago, that the very rich accumulated their wealth by "living frugally", but it is certainly not the case anymore. Neither is the case that the estate tax discourages saving is just nonsense: at least in the US, the estate tax doesn't even apply is your estate is under $11M. [1]

> "As a result, only about 2,000 estates per year in the US are currently liable for federal estate tax." [2]

[1]: https://www.irs.gov/businesses/small-businesses-self-employe...

[2]: https://en.m.wikipedia.org/wiki/Estate_tax_in_the_United_Sta...

I find it shocking that someone of Milton Friedman's stature would begin his argument with something as flimsy as an appeal to virtue ethics. Hard to take the following statement seriously when it begins with such a baseless and by no means uncontroversial value judgment. That Friedman considers "accumulating wealth" a "virtue" in itself is a profound indictment of his worldview.

> Spend your money on riotous living – no tax;

Ah, yes, such a shame that the only way to spend a fortune is on caviar and jetskis.

This is a purposefully obtuse take. We have specific tax structures to incentivize charitable giving, building businesses, creating things to benefit others.

I want to know what these people are buying that doesn’t have sales tax on it and then taxes on the people who made it.

The limits for the estate tax in the US are pretty high. It's over $20 million if you are married. That means those who are hard working and frugal will most likely never pay an estate tax. Hard work and frugality will allow you to slowly accumulate several million dollars over your life.

At the wealth levels at which the estate tax applies, a fair amount of luck has to factor in. Having been in the right place at the right time. That has little to do with morality because many other people had the same behaviors but never got lucky. The estate tax is more a tax on luck than it is on hard work and frugality.

I agree. The problem with the estate tax is that it does a poor job at what it tries to accomplish. There are better methods of wealth redistribution.

The primary way inheritances concentrate wealth is through the "firstborn son rule" where the first son simply receives all of the wealth. If you were to split the wealth among the children it would disappear within a few generations. So simplify the whole ordeal by codifying that no single person may inherit more than 50% of the wealth of the deceased. If son and daughter receive half the wealth of their parents they are unlikely to collaborate for the sake of maintaining generational wealth. Even if the son kills the daughter he will only receive 75% of the wealth of his father.

No liquidation is necessary and therefore it is easy to implement. Paying taxes on inheriting a family business is far more difficult than simply splitting ownership among the living who are still working in that business.

> The income used to accumulate the assets left at death was taxed when it was received; the earnings on the assets were taxed year after year Neither of these are necessarily true. Although, an estate tax is probably a poor place to catch this. Typically, the real wealth isn't even directly owned by a human being anyways, but rather beneficial trusts, etc.

Great, let's be rid of all this nonsense and let the income tax cover inheritance like any other transfer of wealth.

In my view, living within your means, and accumulating wealth beyond your needs, are two ways of saying the same thing. And I think there's a point of diminishing returns on it, in terms of virtue.

If a person lives on a million a year, but accumulates a billion, do they become more virtuous if they accumulate a second billion?

Without a large estate tax, oligarchy arises and destroys democracy.

If everyone lived virtuously, then society wouldn't need laws or taxes. Unfortunately, humans are inconsistently virtuous, so we use laws and taxes to help our society function well.

I understand you are not Friedman, so assume I'm using the general "you" below and that any questions I pose are rhetorical and not directed at you. I don't expect you to even attempt to answer anything below or even have considered the questions.

His argument is hilarious:

"We're going to try and avoid it anyway, so you might as well not try to collect it."

I'm sorry, but I'm not necessarily going to trust someone who has a vested interest in the removal of something that its existence was pointless in the first place. If it truly is meaningless, then why bother?

Another good question is why should a person's accumulated wealth go to that person's heirs upon their death? Those people did nothing themselves to earn that wealth. It is only through the accident of birth they were selected. They completely ignore that. It is assumed that passing their wealth down is natural and right and that any other outcome needs defense.

If that money changed hands via employment or purchase of goods and services, it would have been taxed, even if the exchange was between parent and child. Why is an exchange upon death special?

