How much is too much?

[friedmmj]

I feel like it would be fairly common for a mustachian to end up with an excessive estate.  When I calculate a 4% WR (not including pensions and SS, which would cover most of our expenses based on today's) and a 7% return over 30 years, the amount blows my mind. Not a certainty, sure, but it seems likely to happen to some people on this forum.

True.  What also makes me believe many will wind up with far more money than they started ER with is how little income most of us plan on earning post-retirement (and very often we model assuming this model will be $0).  Every single person I've know IRL who has retired early winds up making a non-trivial amount of money in "retirement", often by accident, including MMM.  Some people I know have made more in retirement because people keep begging them to take their money in exchange for doing what they'd probably do for free anyway. My father doesn't hit this high-water mark, but he does consult 2-3x/month for fun, and is paid enough to cover their entire discretionary budget.

I keep hearing about post retirement consulting for “fun”.  I really can’t imagine what kind of consulting gig would actually be fun.  I suppose some consulting in my field of expertise might be “tolerable” if it was limited to attending meetings and offering my opinions and feedback without any requirements for writing reports, building models or PowerPoint decks.  I hope to never do any of those activities ever again. 

[jeroly]

I've really been working lately on not judging others, so I read the question from that lens.  I'm not sure what the point is of examining this, other than to judge others.

Also, friends of my parents have a lot of money.  If I had to guess, I'd say that their NW is probably more than your $10m threshold.  They have to adult children. 

One of their sons is pretty significantly disabled.  He lives (thanks in part to their money) in a community that is semi-independent living.  I don't know the details, but I believe he has his own home but is provided with services, check-ins, and resources as needed.  He can hold basic jobs (bagger at a grocery store, that sort of thing).  They also live in a very HCOL area, but that is where they worked, and now it is where both of their children and their grandchildren live.  I'm sure they could find similar services for their son (though perhaps not in a LCOL area as this seems pretty specialized and unlikely to be in smaller communities), but that would mean moving away from their other child and grandchildren.  Is it excessive for them to want to leave enough money that he is taken care of for life and never becomes a financial burden on his sibling, and so that the sibling can use money to--to some extent--relieve himself of some of the responsibilites so he can care for his own family (spouse and 2 kids)? 

Oh, and the husband in the family has come down with a devastating, debilitating disease.  (Similar to ALS)  His mody is slowly failing him.  As it turns out, some of their many dollars are going to go toward caring for him: bringing in a daily nurse to get him in and out of the shower, to the bathroom, etc.  Of course they didn't know this would happen and didn't specifically plan for it, but they did plan to be able to cover whatever might come up--more than most people do--because they wanted to be dead certain their son was cared for after they were gone.

So, is their $10m+ unreasonable?  Are they "FAT pigs"?  Not in my book.

You never know what someone's life looks like, especially at a quick glance.  Rather than spending time deciding what is unreasonable for other people, spend it figuring out what is most reasonable for you. To my cousin who makes >$15k/year ad is pretty happy, I suspect most people here would have numbers that look pretty excessive to her.

You have named catastrophic health situations that would eat up $10 million pretty fast if that couple you’re talking about are in their 50s. No $10 million it’s not excessive at all for an ALS type of disease as well as a child who needs lifelong care.

I'm curious about this as someone with a serious and lifelong disease that's expensive to treat, and several immediate family with serious illnesses that are expensive to treat.

This is the reason I intend to have an extra 1-2M saved, because I can see needing tens of thousands of extra medical costs. But I live in Canada, is it really that much more expensive in the US to treat these types of conditions? Such that one couldn't live off of the 400K/yr that 10M would produce?

If that's true then how does anyone in the US with a serious chronic condition survive?

Hi!  OP here again.

The US has a hodgepodge of insurance coverages and there are people who fall through the cracks.  There are many, many people who become bankrupt because of inability to pay medical bills, and many of those actually have health insurance.

