Author Topic: Inheritance Tax  (Read 27078 times)

sheepstache

  • Handlebar Stache
  • *****
  • Posts: 2417
Inheritance Tax
« on: September 08, 2015, 04:19:54 PM »
I'm spinning this off from the NYC Meet-Up thread :)

This is obviously a bit political, but to go back to our discussion at the meetup, I found an article that pretty perfectly sums up my view on why inheritances are immoral. This would be why I think estate taxes should be up near 100% and my hypothetical future children will not be receiving much of any inheritance from me, no huge sums saved up in their 529's, etc.

https://medium.com/@AbiWilks/it-s-inheritance-that-is-immoral-not-inheritance-tax-33ff91791f03

Tl;dr:

Quote
Jemima and Edward have no moral claim to the money they didn’t earn. If they’re to get it, it needs to be justified based on consequences. Returning to the thought experiment at the start of this article, who could really believe that the best possible thing you could do with £1,000,000 is to give it to a couple of affluent, successful 30-somethings?

‘Taking’ the money from them wouldn’t be the immoral act, giving it to them would be.

Inheritance isn’t only immoral because it is a waste of resources that could be better spent elsewhere — on schools, health, social care and any number of other things. It’s also actively harmful to allow wealth to be passed down in families through the generations.

It’s harmful because it’s promoting inequality that can be justified neither morally nor pragmatically.

It doesn’t make society function better if some people are born into privilege and others into poverty. In contrast, it tends to mean you end up with important roles filled not by the most able, but by the most able from within a small pool of candidates with lots of social advantages.

People have no intrinsic claim to the fruits of their ancestors’ labour. Even without inheriting, Jemima and Edward have already benefited extensively from being born into money. Nobody could reasonably argue that is because they’re somehow more deserving than a person brought up in social care, for example.

Despite the talk about social mobility from all major political parties, how rich a person in the UK is likely to be as an adult is massively dependent on the circumstances they are born into. Inheritance plays a huge, very obvious role in this.

People who already have money are much better equipped to make more money. As inheritance is passed down from generation to generation, wealth becomes more and more concentrated in certain families.

Just giving the £1,000,000 to two random people who grew up in poverty would still be preferable to letting Jemima and Edward have it. They already benefited enormously from their parents’ wealth while they were still alive. If they benefit again, the inequality is only amplified.

I wasn't there for the full discussion of course. I guess I'm not opposed to taxing inheritance income like regular income once it's over the lifetime gift amount.
As to the point that the children have already benefited from growing up with well-off parents, would you feel differently if the parents died while the children were still minors?


What justification is there for gifts not being treated like regular income as well?
Not that the giver should pay the tax (as is currently the case, and makes no sense), but that the receiver pays it.


In fact, both morally and pragmatically, shouldn't money one earns by doing productive labor be taxed less than any form of unearned or passive income, since it took work to earn money and the product of that work directly benefits society? 
Of course now we have the exact opposite situation, where almost all forms of unearned income are taxed less so that the tax code is specifically working against mobility and helps those who already have enough pay (proportionately) less

sheepstache

  • Handlebar Stache
  • *****
  • Posts: 2417
Re: Inheritance Tax
« Reply #1 on: September 08, 2015, 04:23:57 PM »

What justification is there for gifts not being treated like regular income as well?
Not that the giver should pay the tax (as is currently the case, and makes no sense), but that the receiver pays it.


I think the gift tax is just to allow some interpersonal exchanges without bureaucracy. When your anti-mustachian relatives send you a $25 gift card, do you pay tax on it? Should children pay tax on the entire amount their parents spent on food for them once they reach adulthood?

I think people just want to keep things informal. Attitudes towards gifts are particular and, in this and many other cultures, they depend upon not being seen as strictly transactional.  But the tax code recognizes that at a certain point it has to become a taxable event.


MDM

  • Senior Mustachian
  • ********
  • Posts: 11527
Re: Inheritance Tax
« Reply #2 on: September 08, 2015, 04:44:53 PM »
Quote
https://medium.com/@AbiWilks/it-s-inheritance-that-is-immoral-not-inheritance-tax-33ff91791f03

Great article - if one is looking for wonderful examples of begging the question.

And we know that "From each according to his ability, to each according to his need" is a great strategy because it has worked so well....

Tyson

  • Magnum Stache
  • ******
  • Posts: 3118
  • Age: 52
  • Location: Denver, Colorado
Re: Inheritance Tax
« Reply #3 on: September 08, 2015, 04:59:33 PM »
The beautiful thing about a Democracy - if we decide we want more taxes (and the things those taxes buy), we elect the people to enact those changes.  If not, not. 

ender

  • Walrus Stache
  • *******
  • Posts: 7402
Re: Inheritance Tax
« Reply #4 on: September 08, 2015, 05:01:07 PM »
The entire article seems to have as its core arguments, "they [the parents] are dead, so why shouldn't we [the government] just have all their money once they are dead?" and "everyone supports taking from those who 'have' to those who 'need' so why not with inheritances too?"

There are compelling reasons to change how inheritance taxes work. But neither of those from the article come close (nor does the rest of it).


Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #5 on: September 08, 2015, 06:12:30 PM »
I like how the people who are given the money by the people who earned it do not deserve it, but the Feds, who already taxed it at least once, do. That's the dumbest argument ever.

Tyson

  • Magnum Stache
  • ******
  • Posts: 3118
  • Age: 52
  • Location: Denver, Colorado
Re: Inheritance Tax
« Reply #6 on: September 08, 2015, 06:16:07 PM »
I think the underlying idea is that a non-level financial playing field is undesirable and that taking money from those with wealth and giving it to those without wealth is a good solution. 

Personally I think both of those positions are wrong. 

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #7 on: September 09, 2015, 07:40:55 AM »
I like how the people who are given the money by the people who earned it do not deserve it, but the Feds, who already taxed it at least once, do. That's the dumbest argument ever.


The "Feds" aren't keeping the money for their own personal enjoyment.  Tax money goes into running the government, building roads, the justice system, stuff like that. 
If all money was forfeited upon death, we could eliminate the income tax on wages, which would be a pretty significant amount of money in almost everyone's pockets - money which they did in fact earn, and so have a much better argument for "deserving it" than the child of someone who had wealth.


The "multiple taxation" concept makes no sense what-so-ever.  Money is fungible.  When you go to work, and earn a dollar, you pay income tax.  Then you spend that dollar and pay sales tax.  Now that dollar is sitting in the cash register and at the end of the day in pays the store owner, who pays income tax.  Then later they spend that dollar and pay sales tax.  Now someone else has earned that dollar, and they pay income tax.  Of course the same money is taxed multiple times.  As long as money is in circulation, it should be taxed infinity times.
But it isn't the same person paying the same tax.
You and your parent are not the same person. 
Your parent paid tax on the money when it was income for them.
When you inherit it, it is now income for you.  You pay taxes on income.  It isn't even money you earned by productive labor, so its hard to see any justification for complaining about paying taxes on it.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #8 on: September 09, 2015, 07:46:33 AM »

What justification is there for gifts not being treated like regular income as well?
Not that the giver should pay the tax (as is currently the case, and makes no sense), but that the receiver pays it.


I think the gift tax is just to allow some interpersonal exchanges without bureaucracy. When your anti-mustachian relatives send you a $25 gift card, do you pay tax on it? Should children pay tax on the entire amount their parents spent on food for them once they reach adulthood?

I think people just want to keep things informal. Attitudes towards gifts are particular and, in this and many other cultures, they depend upon not being seen as strictly transactional.  But the tax code recognizes that at a certain point it has to become a taxable event.


No, just like nobody pays sales tax on the $25 they earned selling some stuff at a garage sale, or the $25 your friend gives you when you help them move (even though legally those are both taxable transactions).

But $5 million is not really equivalent to a $25 gift card, is it?  That goes way beyond any reasonable informal interpersonal exchange.
And even in that case, it is the giver who pays the tax, not the receiver.

It seems like a pretty clear cut hold out from the days of noble blood lines to me, a way to try to keep wealth within family lines.

Gone Fishing

  • Magnum Stache
  • ******
  • Posts: 2927
  • So Close went fishing on April 1, 2016
    • Journal
Re: Inheritance Tax
« Reply #9 on: September 09, 2015, 08:52:07 AM »
Sure, a large inheritance by someone who is not ready for it is a great way to turn a little spending/drinking/drug problem into a big spending/drinking/drug problem. But, the real problem with inherited wealth is not consumption as we know it. The problem is when someone is wealthy enough to buy power and influence, allowing them to manipulate the rules of the game to effectively "tax" the working class and further increase their own wealth which ultimately leads to an aristocracy where all power and money is concentrated in the hands of a few.   I'm pretty conservative, but it doesn't take a liberal to see that excessive wealth and power accumulation is not good for our society.   

The founding fathers took great measures to prevent the excessive accumulation of power in the hands of a few, but those in power always seek more, and will continue to fight tooth and nail to change the rules in their favor, usually under the guise of "job creation" or some other populous friendly terms.  Over time, occasional revisions such as the antitrust laws are required to keep the elite in check.  Without at least some mechanisms in place to control wealth and power, our only saving grace would be the occasional spendthrift that burns through the money; however, even then, the wealthy have created tools like Dynastic Trusts that can lock up and grow wealth for a long time, keeping it reasonably "safe" from spendthrifts if used properly.

Redistribution of wealth sells well politically to the lower classes as they (correctly?) believe it will result in a handout.  But it is not about handouts, it is about maintaining a society where the opportunity to get ahead has not been extinguished by an small portion of society with a chokehold on all aspects of life.

Is an inheritance tax fair?  No, but of all the options, it is probably the fairest.     

Robert Frank makes a pretty good case for replacing income taxes with consumption and inheritance taxes in his book Luxury Fever.  It is a good read for anyone interested in the subject.