Passing wealth on to one's children is natural. It has been practiced time immemorial. The Jewish faith is predicated on the idea that promises made to Abraham can be fulfilled by giving the thing promised (land) to his descendants many generations after his death. Take away the idea that wealth should be passed down to one's children and the Jewish faith does not cohere. By extension, neither does the Christian faith.

The idea that you think needs to be defended - inheritance - lies near the root of Western mores. It is fine to question it, but it is the sort of thing that one cannot refute without a very, very strong argument.

I don’t see my estate going to my kids as their doing, but instead as my doing.

I have private property rights over my money and house during my life and it’s my choice to consume during my life or live more frugally and pass that property to people I love. When I give my kids money for school or give them dinner, that value is not taxed additionally because it benefits them and not just me.

> Milton Friedman

I found the problem.

Spending money rather than accumulating it is, on the ballance, better for everyone else in the economy.

Positing it as an unalloyed good to be frugal and accumulate wealth (especially at massive scale) is extremely murky at best.

The savings rate is an important contributor to economic growth because surplus permits investment.

However saving can hurt growth by reducing consumption.

Savings can be thought of as a steady state rate of saving that the economy has adjusted for. Saving is a higher order effect that causes an increase in the savings rate, temporarily depriving the economy of the level of consumption it expects.

I'm curious what portion of new investment goes into IPOs, additional issues, VC, etc., compared to the portion that just changes hands between fellow 'savers'.

If I buy $1mil of MSFT, I didn't contribute a cent to their payroll. I didn't create jobs, or grow anything. I just transferred $1mil to another investor, who will probably use that money to invest in AAPL.

Seems to me a huge portion of investment is just moving money around a relatively closed system akin to sports betting.

By buying $1mil of MSFT you helped set the market price for their stock and therefore value the company. Based on that value Microsoft can then go to the market and raise new capital.

That is presuming that MSFT ever issues more stock. They haven't appreciably done so in the past 15 years, and the same trend applies for most of the DOW.

If MSFT never issues more stock, what then? Furthermore, helping to determine the value for possible future issuance seems like a very marginal benefit relative to the overall volume of stock trading.

> The basic argument against the estate tax is moral. It taxes virtue – living frugally and accumulating wealth

If you have the means, there’s nothing moral about living frugally. Spending money creates jobs and strengthens the economy.

> The encouragement of spending reduces national wealth and thereby the flow of aggregate taxable income. These indirect effects mean that eliminating the tax is likely to increase rather than decrease the net revenue yield to the federal government.

Very arguable claims there - more “trickle down” economics I guess. The main argument against the estate tax made by this letter is not “moral” as it claims, it is that few actually pay the estate tax - so how about we close those loopholes?

There are two reasons to support a hefty inheritance tax on wealth over $X million. First, it raises revenue to help fill the deficit. More importantly, it is friction against generational wealth. Bill Gates (and his father) have for decades supported inheritance tax and gave this as the explicit reason.

In a "free" society, what basis does society have a right to say how much stuff you can amass? That or we stop pretending we live in a free society. I want society out of my business... if I want to give it away that's my choice.. if I want my kids to live like kings that's also my choice.

Your definition of freedom is just anarchy. The obvious question: What's to stop somebody from murdering you and taking your wealth?

The same objective (or subjective, take your pick) morality that discourages robbery-murder can effortlessly extend to the distribution of wealth in society. An objective moralist once said: "Render unto Caesar...". A subjective moralist could say: "whatever minimizes human suffering and maximizes human opportunities" which leaves policy-makers with a broad canvas.

Personally I don't think this is a particularly moral issue, except near the extremes; but even if it were, the answer isn't what you're hoping for.

Your definition of freedom is just anarchy

How do you go from "it's no ones business how much wealth I accumulate or give to my children" to "anarchy"?

That's not what the OP said at all.

It was just a bald assertion that one should have freedom to do what they want because we live in a free society.

If we live in a free society then we should be free to do what we want to do, because otherwise we wouldn't live in a free society.

Any argument that justifies itself merely with "because freedom" can be used to argue for complete anarchy. After all, "rule" of any sort inherently implies restrictions on freedom. And if restrictions on freedom are inherently bad, then "rule" of any sort must be bad by definition.