That having been said, most people are covered for conditions like ALS (including services like home health aides up to some set number of hours a week, 35/wk IIRC) through national programs like social security disability, Medicare and Medicaid, even if for some reason they are not otherwise covered.

US government programs make a distinction between 'chronic conditions' like diabetes and obesity, and 'disabilities,' and ALS falls under the latter; disability coverage includes some income as well as healthcare.

My mother had a condition similar to ALS called progressive supranuclear palsy (PSP) for the last three years of her life.
Her medical costs were largely covered by Medicare as she was over 65.  If she had needed full-time care (well she did, but my father had decided to be her home health aide), my parents would have largely needed to pay for it themselves or she would have needed to go to a nursing home.

[Bloop Bloop Reloaded]

Why wait until a person dies?  Why not tax assets instead of earnings, and at increasingly higher percentages based on NW?  Wouldn’t that accomplish the same thing, albeit far more quickly?

Because wealth is there to be used by the earner of the wealth. An inheritance is cheating. Your own money is not. It's part of the game.

[Metalcat]

I've really been working lately on not judging others, so I read the question from that lens.  I'm not sure what the point is of examining this, other than to judge others.

Also, friends of my parents have a lot of money.  If I had to guess, I'd say that their NW is probably more than your $10m threshold.  They have to adult children. 

One of their sons is pretty significantly disabled.  He lives (thanks in part to their money) in a community that is semi-independent living.  I don't know the details, but I believe he has his own home but is provided with services, check-ins, and resources as needed.  He can hold basic jobs (bagger at a grocery store, that sort of thing).  They also live in a very HCOL area, but that is where they worked, and now it is where both of their children and their grandchildren live.  I'm sure they could find similar services for their son (though perhaps not in a LCOL area as this seems pretty specialized and unlikely to be in smaller communities), but that would mean moving away from their other child and grandchildren.  Is it excessive for them to want to leave enough money that he is taken care of for life and never becomes a financial burden on his sibling, and so that the sibling can use money to--to some extent--relieve himself of some of the responsibilites so he can care for his own family (spouse and 2 kids)? 

Oh, and the husband in the family has come down with a devastating, debilitating disease.  (Similar to ALS)  His mody is slowly failing him.  As it turns out, some of their many dollars are going to go toward caring for him: bringing in a daily nurse to get him in and out of the shower, to the bathroom, etc.  Of course they didn't know this would happen and didn't specifically plan for it, but they did plan to be able to cover whatever might come up--more than most people do--because they wanted to be dead certain their son was cared for after they were gone.

So, is their $10m+ unreasonable?  Are they "FAT pigs"?  Not in my book.

You never know what someone's life looks like, especially at a quick glance.  Rather than spending time deciding what is unreasonable for other people, spend it figuring out what is most reasonable for you. To my cousin who makes >$15k/year ad is pretty happy, I suspect most people here would have numbers that look pretty excessive to her.

You have named catastrophic health situations that would eat up $10 million pretty fast if that couple you’re talking about are in their 50s. No $10 million it’s not excessive at all for an ALS type of disease as well as a child who needs lifelong care.

I'm curious about this as someone with a serious and lifelong disease that's expensive to treat, and several immediate family with serious illnesses that are expensive to treat.

This is the reason I intend to have an extra 1-2M saved, because I can see needing tens of thousands of extra medical costs. But I live in Canada, is it really that much more expensive in the US to treat these types of conditions? Such that one couldn't live off of the 400K/yr that 10M would produce?

If that's true then how does anyone in the US with a serious chronic condition survive?

It’s not so much treatment of the health condition, it’s maintaining a living situation that is high-quality for adults who need some ( or lots of ) custodial care..

What are all the social services and living support services available to Canadians for custodial care? What is the nursing home situation in Canada? Are those free?

We used to have a poster on here who talked extensively about her own disability and her child’s disability and it seems to me she chased piece meal services which varied from province to province. She seldom had anything good to say about them.

No, those services are definitely not free in Canada, but they don't cost hundreds of thousands a year in my experience. They certainly would be well covered by a 10M stash throwing off 400K/yr.