   

Bob W

  • Magnum Stache
  • ******
  • Posts: 2942
  • Age: 65
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: Inheritance Tax
« Reply #10 on: September 09, 2015, 09:09:53 AM »
Taxes are an unneeded evil.   The easiest and most elegant solution is for the US Government to simply print what it wants to spend each year.    No borrowing,  no ridiculous interest.  It is an enumerated power in the constitution, so no problem there.   

The net effect would be an inflation rate slightly higher than today's  and the ending of the IRS and corporate tax games.

 

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #11 on: September 09, 2015, 09:45:39 AM »
Taxes are an unneeded evil.   The easiest and most elegant solution is for the US Government to simply print what it wants to spend each year.    No borrowing,  no ridiculous interest.  It is an enumerated power in the constitution, so no problem there.   

The net effect would be an inflation rate slightly higher than today's  and the ending of the IRS and corporate tax games.

You've said this before, and I find it fascinating as an idea.  It feels like the next step honestly.  From gold coins to paper backed by gold to floating currency to this.  Has any other country tried this?  Are there economic thesis or hypothesizing I can read about this?  What is it called?  I've heard the inherent value in the U.S. dollar is that it can be used to pay U.S. taxes, wouldn't this affect that?  I mean, most of my dollars go to buying cheese, so as long as cheese sellers take dollars I guess I'm OK.

As for inheritance taxes,  I think they could get a lot more creative with the exemptions and so forth.  Many of the arguments for it are in line with my thinking on person-hood rights granted to corporations.  Weird things start to happen when we create functionally immortal entities.  Whether it's Wal-Mart or Coca-Cola or the Gates fortune, these are things that are going to have an impact for far longer than any actual person will, they enjoy the property protections afforded individuals, but are largely immune from the responsibilities and liabilities of an individual.  As in, you can't send a fortune or a corporation to prison.  As far as I know you also can't jail a stockholder for the actions of the corporation.

I don't really feel like it's unfair to be born to rich parents.  It's certainly lucky, but it isn't something that is controllable in any meaningful way.  The idea that denying inheritance is going to affect birth inequality is silly.  Wealthy people will just use the money to buy power while they are still alive, and use that power to set their kids up to acquire their own wealth/power.  These people got where they are by being good at the game.  Change whatever rules you want, they're still going to be good at the game.

Anyone in the states who complains about the circumstances of their birth is being pretty silly.  You were born in the USA, you won the lottery already.  Same could be said of a dozen other countries or more.  The vast majority of humans are born into far worse starting conditions, and nothing you take from the top is ever going to fix that.  At most, you can manage to make everyone poor.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #12 on: September 09, 2015, 12:20:31 PM »
Taxes are an unneeded evil.   The easiest and most elegant solution is for the US Government to simply print what it wants to spend each year.    No borrowing,  no ridiculous interest.  It is an enumerated power in the constitution, so no problem there.   

The net effect would be an inflation rate slightly higher than today's  and the ending of the IRS and corporate tax games.


We've used paper money for so long that its just become part of the matrix.

Even though it isn't backed by gold (itself an arbitrary standard of value), the whole point of currency is still a way to make value fluid.
It still represents tangible goods and services.

The amount of excess money printed each year is (in theory at least) supposed to reflect the annual increase in GDP (in real, tangible goods and services produced), with some degree of float in order to help manipulate interest rates and stuff like that.

If we followed your suggestion, currency would cease to represent anything, and it would very soon become worthless.

You've said this before, and I find it fascinating as an idea.  It feels like the next step honestly.  From gold coins to paper backed by gold to floating currency to this.  Has any other country tried this?  Are there economic thesis or hypothesizing I can read about this? 

Yes, to both questions.

https://en.wikipedia.org/wiki/Hyperinflation

The most extreme was the Wiemar Republic, in 1922, where they tried literally exactly what Bob W suggests.
Prices doubled every two days, and it took 4 trillion notes to equal one US dollar
A good 10 countries have tried similar schemes, always with the similar results.


Since the US dollar is still the world standard, if we did it we would probably put the entire world into a major recession.
Everyone would quickly switch to another currency (probably the Euro) which would have an extreme negative impact on foreign investment here.  Basically, we would no longer be able to live on debt indefinitely, and I'd guess we would lose "super-power" status within a year.

Unfortunately, we actually do this already, albeit on a much smaller scale - the government does not take in as much as it spends each year, and the shortfall is made up by just printing excess currency.  This is one of the largest driving factors of inflation, and it amounts to a "back-door" tax on everyone who hold US dollars in any form, as the value the printed currency represents comes from devaluing all other existing US currency.  It could not be any other way.

Imagine you have 10 friends, and between you you have 10 apples, and 10 pieces of paper.  You all agree that one piece of paper is worth one apple, and you distribute one piece of paper each among you.

Now you make a trade with someone for three oranges in exchange for two apples. 
You only have one piece of paper - so you just go find another piece of paper somewhere and write "worth one apple" on it.
Well, now 11 pieces of paper is equal to the 10 apples.  You writing that didn't cause another apple to spring into existence.
So that means each piece of paper is only worth 0.9 apples.
You just traded your own apple, plus 10% of everyone else's apples.
You are the US government, paying your own debts by stealing from everyone else who bought into your currency scheme.
« Last Edit: September 09, 2015, 12:38:07 PM by Bakari »

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #13 on: September 09, 2015, 12:36:34 PM »
Anyone in the states who complains about the circumstances of their birth is being pretty silly.  You were born in the USA, you won the lottery already.  Same could be said of a dozen other countries or more.  The vast majority of humans are born into far worse starting conditions,


True.  Its sort of like when lottery winners complain about having their winnings taxed.
So maybe ethically we should be focused on redistributing massive unearned wealth to the third world, instead of to the American middle class.
I don't see how I could argue with that.


Quote
and nothing you take from the top is ever going to fix that.  At most, you can manage to make everyone poor.
You may not fully realize just how much the top actually has.The top 0.1% (the top one tenth of the 1%) consists of 30,000 individuals. Between them they hold approximately 9 trillion dollars.

Just for the sake of the thought exercise, lets say the US excised a one time 90% wealth tax on the top tenth of a percent.
That would leave them 900 billion dollars, or 30 million dollars each (average).  They would all still be extremely rich.

Divided evenly between every man woman and child in the US that comes to $28,000, which is about 2 years salary at minimum wage.

OR (taking you other comment into account)

Divided between the world's most extreme poor, (1.2 billion live on a little over a dollar per day), $7,500 each, which would be over 16 years worth of income.

Remember, in this imaginary - both mathematically entirely possible - scenario, the rich still stay inconceivably richer than everyone else, while eliminating extreme poverty.
That is pretty much the opposite of making everyone poor.

Bob W

  • Magnum Stache
  • ******
  • Posts: 2942
  • Age: 65
  • Location: Missouri
  • Live on minimum wage, earn on maximum
Re: Inheritance Tax
« Reply #14 on: September 09, 2015, 01:00:08 PM »
Taxes are an unneeded evil.   The easiest and most elegant solution is for the US Government to simply print what it wants to spend each year.    No borrowing,  no ridiculous interest.  It is an enumerated power in the constitution, so no problem there.   

The net effect would be an inflation rate slightly higher than today's  and the ending of the IRS and corporate tax games.


We've used paper money for so long that its just become part of the matrix.

Even though it isn't backed by gold (itself an arbitrary standard of value), the whole point of currency is still a way to make value fluid.
It still represents tangible goods and services.

The amount of excess money printed each year is (in theory at least) supposed to reflect the annual increase in GDP (in real, tangible goods and services produced), with some degree of float in order to help manipulate interest rates and stuff like that.

If we followed your suggestion, currency would cease to represent anything, and it would very soon become worthless.

You've said this before, and I find it fascinating as an idea.  It feels like the next step honestly.  From gold coins to paper backed by gold to floating currency to this.  Has any other country tried this?  Are there economic thesis or hypothesizing I can read about this? 

Yes, to both questions.

https://en.wikipedia.org/wiki/Hyperinflation

The most extreme was the Wiemar Republic, in 1922, where they tried literally exactly what Bob W suggests.
Prices doubled every two days, and it took 4 trillion notes to equal one US dollar
A good 10 countries have tried similar schemes, always with the similar results.


Since the US dollar is still the world standard, if we did it we would probably put the entire world into a major recession.
Everyone would quickly switch to another currency (probably the Euro) which would have an extreme negative impact on foreign investment here.  Basically, we would no longer be able to live on debt indefinitely, and I'd guess we would lose "super-power" status within a year.

Unfortunately, we actually do this already, albeit on a much smaller scale - the government does not take in as much as it spends each year, and the shortfall is made up by just printing excess currency.  This is one of the largest driving factors of inflation, and it amounts to a "back-door" tax on everyone who hold US dollars in any form, as the value the printed currency represents comes from devaluing all other existing US currency.  It could not be any other way.

Imagine you have 10 friends, and between you you have 10 apples, and 10 pieces of paper.  You all agree that one piece of paper is worth one apple, and you distribute one piece of paper each among you.

Now you make a trade with someone for three oranges in exchange for two apples. 
You only have one piece of paper - so you just go find another piece of paper somewhere and write "worth one apple" on it.
Well, now 11 pieces of paper is equal to the 10 apples.  You writing that didn't cause another apple to spring into existence.
So that means each piece of paper is only worth 0.9 apples.
You just traded your own apple, plus 10% of everyone else's apples.
You are the US government, paying your own debts by stealing from everyone else who bought into your currency scheme.

So what you are saying is that the US would automatically go off the deep end and just print like crazy?   It's possible of course and eventually would happen.

We are essentially creating something like 800 billion per year going through the Fed Reserve now.     So would you then also have a problem with just printing that 800 billion instead of borrowing it?     I can't see that it would be any more inflationary?

So the next natural step is to reduce taxes by 30% per year while upping the printing (not borrowing).  Within 5 years there would be no federal taxes. 