Society is the only thing enforcing the private property laws that allow you to amass stuff in the first place. If society wasn't involved there would be nothing to stop anyone simply taking your stuff. Society enforces such rules because they are conducive to a good society for everyone. It has every right to stop enforcing them at the point at which that ceases to be the case.

> That or we stop pretending we live in a free society.

This is exactly what we should do. There is no such thing as complete freedom. All freedoms come at the price of restricting some other freedom.

The only thing enforcing private property is the threat of violence if you violate someone else's property. This enforcement can come via a socialized system like government and this is preferable. But you are delusional to think the truly rich need to rely on government. Without 'society' you get survival of the richest and most violent instead of just wealth inequality

“Blood, whips and guns – or dollars. Take your choice – there is no other – and your time is running out.”

Wouldn't the rich not be rich anymore without a government giving their money value?

The rich have plenty of assets

Without a government, they have what they can keep.

>That or we stop pretending we live in a free society.

yes, let's do that. we don't - there has never been such thing as a free society, and we don't live in one now. all society has rules - without rules, it's not a society anymore. Let's once and for all take away this absurd escape-hatch where one can avoid defending an idea on it's merits by claiming it restricts their freedom.

If we truly lived in a free society, we wouldn't have estate law at all - wheover kills you should simply claim all your property.

100% agree. The only free society is a society of 1.

In a "free" society, what basis does society have to say how much stuff you owe based on your income each year? Or that you have to keep your sidewalk clear of snow each winter? Or that you can't just leave your car wherever you want?

What about amassing as much stuff as possible selling controlled substances and brokering crime?

If you want society completely out of your business, you're going to have a hard time.

Limits on property ownership are a very different topic than taxation or crime.

They are treated fundamentally different in law, economics, and philosophy.

Taxation is basically a limit of property ownership. The inheritance tax comes to mind (also an estate tax although those are not well established everywhere in the world) but also income-taxation limits what you can earn as a person and therefore what you can own.

And taxation is also not the only parallel one could draw. For example, limits on the usage of you property is also highly regulated in various ways. Usage and ownership are very closely related.

You say that like that as though you're not just uncharitably describing what's basically a libertarian paradise.

There are tons of people who want exactly what you find so abhorrent.

You're making an assumption I ascribe any feeling whatsoever to what I described when in fact I was extending the comment to include things most societies currently do have a say in, without emotion.

For all you know I am a libertarian making the argument for a libertarian paradise.

He's not saying that in the least. This is a conversation specifically about inheritance taxes. Where do you get libertarian paradise from?

Plenty of countries don't have an inheritance tax and aren't libertarian in the least.

Why should your kid have dominion over mine just because you became a billionaire? No society is truly free. That's antithetical the the idea of a society.

Good luck doing business without society.

On the upside: software would have no bugs :D

I don’t see how a society with dynastic wealth is free, especially when that dynastic wealth further accumulates.

The problem for me is not even that people amass such large amounts of money (do I think we should have some higher tax brackets on capital gains, sure) but that generational wealth creates power and economic structures which hurt the rest of us and ultimately impinges many more peoples’ freedom

Have you ever played monopoly? We are far along the path to the same type of conclusion -- one or a few people owning everything and setting all the rules, with everyone else living marginally and unable to avoid incurring further wealth extraction from the winners of the game.

The government is there, supposedly, for the benefit of a healthy society, not to enforce some capitalists' idea of what they think is fair. It is the same reason why the rules change for a company when it becomes a monopoly (there is that word again).

"I want society out of my business."

This sounds like the libertarian mindset that takes for granted all the benefits that come from being a business operating in a healthy society.

Although worker productivity has gone up tremendously over the past 40 years, nearly all of the incremental gains in wealth has accrued to a small fraction of the population. Yet that form of unfairness doesn't ruffle the people who think taxation is theft.

I find the support for inheritance taxes surprising. HN loves the social democracies, but most of them don't have inheritance taxes, with many abolishing them in the past few decades - Australia, NZ, Canada, Luxembourg, Sweden, Norway, Slovakia, Portugal.

Inheritance taxes raise insignificant amounts of money compared to others form tax. If you taxed all wealth at 100% you could only fund the government for a few months.