[nereo]

Why wait until a person dies?  Why not tax assets instead of earnings, and at increasingly higher percentages based on NW?  Wouldn’t that accomplish the same thing, albeit far more quickly?

Because wealth is there to be used by the earner of the wealth. An inheritance is cheating. Your own money is not. It's part of the game.

How is it ‘cheating’ any more than spending money on your family while you are alive?  In both scenarios the ‘wealth earner’ isn’t spending money on him or herself.

[GuitarStv]

We can't eliminate all disparity in upbringing and genes but we can eliminate the financial ones if we so choose. That way society moves closer to a true meritocracy where each child genuinely has the opportunity to succeed.

I'd like a society where no child can say that he or she didn't have access to a good education, a modicum of private tuition, free meals (for poor kids), access to a good school and sporting facilities, and so on. Tax estates and we can get that closer to a reality.

Well strengthening meritocracy is a worthwhile objective.

However, I'm a 50 something professional engineer with a good career.   Any inheritance will come too late to have much effect on my development as a person.    I'm already FI, so I don't need the money and I've demonstrated the basic discipline not to spend a windfall on stupid shit.      So my parent's estate will have nothing to do with my success in life.    Their outlook and work ethic certainly did, but there's no way to tax outlook and work ethic.

Tell us, if you were to receive a 1M AUD inheritance, would you donate 900K of it to the government in order to live up to your ideals?

Yeah, for the vast majority of people, it's not inheritance that gives people privilege and advantage in terms of success in the world.

44% of billionaires are not self-made (https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-majority-of-worlds-billionaires-self-made.html#:~:text=That's%20according%20to%20the%20Billionaire,13.3%25%20inherited%20their%20wealth%20entirely.).  Of that group 30% did at least some work, but about 13% did nothing at all to earn their wealth.  Seems like inheritance is giving a surprising number of rich people both privilege and advantage in terms of success in the world.

[DadJokes]

I'm fine with a steep inheritance tax for amounts over $50 million or so (and certainly willing to accept higher/lower) and taxing gifts as well to prevent circumventing the inheritance tax. While I like the idea of a wealth tax, implementing one is a challenge, since it would require business owners to sell part of their ownership interest.

As for myself, I plan to stop accumulating by the time I get to $2 million in invested assets (in 2020 dollars).

[mathlete]

I think all inheritance should be taxed at least as ordinary income. It's so weird to me that we tax labor at higher rates than capital investment and inheritance.

[ericrugiero]

Regarding the original post, anything above about $8-10M seems unneeded unless you are just spending lots of money on things in pursuit of happiness. (yacht's, planes, supercars, etc)

But, I'm not advocating for a wealth tax or a majorly stepped up inheritance tax.  The person who earned the money should have a lot of say in how it's used.  The current US inheritance tax system makes sense to me (no tax up to a pretty healthy level (~$11M/couple), taxes are significant (about 40%) if you go much above that level).  The problem I see is that nobody pays those tax rates.  A $1 Billion estate is almost always going to go into a trust or some other scheme which DRAMATICALLY lowers the tax rate.  They can afford the best lawyers and accountants with the $400 Million they stand to avoid in taxes. 

If it was up to me, I would simplify the whole system.  Set inheritance and income taxes at a reasonable level (at or below where they are now).  There isn't any need to raise them, just eliminate the loopholes.  The ultra rich never pay the stated tax rates because there are so many loopholes and they hire the best people to exploit them. 

[ericrugiero]

Seems to me that there can't be any kind of "one size fits all" answer to this question.  Especially because not everybody here is operating on the premise of the 4% rule.  I for one have zero money in the stock market.  My investments are/were in Notes Receivable and RE.  With the run-up in real estate prices, my net worth is approaching a doubling from when I ERd.  But as the rents I'm collecting have gone up just a few hundred dollars, the net worth vs income don't scale together.  So how meaningful is it for me or somebody to say "my NW is $3 million", if you don't also know that my tax return says I made $35k in income last year?