My math is pretty poor but I'm postulating that printing 4 trillion per year in a country with a net worth of 80 trillion roughly adds up to 5% inflation.  Most of that inflation would be reflected in stock and real estate prices.   I for one have never understood why people think inflation in stocks is good but inflation in food is bad.   

One would have to assume that the fed would continue to offset inflation by printing less money and increasing interest rates as warranted.  Most people agree that a little inflation is o.k. but deflation is bad and equilibrium will never be exact. 

Money is essentially trust and yes it always goes bad so it is the old when not if paradigm. 

And as you say the inflation tax is hidden now.  With straight printing everyone would understand that is the game and act accordingly.   The inflation tax would be spread across all sectors of society in a somewhat onerous equal manner. 

If congress said we are going to print 4.5T per year and no more it may be best.   Soc Sec recipients would receive no raises,  Fed employees no raises etc..  So it may not lead to the hyperinflation you speak of.

It's a balance act.   


Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #15 on: September 09, 2015, 01:45:19 PM »
I like how the people who are given the money by the people who earned it do not deserve it, but the Feds, who already taxed it at least once, do. That's the dumbest argument ever.


The "Feds" aren't keeping the money for their own personal enjoyment.  Tax money goes into running the government, building roads, the justice system, stuff like that. 
If all money was forfeited upon death, we could eliminate the income tax on wages, which would be a pretty significant amount of money in almost everyone's pockets - money which they did in fact earn, and so have a much better argument for "deserving it" than the child of someone who had wealth.


The "multiple taxation" concept makes no sense what-so-ever.  Money is fungible.  When you go to work, and earn a dollar, you pay income tax.  Then you spend that dollar and pay sales tax.  Now that dollar is sitting in the cash register and at the end of the day in pays the store owner, who pays income tax.  Then later they spend that dollar and pay sales tax.  Now someone else has earned that dollar, and they pay income tax.  Of course the same money is taxed multiple times.  As long as money is in circulation, it should be taxed infinity times.
But it isn't the same person paying the same tax.
You and your parent are not the same person. 
Your parent paid tax on the money when it was income for them.
When you inherit it, it is now income for you.  You pay taxes on income.  It isn't even money you earned by productive labor, so its hard to see any justification for complaining about paying taxes on it.

Hahahaha, that's cute.  We could...but we wouldn't.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #16 on: September 09, 2015, 04:29:10 PM »
So what you are saying is that the US would automatically go off the deep end and just print like crazy?   It's possible of course and eventually would happen.


I'm saying that having the entire federal budget be covered by meaningless paper currency IS going off the deep end!



Quote
We are essentially creating something like 800 billion per year going through the Fed Reserve now.     So would you then also have a problem with just printing that 800 billion instead of borrowing it? 


Borrowing and printing are not interchangeable.  When you borrow money, it still represents real value of tangible things.


Quote
   I can't see that it would be any more inflationary?


Go back to the IOU-an-apple example, trading or loaning the papers doesn't change the ratio of one paper equaling exactly one apple.  Printing extra paper IOUs does.



Quote
So the next natural step is to reduce taxes by 30% per year while upping the printing (not borrowing).  Within 5 years there would be no federal taxes. 

My math is pretty poor but I'm postulating that printing 4 trillion per year in a country with a net worth of 80 trillion roughly adds up to 5% inflation.


Current fed budget inflows: 1.5 trillion income tax, 1 trillion payroll tax, 580 billion in borrowing.

Of that 580, 30% is borrowed from government trust funds (mostly SS), 58% is private and/or foreign countries, 12% is from the Fed.

Of that Fed money, some is from their existing reserves, some is from the magical "printed money" - this where adjusting the money supply to try to manipulate macro-economics comes in (called Quantitative Easing).  In theory this money is not intended to directly pay federal debt, it is just supposed to stimulate the economy by expanding the money supply.  This has averaged 375 billion a year between 2007 and 2015, because it was ramped up due to the recession.


Lets say that all the complicated economics behind QE are all just a front, and all 375 billion are really just a way for the government to pay for everything (it isn't, but lets just go with that).


Its covering .37 trillion, out of a budget of 6.2 trillion.
Your idea is to scale that up by a factor of 16 (and skip the whole fed to treasury to private banks that then buy US bonds process that is supposed to insulate it from direct monetization of debt)


Quote
  Most of that inflation would be reflected in stock and real estate prices.   I for one have never understood why people think inflation in stocks is good but inflation in food is bad.   


Inflation in stocks is only good if the underlying companies are actually doing better than the year before, selling more with lower costs, therefor increasing profits.  If stocks go up without the companies the represent doing better, that's what is called a "bubble", and it is never good (for very long)


Quote
One would have to assume that the fed would continue to offset inflation by printing less money
How could they possibly ever print less if 100% of government activites is funded by printing more money?  They aren't going to get what they spent last year back, so they would have to keep printing the full annual budget each year forever.
Hence, hyperinflation.


Quote
and increasing interest rates as warranted.  Most people agree that a little inflation is o.k. but deflation is bad and equilibrium will never be exact. 

Most "people don't have any more sense than a baby"
-Humpty Dumpty, Through the Looking Glass

Quote
Money is essentially trust and yes it always goes bad so it is the old when not if paradigm. 
?

Quote
And as you say the inflation tax is hidden now.  With straight printing everyone would understand that is the game and act accordingly.
The way people act accordingly is by not accepting a dollar for a soda now that a dollar is only worth 50 cents, and not accepting 2 dollars tomorrow when they are only worth a quarter.


You don't have to take my word for it.
Read the wiki link, which not only goes into the theory, but details ten real life examples from recent history when governments really did try that exact idea.


Quote
If congress said we are going to print 4.5T per year and no more it may be best.   Soc Sec recipients would receive no raises,  Fed employees no raises etc..  So it may not lead to the hyperinflation you speak of.


But it wouldn't.  Demanding a balanced budget is an entirely different question from where the money comes from.  The government could set an absolute spending cap, and/or demand a balanced budget, as it is today.  But it doesn't.
It came close, but we've dug ourselves in pretty deep, and everyone has a sacred cow.  There are very few if any politicians who are willing to publically call for massive cuts to social security AND the military.  Everyone says absolutely not to massive cutting to one or the other, and that wouldn't change just because spending came entirely in the form of printing money instead of taxes, why would it?

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #17 on: September 10, 2015, 09:17:42 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

Given that taxes have to come from somewhere we can choose if we want income tax, sales tax, estate tax, etc. I choose an estate tax to be as high as is reasonably possible (I'd support an 100% tax with a possible exemption for 1 personal residence under $2M or something similar), as inheritances by their very nature are unearned and go to those who need them the least (people who have benefited the most from parental wealth, gone to the best schools, had the best healthcare, etc will also the ones who receive the largest inheritances). An income tax, sales tax, or property tax is far more unjust but will still need to exist because even a 100% estate tax would not cover all US government expenditures.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 2200
  • Age: 51
  • Location: Houston TX
  • Devour your prey raptors!
    • Living Universe Foundation
Re: Inheritance Tax
« Reply #18 on: September 10, 2015, 09:31:39 AM »

What justification is there for gifts not being treated like regular income as well?
Not that the giver should pay the tax (as is currently the case, and makes no sense), but that the receiver pays it.


I think the gift tax is just to allow some interpersonal exchanges without bureaucracy. When your anti-mustachian relatives send you a $25 gift card, do you pay tax on it? Should children pay tax on the entire amount their parents spent on food for them once they reach adulthood?

I think people just want to keep things informal. Attitudes towards gifts are particular and, in this and many other cultures, they depend upon not being seen as strictly transactional.  But the tax code recognizes that at a certain point it has to become a taxable event.

This may vary in other jurisdictions but in the US, the gift tax only applies after a 13,000 annual exemption.  (Which I believe goes to 14k next year.)  De Minimus gifts are explicitly excluded by the gift tax code.

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #19 on: September 10, 2015, 10:02:01 AM »
I think a big part of the income inequality perception problem is the failure to understand the fundamentals of valuation, and confusing that with "shit you can buy."  If you handed every man, woman, and child in the world $28,000 you would not eliminate poverty.  You might provide relief temporarily, for some things, in some places, but poverty is not a function solely of income.  Income is how it is measured, it is not what it is.

It's like determining someone's health by measuring their current temperature.  It's a useful data point, but doesn't tell the whole story.

In a post 100% inheritance tax world, we'd all be out trying to get poor people to give us a job.  To date, I've never gotten a job from a poor person.

I'll use Elon Musk as an example.  He created a thing, and made a ton of money.  He didn't sit on that money, he went and created more companies.  So his original company is providing jobs under its new owners, and his new companies are providing jobs, and he is continuously out there doing that.  He's spending his money on goals, and in the process creating jobs.  Damn near 100% of his earnings are going to job creation, helping out others.  Compare that to me, where almost none of my earnings go to job creation (any more than any other consumption would), which one of us should be trusted to hold on to that money?

Now when (if?) he dies, the government got 100% of his wealth, what would that look like?  Would spaceX become part of NASA?  Or would the government sell spaceX to the highest bidder?  Musk 2.0 (his children/clones/however musks procreate) might not be the best custodian of that fortune, but once it's in the hands of government (particularly the U.S. government) it'll be gone, instantly.

Particularly when the government is already massively taxing the wealthy.  Inflation is entirely the result of governmental monetary policy, and the true cost of inflation is born by those who have the money.

Welshrabbit

  • Guest
Re: Inheritance Tax
« Reply #20 on: September 10, 2015, 10:08:13 AM »
Sure, a large inheritance by someone who is not ready for it is a great way to turn a little spending/drinking/drug problem into a big spending/drinking/drug problem. But, the real problem with inherited wealth is not consumption as we know it. The problem is when someone is wealthy enough to buy power and influence, allowing them to manipulate the rules of the game to effectively "tax" the working class and further increase their own wealth which ultimately leads to an aristocracy where all power and money is concentrated in the hands of a few.   I'm pretty conservative, but it doesn't take a liberal to see that excessive wealth and power accumulation is not good for our society.   