I understand your sentiment. But the highest marginal estate tax rate is currently 40%, for amounts above $1M (after deducting applicable exemptions). That seems high enough. The problem is that the estate tax system is so complex, so full of loopholes and tricks, that no truly rich person with 2 brain cells and a competent estate lawyer will pay a fraction of that 40% tax.

I don't know what the solution is, but it seems to me that the estate tax system is overly complex, too open to abuse, and needs to be simplified. It is unfortunately intertwined with Trust laws, Probate laws, Income tax laws, international tax treaties, etc. As far as I can tell, the estate tax exists only because of the "stepped up cost basis" feature in the US tax code, where all capital gains is zeroed out upon death by increasing the cost basis of the asset to the current market value. (Does any other country have this?)

I think it would be simpler to eliminate Stepped Up Cost Basis, and replace the estate tax with something like a "deemed disposition" tax, where the capital gains tax is paid upon death (above a certain exemption amount, say $5M/couple), or paid upon transfer to another non-pass-through legal entity (e.g. an irrevocable trust). Oh, we should also eliminate the long-term capital gains tax rate, and all capital gains should be taxed at the same rate as earned income. I think this would eliminate the "carried interest" loophole. Oh, and we should eliminate Dynasty Trusts, which can last as long as 365 years. It's hard to see how allowing a Trust to last 365 years is good public policy. Oh, and so many other loopholes need to be closed.

Unfortunately, I don't think there is much political will to tackle these issues. Estate tax law is a very obscure part of the tax code. Very few people care, except for the small number of ultra wealthy people and their lawyers who are taking full advantage of the current system.

An estate tax should be simple and Draconian to be effective. Simple is you have $10 million to distribute to anybody you so decide in your will. Only one blanket exception without restrictions or definitions attached. Everything else goes to the government. Any assets transfered out of country, as well as those derived thereof, are forfeit to the government, and any internally claimed jurisdictions, upon reentry.

A caveat to this is, what happens when we actually solve aging and involuntary death? Will the world eventually be owned by a single, Bezos like individual simply by the weight of time and compounding interest crowding out everyone else? Would we be ok with a situation where the racist slave owners of 200 years ago are still alive and control the vast majority of the world's wealth and power?

This is the kind of concern that isn't a problem right now, but will be one day. And it will happen in the blink of an eye.

> Why in the hell should the Rockefeller’s of today be billionaires???

I'm curious what the statistics are for a family remaining wealth over a long period of time.

Even with wealth evenly split between each generations kids, given a growth of just 4% it might end up with each generation getting a greater amount of wealth still.

In the past large familes prevented this, but if the average extremely wealthy person only averages 2 kids. The dilution through children just doesn't occur.

> I'm curious what the statistics are for a family remaining wealth over a long period of time.

I don't have statistics, but a fun factoid is that the Grosvenor family, who own many properties in the west end of London, were originally granted those properties because the grantee was the grand-nephew of William the Conqueror. So wealth can last a long time. For those families who are luckiest and canniest, the only major threat is social breakdown as a result of revolution or being conquered.

> Even with wealth evenly split between each generations kids

This is why primogeniture and entailments were invented. They were necessary to maintain dynastic wealth. In cultures where partible inheritance is more common, such as the US, dynastic wealth has a much shorter half-life.

Familial wealth disperses much quicker in the United States than other countries. Comparing modern american economics to the descendants of william the conqueror in feudal pre capitalist society with an entrenched aristocracy is disingenuous. You cannot seriously use that as an example of why wealth will last in american families like that.

The book The Son Also Rises makes a fairly compelling (albeit contested) case that extreme wealth continues to have beneficial impact for hundreds of years.

The author shows numerous examples but one of the most striking for English-speakers is that the Norman conquerors of 1086 are still, 31 generations later, over-represented at places like Oxford and Cambridge admissions and upper class probate court records.

> I have no problem at all with Bezos being worth $200 billion

Really? You have no problem one person owning so much money? That's around 30$ for _every_ person on the planet, can you even wrap your head around that? There's no reason why a single person should ever own this sort of wealth, none at all.

I wouldn't say that there's no reason, but it's just very unhealthy for democracy.

The guy could literally buy every team in the NFL and have billions to spare.