That's a good point but tax return income isn't the whole story.  You may have been depreciating over $100,000 (on $3M worth of real estate) which means your income was really ~$140,000.  In that case, the income would be more than someone with $3M in the stock market taking out 4%/yr.  If you aren't depreciating a bunch and you are only making $35K on $3M then you should sell a bunch. 

[soccerluvof4]

My spouse and I are DINKS, 46 and 51 and worth 2.7m, none of which is inherited. I would be very resentful if the government started wealth taxing it because it was deemed excessive, after being pushed by society and the tax code to save as much as possible so as to have a secure retirement. It would be kinda perverse to have a tax code that both penalizes me now for touching my money too early, yet also has a wealth tax on it because I accumulated to much. Most of our money is in taxed advantaged accounts.I can’t cash flow 100k a year without incurring tax penalties for many more years.


Sent from my iPhone using Tapatalk

I would agree with you 100% on this!

[Metalcat]

We can't eliminate all disparity in upbringing and genes but we can eliminate the financial ones if we so choose. That way society moves closer to a true meritocracy where each child genuinely has the opportunity to succeed.

I'd like a society where no child can say that he or she didn't have access to a good education, a modicum of private tuition, free meals (for poor kids), access to a good school and sporting facilities, and so on. Tax estates and we can get that closer to a reality.

Well strengthening meritocracy is a worthwhile objective.

However, I'm a 50 something professional engineer with a good career.   Any inheritance will come too late to have much effect on my development as a person.    I'm already FI, so I don't need the money and I've demonstrated the basic discipline not to spend a windfall on stupid shit.      So my parent's estate will have nothing to do with my success in life.    Their outlook and work ethic certainly did, but there's no way to tax outlook and work ethic.

Tell us, if you were to receive a 1M AUD inheritance, would you donate 900K of it to the government in order to live up to your ideals?

Yeah, for the vast majority of people, it's not inheritance that gives people privilege and advantage in terms of success in the world.

44% of billionaires are not self-made (https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-majority-of-worlds-billionaires-self-made.html#:~:text=That's%20according%20to%20the%20Billionaire,13.3%25%20inherited%20their%20wealth%20entirely.).  Of that group 30% did at least some work, but about 13% did nothing at all to earn their wealth.  Seems like inheritance is giving a surprising number of rich people both privilege and advantage in terms of success in the world.

I never argued that, I said the vast majority of people, not billionaires. Billionaires are the serious minority of people whom an inheritance law would affect.

[Gronnie]

We can't eliminate all disparity in upbringing and genes but we can eliminate the financial ones if we so choose. That way society moves closer to a true meritocracy where each child genuinely has the opportunity to succeed.

I'd like a society where no child can say that he or she didn't have access to a good education, a modicum of private tuition, free meals (for poor kids), access to a good school and sporting facilities, and so on. Tax estates and we can get that closer to a reality.

Well strengthening meritocracy is a worthwhile objective.

However, I'm a 50 something professional engineer with a good career.   Any inheritance will come too late to have much effect on my development as a person.    I'm already FI, so I don't need the money and I've demonstrated the basic discipline not to spend a windfall on stupid shit.      So my parent's estate will have nothing to do with my success in life.    Their outlook and work ethic certainly did, but there's no way to tax outlook and work ethic.

Tell us, if you were to receive a 1M AUD inheritance, would you donate 900K of it to the government in order to live up to your ideals?

Yeah, for the vast majority of people, it's not inheritance that gives people privilege and advantage in terms of success in the world.

44% of billionaires are not self-made (https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-majority-of-worlds-billionaires-self-made.html#:~:text=That's%20according%20to%20the%20Billionaire,13.3%25%20inherited%20their%20wealth%20entirely.).  Of that group 30% did at least some work, but about 13% did nothing at all to earn their wealth.  Seems like inheritance is giving a surprising number of rich people both privilege and advantage in terms of success in the world.

And?