The founding fathers took great measures to prevent the excessive accumulation of power in the hands of a few, but those in power always seek more, and will continue to fight tooth and nail to change the rules in their favor, usually under the guise of "job creation" or some other populous friendly terms.  Over time, occasional revisions such as the antitrust laws are required to keep the elite in check.  Without at least some mechanisms in place to control wealth and power, our only saving grace would be the occasional spendthrift that burns through the money; however, even then, the wealthy have created tools like Dynastic Trusts that can lock up and grow wealth for a long time, keeping it reasonably "safe" from spendthrifts if used properly.

Redistribution of wealth sells well politically to the lower classes as they (correctly?) believe it will result in a handout.  But it is not about handouts, it is about maintaining a society where the opportunity to get ahead has not been extinguished by an small portion of society with a chokehold on all aspects of life.

Is an inheritance tax fair?  No, but of all the options, it is probably the fairest.     

Robert Frank makes a pretty good case for replacing income taxes with consumption and inheritance taxes in his book Luxury Fever.  It is a good read for anyone interested in the subject.


 

Or...we could simply mandate a divorce between politics and money.

Mississippi Mudstache

  • Handlebar Stache
  • *****
  • Posts: 2175
  • Age: 40
  • Location: Danielsville, GA
    • A Riving Home - Ramblings of a Recusant Woodworker
Re: Inheritance Tax
« Reply #21 on: September 10, 2015, 10:10:59 AM »
Now when (if?) he dies, the government got 100% of his wealth, what would that look like?  Would spaceX become part of NASA?  Or would the government sell spaceX to the highest bidder?  Musk 2.0 (his children/clones/however musks procreate) might not be the best custodian of that fortune, but once it's in the hands of government (particularly the U.S. government) it'll be gone, instantly.

I'm not here to defend a 100% inheritance tax (I think it's a bad idea, for the record), but what the fuck? Do you think Elon Musk owns 100% of SpaceX? He owns about a quarter, from what I've read. His estate could be settled by selling his shares, and then the money, not the companies, would go to the government.

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #22 on: September 10, 2015, 10:16:12 AM »
I think a big part of the income inequality perception problem is the failure to understand the fundamentals of valuation, and confusing that with "shit you can buy."  If you handed every man, woman, and child in the world $28,000 you would not eliminate poverty.  You might provide relief temporarily, for some things, in some places, but poverty is not a function solely of income.  Income is how it is measured, it is not what it is.

It's like determining someone's health by measuring their current temperature.  It's a useful data point, but doesn't tell the whole story.

In a post 100% inheritance tax world, we'd all be out trying to get poor people to give us a job.  To date, I've never gotten a job from a poor person.

I'll use Elon Musk as an example.  He created a thing, and made a ton of money.  He didn't sit on that money, he went and created more companies.  So his original company is providing jobs under its new owners, and his new companies are providing jobs, and he is continuously out there doing that.  He's spending his money on goals, and in the process creating jobs.  Damn near 100% of his earnings are going to job creation, helping out others.  Compare that to me, where almost none of my earnings go to job creation (any more than any other consumption would), which one of us should be trusted to hold on to that money?

Now when (if?) he dies, the government got 100% of his wealth, what would that look like?  Would spaceX become part of NASA?  Or would the government sell spaceX to the highest bidder?  Musk 2.0 (his children/clones/however musks procreate) might not be the best custodian of that fortune, but once it's in the hands of government (particularly the U.S. government) it'll be gone, instantly.

Particularly when the government is already massively taxing the wealthy.  Inflation is entirely the result of governmental monetary policy, and the true cost of inflation is born by those who have the money.

Yes I think a simple solution would be for the government to sell the shares immediately. I find the whole "wealth and job creation" thing to be incredibly irrelevant honestly. Musk's wealth invested in companies does create jobs. But if that money were held by someone else (or even ten people who group their wealth together in a partnership or private equity fund) it could be used equally well. There's no reason to think his kids will make the economy any better by inheriting it instead. I'd much rather see his shares sold to pay for new infrastructure, reduce the government debt, fully fund SS, get rid of tuition at public colleges, etc than to make the Musk Juniors instant billionaires.

Note: I know little in particular about Elon Musk and his particular situation, have nothing against him, and am only using him to go along with the given example.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #23 on: September 10, 2015, 10:34:22 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 

Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts). 


bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #24 on: September 10, 2015, 10:46:43 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 

Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts).

It's pretty simple. People worrying about getting a fair shake are the only way changes ever happen politically. If we switched to a feudal society should I just be satisfied with my indentured servitude and respect all that the landed gentry have? No! Fighting for a better, fairer society is irrelevant? Man, I'd sure hate to see where we'd be if people hadn't done just that. Women want to vote? Eh, who cares what they think they deserve right? Their jealousy is irrelevant.

The "shut up and don't whine" oppression line is always used by those in power, but fortunately we do have a say in what we deserve. Eventually we may even convince enough people to change the law.

RFAAOATB

  • Pencil Stache
  • ****
  • Posts: 654
Re: Inheritance Tax
« Reply #25 on: September 10, 2015, 11:13:18 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 

Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts).

It's pretty simple. People worrying about getting a fair shake are the only way changes ever happen politically. If we switched to a feudal society should I just be satisfied with my indentured servitude and respect all that the landed gentry have? No! Fighting for a better, fairer society is irrelevant? Man, I'd sure hate to see where we'd be if people hadn't done just that. Women want to vote? Eh, who cares what they think they deserve right? Their jealousy is irrelevant.

The "shut up and don't whine" oppression line is always used by those in power, but fortunately we do have a say in what we deserve. Eventually we may even convince enough people to change the law.

Since we're all smart enough to see who is in power, why do a lot of you want to redistribute wealth with an inheritance tax instead of BECOMING the landed gentry?  If you save enough money to retire early, you could probably save enough money so your descendants never have to worry about money again.  Your estate could last hundreds of years as you start a political dynasty like the Medici family.  We've got the resources to think big, and our benevolence and wealth can save the world if you think other's greed, indifference, and wealth can destroy it. 

beltim

  • Magnum Stache
  • ******
  • Posts: 2957
Re: Inheritance Tax
« Reply #26 on: September 10, 2015, 11:14:34 AM »
So what you are saying is that the US would automatically go off the deep end and just print like crazy?   It's possible of course and eventually would happen.



My math is pretty poor but I'm postulating that printing 4 trillion per year in a country with a net worth of 80 trillion roughly adds up to 5% inflation. 

Your denominator is wrong.  You can't use a net worth to determine inflation - you have to use the money supply, which is something like $12-15 trillion.  Now $3 trillion in printing - going directly to the money supply -  becomes 20-25% inflation to start, which most likely leads to hyperinflation.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #27 on: September 10, 2015, 11:19:46 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 

Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts).

It's pretty simple. People worrying about getting a fair shake

I don't understand what's "fair" about you demanding that we take money away from people who were given it by the people who earned it, because you say so.  If you earn the money legally, you should get to determine where it goes, both while alive, and when you pass.  Period.  The end.  No one else has a right to it, no matter what you, a third party, thinks others "deserve" or what is "fair."  Fuck fair.  Life's not fair.  That's not a license to steal.

Tyson

  • Magnum Stache
  • ******
  • Posts: 3118
  • Age: 52
  • Location: Denver, Colorado
Re: Inheritance Tax
« Reply #28 on: September 10, 2015, 11:28:54 AM »
The problem with flat re-distribution from one person (the rich) to another (the poor) is that the poor people are often spendypants and will promptly waste those earnings.  A far better use of the funds would be to invest in infrastructure that would make poor people better/wiser with money.  We should have dedicated finance courses/subjects from grade school all the way through grad school and make them a requirement for everyone.  To make it fully mustachian we should also have many courses on frugality and budgeting.  That would be much more helpful than just giving people money.

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #29 on: September 10, 2015, 11:52:27 AM »
Hey everyone. I posted the original article that sheepstache cited. Basically, my view is:

Earned income should at the very least not be taxed more than unearned income (inheritance, gifts, etc). If I work for ten years at $100k per year I've made $1M, but given maybe $300k back in taxes. If my parents die and give me $1M I pay no taxes on it though? I did nothing to deserve it.

I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 

Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts).

It's pretty simple. People worrying about getting a fair shake

I don't understand what's "fair" about you demanding that we take money away from people who were given it by the people who earned it, because you say so.  If you earn the money legally, you should get to determine where it goes, both while alive, and when you pass.  Period.  The end.  No one else has a right to it, no matter what you, a third party, thinks others "deserve" or what is "fair."  Fuck fair.  Life's not fair.  That's not a license to steal.

No. Saying "period" doesn't make you right.

Quote
If you earn the money legally, you should get to determine where it goes, both while alive, and when you pass.

See, I don't agree with that at all. Period. The end. You wanting the rules to stay as they are doesn't mean those rules are inherently right.

Quote
Fuck fair.  Life's not fair. That's not a license to steal.

You're right, it's not. However, most of our attempts to make it fairer have resulted in far happier, safer, healthier societies so I and others will continue to fight for fairness. Public school districts "steal" money from the wealthy to pay for school for kids whose parents can't pay it. Should we fuck that fairness away? Medicaid "steals" from the wealthy so a poor, elderly woman can have life-saving surgery she otherwise couldn't afford. Should we fuck that away too?

Quote
A far better use of the funds would be to invest in infrastructure that would make poor people better/wiser with money.

Agreed. That's why I said to use it for "pay for new infrastructure, reduce the government debt, fully fund SS, get rid of tuition at public colleges, etc" rather than just hand out redistribution checks.

Quote
Since we're all smart enough to see who is in power, why do a lot of you want to redistribute wealth with an inheritance tax instead of BECOMING the landed gentry?  If you save enough money to retire early, you could probably save enough money so your descendants never have to worry about money again.  Your estate could last hundreds of years as you start a political dynasty like the Medici family.  We've got the resources to think big, and our benevolence and wealth can save the world if you think other's greed, indifference, and wealth can destroy it.