Curious, what exactly stops these rich families from simply moving their wealth off shore? I'm sure there are many other countries that would bend over backwards to have these uber rich families living in their country instead of the USA.

It doesn't matter if you live in another country. US citizens are still taxed by the US government regardless of where in the world they live. Moving to another country accomplishes nothing.

They would have to give up their US citizenship. Financial implications aside, few are willing to go that far. The financial implications are also large. You have to pay an exit tax, which would be substantial. And giving up US citizenship to avoid taxes is illegal, so there's that too...

I don't get it, the Rockefeller family has an estimated net worth of $11bn today. That's for 174 members of this family or around $63m per family. While not a small amount, it's not outrageous either; especially that it's an old family, so they haven't really accumulated lots of wealth. You'd think compound interest would have made them own much more than that.

On the other hand, Bezos, a single person, has control of a $1.58T company and you are totally okay with it?

Am I ok with someone having control over the company they founded and have successfully led for multiple decades? Yes, I am.

What's wrong with leaving your wealth to your offspring?

What I find sickening is people trying to meddle in other people's pockets.

Because it exacerbates the divide between the wealthy and the poor in this country, creating classes of wealth that is so far beyond a normal person as to live in a different realm. It creates a ruling oligarchy class that is passed down not on merit or by work, but purely through nepotism.

There's absolutely nothing wrong in you leaving your average suburban house and penny stocks to your indebted children. Go for it. Live the dream.

This would hurt family owned businesses. Under such a system, within a family, everyone would keep their money to themselves. Let's say your dad wants to open a restaurant, so you donate $1 million, and the business does well, but then he unexpectedly dies and the his net worth is assessed at $5 million. Now you are out $1 million due to the tax. pretty bad deal.

I think that is the point? To reduce legacy wealth and force each generation to compete on a level playing field

Why donate? Why wouldn't you invest in it and become part-owner yourself?

But you can also flip that around: Let's say your dad opened a Facebook, but then dies, why should you get $98 billion? You didn't do anything. Why is that now yours in the first place?

In your example, you could just make a loan instead of a donation.

How about tax rate for any money that isn't directly tied to employing people at 90%?

>Why in the hell should the Rockefeller’s of today be billionaires?

Because we live in a system which rewards good genes, and that is a very good thing. By instituting a generational wealth tax you will be killing the human desire for wealth on a generational timescale.

Where does the money go? To other people i assume, you have now created a system where the evolutionary incentive is to leech from the system contributing as little as you can get away with. We live in such a system today but at-least there are some benefits to contributing more, those benefits are inherently that you can turn wealth into more children and transfer that wealth to them.

This is a not good line of thinking. Good genes? What does that mean, greed? Competitiveness? What about positive human traits like empathy, compassion, generosity and contentment? The things that make society work in the first place? Plus it's not like billionaires have more kids. "Leeches" aren't poisoning the gene pool... Your "leeches" are the gene pool.

Individuals are made from genes.

I agree we should strive for a system which incentivises empathy, compassion, generosity and contentment.

Billionares do not have more kids but wealthy people have the capacity to have more healthy offspring, irregardless if they actually do.

I have said nothing about poisoning the gene pool, i am not a eugenicist and far from it. But every system has free-riders (leeches) as game theory predicts, we should try to counteract this behaviour not reward it.

I'm very sceptical about the claim that the incentive to earn staggering amounts of money goes away if your great-great-grandchildren cannot profit from it. Caring about your own children and grandchildren makes sense because you actually get to meet them, but at some point most people probably don't care about their far-far relatives.

Also, is this really your main motivation if you're Jeff Bezos? To make even more money? Doesn't the money stop mattering after the first 100 million and you're simply staying at Amazon because that's what you actually like doing? (Including having influence, shaping the future of commerce, etc etc)

>I'm very sceptical about the claim that the incentive to earn staggering amounts of money goes away if your great-great-grandchildren cannot profit from it.

I'ts not that simple, we are talking about evolutionary timescales here. It's very easy to see that if we live in a universe where accumulating wealth will not benefit your descendants, then accumulating wealth is an energy and time sink which will be selected against.

As for the second point i have no idea what Bezoz's motivations are.

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