[Bloop Bloop Reloaded]

Why wait until a person dies?  Why not tax assets instead of earnings, and at increasingly higher percentages based on NW?  Wouldn’t that accomplish the same thing, albeit far more quickly?

Because wealth is there to be used by the earner of the wealth. An inheritance is cheating. Your own money is not. It's part of the game.

How is it ‘cheating’ any more than spending money on your family while you are alive?  In both scenarios the ‘wealth earner’ isn’t spending money on him or herself.

It's a lot easier (and more effective) to give $5m to your heir than to spend $5m on your heir while you're still alive. Putting aside gifts (which would be taxed the same), how do you even spend that money? You could, I suppose, spend it on lavish holidays and other experiences for your heir - which, while a 'perk' in a sense, doesn't imbue your heir with a massive playing field advantage the same way as a huge bank account does. 

But really, you're playing the what-about game, instead of accepting that an inheritance is the single most direct and most unfair form of wealth transfer (not that there aren't any other wealth transfers). If we could just normalise the concept that inheritance= cheating and anti-meritocratic, that would do A LOT to improve equality of opportunity in our society. Imagine a society where the majority of people were given proper opportunities for childhood education and social development, due to the extra services that could be paid for by an estate tax.

A wealth tax is not the same thing as an estate tax. It's unnecessary to have both. A wealth tax simply penalises the successful; an estate tax ensures that success can't be directly transferred from one generation to the other.

[GuitarStv]

We can't eliminate all disparity in upbringing and genes but we can eliminate the financial ones if we so choose. That way society moves closer to a true meritocracy where each child genuinely has the opportunity to succeed.

I'd like a society where no child can say that he or she didn't have access to a good education, a modicum of private tuition, free meals (for poor kids), access to a good school and sporting facilities, and so on. Tax estates and we can get that closer to a reality.

Well strengthening meritocracy is a worthwhile objective.

However, I'm a 50 something professional engineer with a good career.   Any inheritance will come too late to have much effect on my development as a person.    I'm already FI, so I don't need the money and I've demonstrated the basic discipline not to spend a windfall on stupid shit.      So my parent's estate will have nothing to do with my success in life.    Their outlook and work ethic certainly did, but there's no way to tax outlook and work ethic.

Tell us, if you were to receive a 1M AUD inheritance, would you donate 900K of it to the government in order to live up to your ideals?

Yeah, for the vast majority of people, it's not inheritance that gives people privilege and advantage in terms of success in the world.

44% of billionaires are not self-made (https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-majority-of-worlds-billionaires-self-made.html#:~:text=That's%20according%20to%20the%20Billionaire,13.3%25%20inherited%20their%20wealth%20entirely.).  Of that group 30% did at least some work, but about 13% did nothing at all to earn their wealth.  Seems like inheritance is giving a surprising number of rich people both privilege and advantage in terms of success in the world.

And?

Anyone interested in meritocracy should be thoroughly disgusted by those numbers.  If we've got a system set up that allows a person to simply be born into the lap of luxury and never need to do an honest day's work, we have a failing in our system.  That scenario is of no benefit to society as a whole and should not be tolerated by people.

[Bloop Bloop Reloaded]

We can't eliminate all disparity in upbringing and genes but we can eliminate the financial ones if we so choose. That way society moves closer to a true meritocracy where each child genuinely has the opportunity to succeed.

I'd like a society where no child can say that he or she didn't have access to a good education, a modicum of private tuition, free meals (for poor kids), access to a good school and sporting facilities, and so on. Tax estates and we can get that closer to a reality.

Well strengthening meritocracy is a worthwhile objective.

However, I'm a 50 something professional engineer with a good career.   Any inheritance will come too late to have much effect on my development as a person.    I'm already FI, so I don't need the money and I've demonstrated the basic discipline not to spend a windfall on stupid shit.      So my parent's estate will have nothing to do with my success in life.    Their outlook and work ethic certainly did, but there's no way to tax outlook and work ethic.