Because I have enough of a moral compass to see beyond just increasing my own power? I don't want anyone, including me, to be the landed gentry.

And for the record this conversation started because I stated at the NYC meetup that I won't be giving my kids much of any inheritance no matter how much I end up with. The whole idea of leaving a legacy, putting hundreds of thousands in 529 accounts, and so on is nuts to me. My parents didn't pay a dime for college, and I've hustled, scraped, working multiple jobs to get where I am. It's probably what I'm most proud of and hugely influences my character and confidence. You think I want my kids to grow up with a silver spoon in their mouths? There's nothing, absolutely nothing about that appealing to me. Their journey to FI, if that's what they pursue, will be on their own.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #30 on: September 10, 2015, 11:56:53 AM »

And for the record this conversation started because I stated at the NYC meetup that I won't be giving my kids much of any inheritance no matter how much I end up with. The whole idea of leaving a legacy, putting hundreds of thousands in 529 accounts, and so on is nuts to me. My parents didn't pay a dime for college, and I've hustled, scraped, working multiple jobs to get where I am. It's probably what I'm most proud of and hugely influences my character and confidence. You think I want my kids to grow up with a silver spoon in their mouths? There's nothing, absolutely nothing about that appealing to me. Their journey to FI, if that's what they pursue, will be on their own.

So you've got a giant chip on your shoulder because life and your parents fucked you, so fuck everyone else, right? Mod Note: Personal attacks are not okay.  Got it.  My goal in my life is to make my kid's life better than mine.  Quite frankly, I think anyone who believes differently is a terrible person.  There it is.
« Last Edit: September 10, 2015, 03:20:08 PM by swick »

MDM

  • Senior Mustachian
  • ********
  • Posts: 11527
Re: Inheritance Tax
« Reply #31 on: September 10, 2015, 12:05:53 PM »
...I won't be giving my kids much of any inheritance no matter how much I end up with.
There is of course the chance, small to nonexistent though you think it now, that your opinion will change as you age and have actual kids to consider.

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #32 on: September 10, 2015, 12:08:01 PM »
Quote
So you've got a giant chip on your shoulder because life and your parents fucked you, so fuck everyone else, right?  Got it.  My goal in my life is to make my kid's life better than mine.  Quite frankly, I think anyone who believes differently is a terrible person.  There it is.

Yep, you've encapsulated me. My incredible life that I actually had to work for means that life fucked me. So now I want to fuck everyone else by volunteering, contributing to important causes, and generally trying to make the world a better place. I don't believe handing my hypothetical kids tons of money would make their life better though, no. Quite the contrary.

Quote
There is of course the chance, small to nonexistent though you think it now, that your opinion will change as you age and have actual kids to consider.

Sure. Just as with everyone.

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #33 on: September 10, 2015, 12:35:06 PM »
My parents didn't pay a dime for college, and I've hustled, scraped, working multiple jobs to get where I am. It's probably what I'm most proud of and hugely influences my character and confidence. You think I want my kids to grow up with a silver spoon in their mouths? There's nothing, absolutely nothing about that appealing to me. Their journey to FI, if that's what they pursue, will be on their own.

So you aren't OK with helping out your own kids, but you are OK with everyone else being forced to help out everyone else's kids?  And you can't at all conceive of how we might find that nuts?

I love how once a society has great wealth to feed into social programs, suddenly the social programs in and of themselves are what lifted the poor and starving masses.  The underlying wealth that free people generate when left to self-govern is why these programs have the funding they do.

Comparing the wealthy elite of today to the fuedal lords of yesteryear is fundamentally assinine thinking.  Something like 200 million people get up and drive their personal chariots to their job of choice so they can go home to their personal mansion.  It's all heavily subsidized (and has been for generations) by the wealthiest people, the overwhelming majority acquired that wealth legitimately, without exploitation of labor, and without exploitation of the environment.  They did it by saving money, rather than spending it.  They did it by building factories and providing jobs.  And every once in awhile a child of that dynasty spends all or almost all of it, which is why you are far more likely to drop out of the wealthiest 1% than you are to move up into it.  And when asked to pay the taxes, they do so voluntarily.  Soldiers aren't needed to break into their vaults and take it by force.

And schools don't take money money from the wealthy and use it to educate people.  At least in Texas, schools take money from the residents that, if they had children, those children would attend those schools.


But if that money were held by someone else (or even ten people who group their wealth together in a partnership or private equity fund) it could be used equally well.

This is true, but the money doesn't go to 10 people, it gets taken by the government, distributed to everyone, at least 80% of whom go out and spend it on shit they don't need and can't afford.  So while the lil' musklings might not have done a good job with it, the government absolutely wouldn't do a good job with it, so the choice is pretty clear to me.

And who do you sell the shares of SpaceX too? There are no more wealthy investors, the overwhelming majority of fortunes have ceased to exist, they were taxed so Ma and Pa Givenofucks could have an extra Plasma TV.

•   Giving money and power to government is like giving whiskey and car keys to teenage boys.
-P. J. O'Rourke, Parliament of Whores (1991).

Aside from the bare minimum necessary to keep me from getting shot as I leave my house every morning, every dollar given to government is a waste.

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #34 on: September 10, 2015, 01:03:58 PM »
Quote
So you aren't OK with helping out your own kids, but you are OK with everyone else being forced to help out everyone else's kids?  And you can't at all conceive of how we might find that nuts?

Ok, I'm not going to respond to most of your post because arguing with someone who thinks government is evil is a waste of both of our time. I'm not going to change your opinion. I'll respond just to the above quoted snippet.

I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.

As for being forced to pay for everyone else, absolutely. Everyone should be able to improve their education, not just the wealthy. And the comparison to feudalism is to show the lunacy of the "Life's not fair, deal with it" argument. Someone like Chris has benefitted from his and his parent's wealth his entire life, I'm sure it's easy to make that statement. The feudal lords would have done the same. Those who benefit often think everyone else should go along with the rules that are setup in their favor.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #35 on: September 10, 2015, 01:15:02 PM »
Quote
So you aren't OK with helping out your own kids, but you are OK with everyone else being forced to help out everyone else's kids?  And you can't at all conceive of how we might find that nuts?

Ok, I'm not going to respond to most of your post because arguing with someone who thinks government is evil is a waste of both of our time. I'm not going to change your opinion. I'll respond just to the above quoted snippet.

I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.

As for being forced to pay for everyone else, absolutely. Everyone should be able to improve their education, not just the wealthy. And the comparison to feudalism is to show the lunacy of the "Life's not fair, deal with it" argument. Someone like Chris has benefitted from his and his parent's wealth his entire life, I'm sure it's easy to make that statement. The feudal lords would have done the same. Those who benefit often think everyone else should go along with the rules that are setup in their favor.

Sure, I'll grant you that.  But the flip side is that taking money AWAY from me is not fair either. 

For the record, I was told I would be able to attend any college I could get into, and my parents (who were not particularly wealthy at the time) would find a way to pay for it, because that was their primary concern in life.  I still elected to essentially put myself through college via an ROTC scholarship. 

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #36 on: September 10, 2015, 01:26:23 PM »
Quote
So you aren't OK with helping out your own kids, but you are OK with everyone else being forced to help out everyone else's kids?  And you can't at all conceive of how we might find that nuts?

Ok, I'm not going to respond to most of your post because arguing with someone who thinks government is evil is a waste of both of our time. I'm not going to change your opinion. I'll respond just to the above quoted snippet.

I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.

As for being forced to pay for everyone else, absolutely. Everyone should be able to improve their education, not just the wealthy. And the comparison to feudalism is to show the lunacy of the "Life's not fair, deal with it" argument. Someone like Chris has benefitted from his and his parent's wealth his entire life, I'm sure it's easy to make that statement. The feudal lords would have done the same. Those who benefit often think everyone else should go along with the rules that are setup in their favor.

Sure, I'll grant you that.  But the flip side is that taking money AWAY from me is not fair either. 

For the record, I was told I would be able to attend any college I could get into, and my parents (who were not particularly wealthy at the time) would find a way to pay for it, because that was their primary concern in life.  I still elected to essentially put myself through college via an ROTC scholarship.

That's great, and I don't mean to be harsh on your choices.

Let's assume your talking about money you'd inherit when your parents die here. My view is that it's not YOUR money, it's your parents'. But because they'd be dead their concern with it doesn't really matter. At that point since you didn't earn it you don't deserve it any more than I do, so it'd be better spent on important projects like infrastructure, education, etc than arbitrarily giving it to the people who happened to be born to the income earner.

Ultimately I plan to give my money to charity when I die, as helping people truly in need will do a lot more good than leaving my children a few million dollars (let's assume I get there). I can't see why they should have it just because they are my children. Seems pretty rational to me.

Chris22

  • Magnum Stache
  • ******
  • Posts: 3770
  • Location: Chicago NW Suburbs
Re: Inheritance Tax
« Reply #37 on: September 10, 2015, 01:45:09 PM »
Quote
So you aren't OK with helping out your own kids, but you are OK with everyone else being forced to help out everyone else's kids?  And you can't at all conceive of how we might find that nuts?

Ok, I'm not going to respond to most of your post because arguing with someone who thinks government is evil is a waste of both of our time. I'm not going to change your opinion. I'll respond just to the above quoted snippet.

I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.

As for being forced to pay for everyone else, absolutely. Everyone should be able to improve their education, not just the wealthy. And the comparison to feudalism is to show the lunacy of the "Life's not fair, deal with it" argument. Someone like Chris has benefitted from his and his parent's wealth his entire life, I'm sure it's easy to make that statement. The feudal lords would have done the same. Those who benefit often think everyone else should go along with the rules that are setup in their favor.

Sure, I'll grant you that.  But the flip side is that taking money AWAY from me is not fair either. 

For the record, I was told I would be able to attend any college I could get into, and my parents (who were not particularly wealthy at the time) would find a way to pay for it, because that was their primary concern in life.  I still elected to essentially put myself through college via an ROTC scholarship.

That's great, and I don't mean to be harsh on your choices.

Let's assume your talking about money you'd inherit when your parents die here. My view is that it's not YOUR money, it's your parents'. But because they'd be dead their concern with it doesn't really matter. At that point since you didn't earn it you don't deserve it any more than I do, so it'd be better spent on important projects like infrastructure, education, etc than arbitrarily giving it to the people who happened to be born to the income earner.

Ultimately I plan to give my money to charity when I die, as helping people truly in need will do a lot more good than leaving my children a few million dollars (let's assume I get there). I can't see why they should have it just because they are my children. Seems pretty rational to me.

BUT, the people who DID earn it, my parents, get to decide where it's going, so yes, I DO deserve it more than you do, because the earners decided where to direct it.  Hell, if you made the inheritance tax 100%, my parents would just sign it all over to me before they died anyways. 

(Note: we're not talking about a ton of money here, my parents' estate will probably be give or take a million all-in, depending on how long they live, split two ways)

trailrated

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Age: 36
  • Location: Bay Area Ca
  • a smooth sea never made a skilled sailor
Re: Inheritance Tax
« Reply #38 on: September 10, 2015, 02:29:02 PM »
learning how to properly manage money is worth so much more than money itself.

Imagine an inheritance as someone giving you a giant farm. Most people will have such a surplus of food for that first year or so and  they will go crazy feasting. But what happens next year? When the person realizes too late that they do not know how to properly tend to and harvest each crop?

I guess that is where this redistribution of wealth or tax the wealthy and give it to the poor thing rubs me the wrong way. You want to give farms to people that do not know how to farm. I think teaching financial literacy to the bottom rungs will help them much more than saying "here's some money there is no more poverty now, HOORAY!" Because much like the farm, they will have nothing to show for it in a year or two.

Tyson

  • Magnum Stache
  • ******
  • Posts: 3118
  • Age: 52
  • Location: Denver, Colorado
Re: Inheritance Tax
« Reply #39 on: September 10, 2015, 04:15:53 PM »
learning how to properly manage money is worth so much more than money itself.

Imagine an inheritance as someone giving you a giant farm. Most people will have such a surplus of food for that first year or so and  they will go crazy feasting. But what happens next year? When the person realizes too late that they do not know how to properly tend to and harvest each crop?

I guess that is where this redistribution of wealth or tax the wealthy and give it to the poor thing rubs me the wrong way. You want to give farms to people that do not know how to farm. I think teaching financial literacy to the bottom rungs will help them much more than saying "here's some money there is no more poverty now, HOORAY!" Because much like the farm, they will have nothing to show for it in a year or two.

That was exactly my thought as well!

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #40 on: September 11, 2015, 07:16:48 AM »
learning how to properly manage money is worth so much more than money itself.

Imagine an inheritance as someone giving you a giant farm. Most people will have such a surplus of food for that first year or so and  they will go crazy feasting. But what happens next year? When the person realizes too late that they do not know how to properly tend to and harvest each crop?

I guess that is where this redistribution of wealth or tax the wealthy and give it to the poor thing rubs me the wrong way. You want to give farms to people that do not know how to farm. I think teaching financial literacy to the bottom rungs will help them much more than saying "here's some money there is no more poverty now, HOORAY!" Because much like the farm, they will have nothing to show for it in a year or two.

Yea.  I'd be much more inclined to go along with massively re-distributive policies if I could tell they were working (long term reduction in rates of poverty vs. slight improvents in impoverished Q.O.L.).


I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.



So you, who could absolutely pay for your kids education, or give them sufficient advice so they could pay for it themselves, would be willing to let them take financial aid if they qualified?  You who have so much, would take from those with a legitimate need?  Isn't that bizarre?  Maybe if people like you just took care of business the need based financial aid systems would be able to pay out enough to those with actual need to take care of the problem.  I know the reality is your kids probably wouldn't qualify, but there's something inconsistent with your position there.  I'm happy to be paying taxes so you can teach your kids responsibility.  You're welcome.  I'll elect to teach mine responsibility without abusing aid programs set up for the needy.

I don't think government is evil.  I think it is incompetent.  Functionally it is amoral, as it isn't a person and so cannot be moral or immoral.  Evil is a willful disregard of moral principles.  Taking money from one person and giving it to another is immoral theft if done by an individual, taxes if done by a government.  See the difference?  Spending money on something stupid is immoral wastefulness if done by an individual, appropriations if done by government.

Prior to governmental student loan programs and government run need based financial aid, it was free to attend many top notch colleges, if you got in.  The wealthy had donated enough money to support the institutions without tuition.  Part of that was the institutions rigidly controlling costs.  Particularly when it comes to college education, government created the pricing problem by subverting the perceptions of the cost, and now wants you to believe they can solve it.  When running a good school became more about advertising to get as many students as possible to bring in as many free grants/subsidized loan money, controlling costs fell by the wayside.

http://www.bestcollegesonline.com/blog/2011/08/08/a-timeline-of-college-tuition/

Oh, and then there's also this:

http://www.mrmoneymustache.com/2013/07/25/50-jobs-over-50000-without-a-degree-part-1/

and

http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/

The cost isn't keeping people from going to college.  A systematic failure to both recognize and take advantage of opportunity is keeping people from going to college.  I don't blame them for not believing in the possibility, as every liberal in the country uses every breath to convince them rich white people have doomed them to failure.

The single greatest contributor to my successful college career is that failure wasn't an option.  The very first thing I can ever remember regarding discussions of the future is that I would go to college.  We broke as shit growing up, and my parents recognized college as a potential way out, one that was controllable and viable.  I got kicked out at 18 and told come home with a degree or not at all.  That I listened to my parents, and not every single friend that told me college was 1.  too expensive, 2. too hard, and 3. not worth it, deal drugs with us instead, I'd be back with all of those people still.

No amount of money handed to me by self-hating rich person guilt would have changed my outcome one way or another, except insofar as changing how much total I spent to get here.

Rice didn't start charging tuition until like 1965 for christ's sake (had to change their charter to do that and admit non-white students).  Part of the argument at the time to charge tuition, wasn't a real need financially, it was that not charging tuition meant missing out on free money from the federal government.

It IS hard to argue with how many more people go to college now, and I'm OK with spending as much money as necessary to make sure the opportunity is out there for everyone to go, but that's what we have right now already.


acroy

  • Handlebar Stache
  • *****
  • Posts: 1697
  • Age: 46
  • Location: Dallas TX
    • SWAMI
Re: Inheritance Tax
« Reply #41 on: September 11, 2015, 08:14:17 AM »
I find it spooky so many of you (who should know better) seem to assume the Govt should have any input at all in how inheritance is handled. Big Brother must really be in your head. Makes me very nervous for the future of this country... eventually, you'll run out of other people's money to re-distribute. The folks with money will leave to protect it.

The wealth was created by the individual. It is his. It was already taxed when he earned it. He can distribute however he dam' well pleases. Anything else is flagrant double taxation and abuse of private property.

bb11

  • Pencil Stache
  • ****
  • Posts: 503
Re: Inheritance Tax
« Reply #42 on: September 11, 2015, 08:28:56 AM »
learning how to properly manage money is worth so much more than money itself.

Imagine an inheritance as someone giving you a giant farm. Most people will have such a surplus of food for that first year or so and  they will go crazy feasting. But what happens next year? When the person realizes too late that they do not know how to properly tend to and harvest each crop?

I guess that is where this redistribution of wealth or tax the wealthy and give it to the poor thing rubs me the wrong way. You want to give farms to people that do not know how to farm. I think teaching financial literacy to the bottom rungs will help them much more than saying "here's some money there is no more poverty now, HOORAY!" Because much like the farm, they will have nothing to show for it in a year or two.

Yea.  I'd be much more inclined to go along with massively re-distributive policies if I could tell they were working (long term reduction in rates of poverty vs. slight improvents in impoverished Q.O.L.).


I didn't say I wouldn't help my kids, I send I wouldn't give them much of an inheritance or $100k+ in their 529's. First of all, support and advice would be completely free and in unlimited supply. Choosing a college is a kids' first real spending choice, and it's important they can analyze things and come to a rational decision. I went to junior college (free with financial aid) and then transferred to a 4 year for my final two years (also heavily aid supported). Assuming my kids wouldn't qualify I'd be willing to pay a chunk of it as an incentive, meaning as long as they can meet grade benchmarks. The kids should have skin in the game too though, and I think them being responsible for at least half of it is fair and promotes responsible fiscal thinking. Would I be willing to pay $200k so they can go to Syracuse or Santa Clara U for 4 years? Of course not. UC's in California are only $9k a year, and CSU's are even less. Their total debt should be <$20k, especially considering they should be working some through college.



So you, who could absolutely pay for your kids education, or give them sufficient advice so they could pay for it themselves, would be willing to let them take financial aid if they qualified?  You who have so much, would take from those with a legitimate need?  Isn't that bizarre?  Maybe if people like you just took care of business the need based financial aid systems would be able to pay out enough to those with actual need to take care of the problem.  I know the reality is your kids probably wouldn't qualify, but there's something inconsistent with your position there.  I'm happy to be paying taxes so you can teach your kids responsibility.  You're welcome.  I'll elect to teach mine responsibility without abusing aid programs set up for the needy.

I don't think government is evil.  I think it is incompetent.  Functionally it is amoral, as it isn't a person and so cannot be moral or immoral.  Evil is a willful disregard of moral principles.  Taking money from one person and giving it to another is immoral theft if done by an individual, taxes if done by a government.  See the difference?  Spending money on something stupid is immoral wastefulness if done by an individual, appropriations if done by government.

Prior to governmental student loan programs and government run need based financial aid, it was free to attend many top notch colleges, if you got in.  The wealthy had donated enough money to support the institutions without tuition.  Part of that was the institutions rigidly controlling costs.  Particularly when it comes to college education, government created the pricing problem by subverting the perceptions of the cost, and now wants you to believe they can solve it.  When running a good school became more about advertising to get as many students as possible to bring in as many free grants/subsidized loan money, controlling costs fell by the wayside.

http://www.bestcollegesonline.com/blog/2011/08/08/a-timeline-of-college-tuition/

Oh, and then there's also this:

http://www.mrmoneymustache.com/2013/07/25/50-jobs-over-50000-without-a-degree-part-1/

and

http://www.mrmoneymustache.com/2013/08/05/50-jobs-over-50000-without-a-degree-part-2/

The cost isn't keeping people from going to college.  A systematic failure to both recognize and take advantage of opportunity is keeping people from going to college.  I don't blame them for not believing in the possibility, as every liberal in the country uses every breath to convince them rich white people have doomed them to failure.

The single greatest contributor to my successful college career is that failure wasn't an option.  The very first thing I can ever remember regarding discussions of the future is that I would go to college.  We broke as shit growing up, and my parents recognized college as a potential way out, one that was controllable and viable.  I got kicked out at 18 and told come home with a degree or not at all.  That I listened to my parents, and not every single friend that told me college was 1.  too expensive, 2. too hard, and 3. not worth it, deal drugs with us instead, I'd be back with all of those people still.

No amount of money handed to me by self-hating rich person guilt would have changed my outcome one way or another, except insofar as changing how much total I spent to get here.

Rice didn't start charging tuition until like 1965 for christ's sake (had to change their charter to do that and admit non-white students).  Part of the argument at the time to charge tuition, wasn't a real need financially, it was that not charging tuition meant missing out on free money from the federal government.

It IS hard to argue with how many more people go to college now, and I'm OK with spending as much money as necessary to make sure the opportunity is out there for everyone to go, but that's what we have right now already.

Let's try sticking to the subject rather than making incorrect assumptions about the things I would do. This thread is not about college tuition.

Quote
I find it spooky so many of you (who should know better) seem to assume the Govt should have any input at all in how inheritance is handled.

Do you find it spooky that government decides how income tax is handled? Who else would determine taxation?

Quote
eventually, you'll run out of other people's money to re-distribute.

It's not really a matter of redistribution. I'd rather tax unearned income (I by the nature of an inheritance won't earn any of the inheritances I receive) than income you've worked for. At the very least I'd like both types of income to be taxed at the same rate, whereas currently most income received through inheritance goes completely untaxed in the US.

Quote
He can distribute however he dam' well pleases.

Well, no. That's what we're arguing against.

Quote
Anything else is flagrant double taxation and abuse of private property.

Sales tax is flagrant double taxation. Property tax is flagrant double taxation. This is a really poor argument. A dead person no longer owns anything, and it's not them being taxed. It is the heir who is receiving new income (the inheritance) that they have not been taxed on. If I own a business and pay you a $100k salary should you be exempt from taxes because I already paid taxes on the $100k when I earned it? Taxes are paid for each wealth transfer, not once and then never again.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #43 on: September 11, 2015, 09:22:25 AM »
I think a big part of the income inequality perception problem is the failure to understand the fundamentals of valuation, and confusing that with "shit you can buy."  If you handed every man, woman, and child in the world $28,000 you would not eliminate poverty.  You might provide relief temporarily, for some things, in some places, but poverty is not a function solely of income.  Income is how it is measured, it is not what it is.

It's like determining someone's health by measuring their current temperature.  It's a useful data point, but doesn't tell the whole story.


It is not the whole story, no, it is also a function of wealth.  Yes, "money" is just an abstract placeholder for "value", but given that it is, I don't see how you can argue that wealth and income are not the sole defining factors of "poverty".  If you have no land, and then you get lots of money, and buy land, now you are no longer landless.
Then you can start growing your own food, being productive rather than relying on government or charity.

Quote
In a post 100% inheritance tax world, we'd all be out trying to get poor people to give us a job.  To date, I've never gotten a job from a poor person.


That doesn't make any sense.  At all.  First, how is "jobs" even relevant?  If income doesn't measure poverty, than jobs sure as heck doesn't.  If you work in a factory in a foreign country for 5 cents a day, you have a job, yet you are never going to get out of poverty. 
Second, what is the connection between inheritance and jobs?  Are you saying the only people to ever "create" jobs are people who inherited their fortune?


Quote
I'll use Elon Musk as an example.  He created a thing, and made a ton of money.  He didn't sit on that money, he went and created more companies.  So his original company is providing jobs under its new owners, and his new companies are providing jobs, and he is continuously out there doing that.  He's spending his money on goals, and in the process creating jobs.  Damn near 100% of his earnings are going to job creation, helping out others.  Compare that to me, where almost none of my earnings go to job creation (any more than any other consumption would), which one of us should be trusted to hold on to that money?


Your own example is the opposite of your point.  Musk (supposedly) "created" jobs.  He didn't inherit his fortune.
Now those jobs exist.  No matter who takes over when he dies, those jobs already exist, and no new jobs get created.
I wrote a whole blog post on the catch phrase "A poor person never gave me a job" ...


Quote
Now when (if?) he dies, the government got 100% of his wealth, what would that look like?  Would spaceX become part of NASA?  Or would the government sell spaceX to the highest bidder?
well, yeah.  The highest bidder, obviously.  That they can afford gives at least some minimal evidence that they can manage money and are interested in that particular company.  Similar to how companies like get their seed money in the first place.  Then the investors select who they think is the most qualified executive to run it.


Quote
Musk 2.0 (his children/clones/however musks procreate) might not be the best custodian of that fortune, but once it's in the hands of government (particularly the U.S. government) it'll be gone, instantly.
Might not be?  There is no reason at all to think they would be the best custodians.  But why is it "gone instantly" otherwise?
May as well just give it to any randomly selected person on the street.



Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #44 on: September 11, 2015, 09:33:38 AM »
I don't understand why so many people are caught up in who DESERVES something and why they think they have a say in who DESERVES what. 


Because otherwise why don't we just randomly take some people's land, tax some at 90% and tax others at 2% based solely on a lottery, mandate 60 hour work weeks for some but overtime after 2 hours for other, hand out get of jail free cards to every 5th person on the street.
We have a constitution that says everyone should be treated equally, why would we have a government and laws at all if we didn't want to make things at least reasonably fair between people?


Quote
Taxes are generally based (mostly) on incentivizing activities.  You earn money going to work.  That money is taxed.  Then, you can either A) spend/give the money, B) stick it under your mattress, C) save it, or D) invest it.  People get all angry when D) is selected and the tax rate is lower on D) than when it's earned (but higher than every other choice, save for giving large sums) but that's because we WANT people to invest it.  That is GOOD for us.  Yeah, you're angry Paris Hilton pays 15% on her capital gains and you pay 25% marginal on your salary, but tough titties, your jealousy is irrelevant.  Paris's investment is good for all of us, so you're being butthurt that she got a better deal is meaningless (to say nothing of the fact that generally raising the cap gains tax lowers total receipts).


Thing is, going to work and earning money by doing productive labor is even more good for society.  So, if your theory is correct, why would we disincentivize working, relative to investing?  Investing does not directly increase GDP.  Working does.


Also, it is debatable how much investing really does help "everyone".  Basic economic theory suggests that any excess profit is an indication of market inefficiencies.  When price sits where supply and demand curves meet, there's no money left over to pay dividends.

What if instead of valuing growth for the sake of growth, our indicator of a good economy was stability, employment, and lack of inflation?  Investment helps growth, but it doesn't necessarily cause any intrinsic good, especially when most or all of the value of the growth goes to the investor's themselves (as evidenced by the lack of corresponding rise in average wages to the growth of GDP over the past few decades)
 

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #45 on: September 11, 2015, 09:38:03 AM »
Since we're all smart enough to see who is in power, why do a lot of you want to redistribute wealth with an inheritance tax instead of BECOMING the landed gentry?  If you save enough money to retire early, you could probably save enough money so your descendants never have to worry about money again.  Your estate could last hundreds of years as you start a political dynasty like the Medici family.  We've got the resources to think big, and our benevolence and wealth can save the world if you think other's greed, indifference, and wealth can destroy it.


Would you want to legalize slavery, because you personally would be a generous and benevolent master?
How about legalizing murder because you personally would be fair and just in your vigilante execution?
Why not scrap democracy in favor of a totalitarian monarchy, where you are the ruler of everything?


Even if you really are benevolent, I can see problems with those scenarios.
If something is generally wrong, you don't get to make special exceptions for yourself.


For now though, working within the system we already have, I AM working on becoming landed gentry, even while I argue against it's existence.  Although my children will definitely not be inheriting anything from me.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #46 on: September 11, 2015, 09:45:27 AM »
I don't understand what's "fair" about you demanding that we take money away from people who were given it by the people who earned it, because you say so.  If you earn the money legally, you should get to determine where it goes, both while alive, and when you pass.  Period.  The end.  No one else has a right to it, no matter what you, a third party, thinks others "deserve" or what is "fair."  Fuck fair.  Life's not fair.  That's not a license to steal.


There has never been any expectation that you can do whatever you want with your money if you earn it legally.
You can't hire a hitman.  You can't buy a slave.  You can't donate it to the North Korean government.
You have to pay taxes.
You have to pay your creditors.
You have to pay for your children's living expenses.
If you lose a lawsuit, you have to pay that person.
In fact, the government can actually go into your bank account and take your money if you refuse to give it up voluntarily.
So there is no basic legal "right" to it.


And when you are dead?  Your dead, dude.  You have NO rights.  Sure, it would be nice if people write the obituary you wanted, or hold the funeral the way you wanted.  It would be nice if the kids keep the family home in the home instead of selling it and dividing up the money.  But you know what?  Too bad for you, dead people have no rights, and no one is under any obligation to do what you want anymore.
What are you going to do, haunt the living who disobey your dying will?
Hire some sort of ghost lawyer?


Life isn't fair - for dead people.  Because they don't have any anymore.

Bakari

  • Handlebar Stache
  • *****
  • Posts: 1799
  • Age: 44
  • Location: Oakland, CA
  • Veggie Powered Handyman
    • The Flamboyant Introvert
Re: Inheritance Tax
« Reply #47 on: September 11, 2015, 09:48:01 AM »
The problem with flat re-distribution from one person (the rich) to another (the poor) is that the poor people are often spendypants and will promptly waste those earnings.  A far better use of the funds would be to invest in infrastructure that would make poor people better/wiser with money.  We should have dedicated finance courses/subjects from grade school all the way through grad school and make them a requirement for everyone.  To make it fully mustachian we should also have many courses on frugality and budgeting.  That would be much more helpful than just giving people money.


Who said anything about giving people money?
I was suggesting using the proceeds from stiff inheritance and gifts taxes to lower or reduce some combination of either the debt and/or income taxes.
People who have jobs and work have already demonstrated their ability to earn money.


I'm all for mandatory finance classes in high school though


People keep repeating the same stuff about "giving poor people money" and "redistribution"
You all realize that taxes exist, right?
That's not a new concept we are introducing.
If you are arguing against the collection of any taxes at all, you have to be ok with their being no military, no public roads, no guaranteed currency  (which means almost all forms of commerce and trade become impossible), no courts or jails (which in practice means no law -- just a free-for-all anarchy), no land ownership (except what you can personally defend with your shotgun), minimal technology growth, and none that requires distribution networks (running water, electricity, gas, sewage)
In other words, you pretty much want to return to hunter gather tribes.
Which, ok, I guess I can see some positives there.
But I don't really believe that's what any of you want.

You are just repeating lines and catch phrases you've heard on talk radio or 24hour news commentators, and aren't actually thinking about what they mean.

No one has at any point suggested taking all the proceeds of a inheritance tax and using it to gigantically expand welfare.

Hell, if we worked to level out the playing field as much as possible for each new generation (free and mandatory education from preschool all the way to university,  90% or more gift and inheritance tax after the first $5000 or so, and a ban on owning more than one plot of residential land - the one you live in) then I would be fine with ending welfare completely - because in that world the people who are still poor clearly just made a series of really stupid personal decisions, and we, society, have already given them every advantage we could.

Whatever you think of our government in particular, most people acknowledge that we need to have some system of organizing such a large and complex society.  That has to be funded somehow.  Whatever the source, that means taking value from the citizens who it benefits (well, I guess you could fund everything by war spoils, but in the age of nukes, that's probably a bad idea)

The government budget is:
33% Social security (mandatory retirement plan - the money goes to the same workers that paid into it)
27% medicare (basically a part of that same plan - its paid out to people who paid into it)
Those two are circular, and ought to be considered separate, though in practice the government "borrows" from them to close the deficit
20% military (including vet benefits)
6% interest payments on our debt
4% farm subsidies
4% roads and other transportation
2.5% education
1.5% housing and welfare.

There's what all of you are complaining about.  That 1.5% at the very bottom of the list.  61 Billion dollars.
We are talking about around 28 trillion dollars of concentrated wealth. 
That's 28,000 billion, versus that 61 billion of handouts.

That money would not be going to hand outs to the poor.  That money would be going to balancing America's budget, growing our military, funding the Social Security gap, reducing taxes (on living people)
« Last Edit: September 11, 2015, 10:20:40 AM by Bakari »

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #48 on: September 11, 2015, 10:44:08 AM »

It is not the whole story, no, it is also a function of wealth.  Yes, "money" is just an abstract placeholder for "value", but given that it is, I don't see how you can argue that wealth and income are not the sole defining factors of "poverty".  If you have no land, and then you get lots of money, and buy land, now you are no longer landless.
Then you can start growing your own food, being productive rather than relying on government or charity.


You misunderstand my point.  Go into any environment with substantial numbers living in poverty and hand them cash and you will not fix the problem.  Give them land and resources and everything they need to be wealthy, but stick them with corrupt governments, no institutional support structures, and no culture of both the protection of property and the concepts of self-reliance and wealth management, and you're right back to where you started, if not right away, within a few years, at most a generation.

It requires an understanding of the concept of capital.  This is something the government fundamentally misunderstands.  Every cent you hand them will get spent, the overwhelming majority will get spent on non-infrastructure, non-capital expenses.

The inheritance tax is an exercise in converting Capital into Money, which is stupid.  You think you're getting the area under the curve, but all you're doing is reducing the slope.

Quote
That doesn't make any sense.  At all.  First, how is "jobs" even relevant?  If income doesn't measure poverty, than jobs sure as heck doesn't.  If you work in a factory in a foreign country for 5 cents a day, you have a job, yet you are never going to get out of poverty. 
Second, what is the connection between inheritance and jobs?  Are you saying the only people to ever "create" jobs are people who inherited their fortune?

A source of income is one way to begin the process of taking care of yourself.  It is not the only way.  Most jobs in this country are not created by people who inherit their fortunes.  But quite a few are, a staggering number of them, I want to say around 45% of non-government jobs.  My point is that the fortune exists, and it is creating jobs.  It isn't being spent, it is serving as the capital which supports jobs.  It's the machine you operate, the building you work in, the credit against which additional capital is borrowed to take a chance hiring you, in the hopes that you'll end up revenue-positive.  It does that today, and it does that tomorrow.  If the government gets it, it is spent today and doesn't exist tomorrow.

And if a rule change is implemented that drastically reduces the levels of those fortunes, the overall wealth of the country will decline, as there won't be investors around who can buy those means of production anymore.  We just took away their fortunes and spent it.  So instead of getting 2 billion dollars for space X, the gov't gets 40 million, or some other lower price, because there isn't another billionaire out there to pick it up.  The "value" of these fortunes is incredibly misleading.  The liquid value is far far lower.

It's like, if you had to sell your house right now, and there were no buyers who could afford it, you have to lower the price?  That's what I was talking about.  Upon death it has to be sold to pay the tax bill, so you get what you get for it, and it's going to be way less, particularly the longer this goes on, as overall wealth declines.

Quote
Your own example is the opposite of your point.  Musk (supposedly) "created" jobs.  He didn't inherit his fortune.
Now those jobs exist.  No matter who takes over when he dies, those jobs already exist, and no new jobs get created.
I wrote a whole blog post on the catch phrase "A poor person never gave me a job" ...

No, Musk is the perfect example because he didn't inherit his wealth.  He did neat things that contributed to the world and continues to do so.  He didn't have to inherit his wealth, but he's done far greater things with the money he's been given than the government has during that time.  If someone had handed Musk 2 trillion dollars a year for the last 10 years he wouldn't have a net worth of negative 40 trillion, he'd have turned it into 90 trillion, solved the energy crisis, fixed social security and ensured world peace for all time.  There's no reason to think that what he wants to happen to his wealth upon death isn't the best thing.  It might not be, and he's free to stipulate that it go to the government, but the idea that the government knows best what to do with that money is ignoring the facts.  And one of the foundational premises of the income inequality idea is that to be rich, you have to inherit rich, and Musk works as a guy who didn't do that.  Instead of worrying about what Musklings will do with the Musk fortune, get as many people as you can to go out and become Musks themselves.  Start a company, improve the civilization.  Your progeny will benefit from it.

Quote
well, yeah.  The highest bidder, obviously.  That they can afford gives at least some minimal evidence that they can manage money and are interested in that particular company.  Similar to how companies like get their seed money in the first place.  Then the investors select who they think is the most qualified executive to run it.

The premise of such a large inheritance tax is that it contributes to inequality.  Ergo, most of the people who do buy and take over companies are the wealthy who inherited their wealth.  Within a generation this massive wealth would be totally wiped out by such a large tax.  Everybody in the country would have gotten an extra 50k in services, and now the majority of the wealth of the world is gone.  So when it comes time to sell...there's no buyers.  Certainly the buyers that exist lack the same means, and so the "value" of the "billion dollar fortune" that was based on value of a company, now nets far less in taxes than you were hoping.

Quote
Might not be?  There is no reason at all to think they would be the best custodians.  But why is it "gone instantly" otherwise?
May as well just give it to any randomly selected person on the street.

I'd favor randomly assigning inheritances to individuals over giving it to the government.  At least with a random person there's a chance it will be preserved as capital.  The false choice is false.  The government is a shitty custodian.  Descendants don't have a stellar track record, particularly second or third generation, but there are fortunes out there hundreds of years old whose families are doing a fine job not being 1. massive assholes and 2. squandering their wealth on shit.


Thing is, going to work and earning money by doing productive labor is even more good for society.  So, if your theory is correct, why would we disincentivize working, relative to investing?  Investing does not directly increase GDP.  Working does.


Also, it is debatable how much investing really does help "everyone".  Basic economic theory suggests that any excess profit is an indication of market inefficiencies.  When price sits where supply and demand curves meet, there's no money left over to pay dividends.


I feel like I'm being trolled.

Basic economic theory suggests nothing of the sort!  Profits do not represent some sort of inefficiency!  Profit, mutually profitable endeavors, are the whole point!  I make money selling you apples, you get apples!  My profit is in the money yours is in the apples.

Investing and working are both necessary to increase "GDP" whatever the hell you think that is.  This is why communism failed in the soviet union.  They failed to understand that prices weren't exploitation, they were communication.

You need labor, AND you need capital.  A 100% tax on either will not work.  Taxes on capital are far worse for long term economic growth and societal advancement, due to the illiquid nature of capital.

TheOldestYoungMan

  • Pencil Stache
  • ****
  • Posts: 778
Re: Inheritance Tax
« Reply #49 on: September 11, 2015, 11:53:11 AM »
I read the post
http://biodieselhauling.blogspot.com/2012/06/poor-person-never-gave-me-job.html

And it's a good one.  Of course I don't agree on most of it,  I'm certainly glad you're out there makin' the case for the other side.

You've got a half-decent unsupported rhetorical argument there for "only a uber rich person ever gave me a job" but that's not actually what was said.