Tell us, if you were to receive a 1M AUD inheritance, would you donate 900K of it to the government in order to live up to your ideals?

Yeah, for the vast majority of people, it's not inheritance that gives people privilege and advantage in terms of success in the world.

44% of billionaires are not self-made (https://www.cnbc.com/2019/05/10/wealthx-billionaire-census-majority-of-worlds-billionaires-self-made.html#:~:text=That's%20according%20to%20the%20Billionaire,13.3%25%20inherited%20their%20wealth%20entirely.).  Of that group 30% did at least some work, but about 13% did nothing at all to earn their wealth.  Seems like inheritance is giving a surprising number of rich people both privilege and advantage in terms of success in the world.

And?

Anyone interested in meritocracy should be thoroughly disgusted by those numbers.  If we've got a system set up that allows a person to simply be born into the lap of luxury and never need to do an honest day's work, we have a failing in our system.  That scenario is of no benefit to society as a whole and should not be tolerated by people.

I agree. I am as much of a neoliberal as anyone, and I firmly believe in rewarding talent and giving rewards - even outlandish rewards - to those who are successful by market standards. But I can't tolerate the notion of simply passing on millions to a subsequent generation. The Trump model, you could call it. There's no fairness in that. There's no merit, no talent. It's just cheating. We need to normalise it as a bad thing to pass on any more than a modest "rainy day fund" to your kids. Your inheritance should go to charity or to some other cause, or perhaps it might go into a perpetual trust to give your kids a safety net stipend every year - I'd probably approve of that. But generally the concept of an inheritance is a pretty noxious one to me.

I find it strange though that neither the left nor the right seems to really harp on the point. For all that the left goes on about redistribution, it seems to miss the biggest and most obviously anti-meritocratic institution which we have - which is the inheritance.

I'd be pretty aghast if my kids wanted - or needed - a cent of my wealth.

[norajean]

... The problem I see is that nobody pays those tax rates.  A $1 Billion estate is almost always going to go into a trust or some other scheme which DRAMATICALLY lowers the tax rate.  They can afford the best lawyers and accountants with the $400 Million they stand to avoid in taxes. 
..

I’m not aware of any schemes which subvert inheritance tax via trusts. If you know of one, I am all ears.

[TomTX]

Bezos is worth 184.6 billion and Musk $177.2.  Are we all agreed that there's no real benefit to society in having wealth at that level?

Depends how much you value accelerating the transition to electric vehicles and driving down costs on rocketry - plus the knock-on effects.

Providing global, low-latency high-speed internet to underserved areas at a reasonable price seems like a pretty huge benefit to society.  Folks who have gotten it to replace things like HughesNet have told me it's orders of magnitude better. Conventional aerospace (and conventional owners)  wouldn't have let SpaceX progress nearly as fast as they have.

EV adoption has continued to drive down the price of batteries, which is now cheap enough to allow a stupendous amount of grid battery storage to be developed over the next few years - which will allow much higher penetration of wind and solar power. How stupendous? ERCOT alone (yes, that ERCOT - most of Texas) had 20+GW of battery projects which had gotten to the Full Interconnection Study phase, which is reasonably correlated with project developers being serious about actually building.

[TomTX]

This makes me feel like not making the pledge is a conscious choice on Jeff Bezos's part.

Probably is. He also owns Blue Origin, which is developing rockets and spacecraft. I read a couple years ago that he had been selling a billion dollars worth of Amazon stock a year to finance it. I wouldn’t be surprised if he’s upped it since then.

Yeah - Blue Origin is 2 years older than SpaceX and still hasn't put a gram into orbit, nor have any of the engines they developed/sold. I don't put a lot of stock in them when they just keep re-launching a glorified sounding rocket. Orbit is far more difficult than going straight up to "space" and falling back to Earth - even with powered landing.

On the spending - Jeff said he was putting 1% of his wealth into BO every year. Last time I calculated it (year or two ago) that put them at ~3x the amount of Founder/VC/Investor funding as SpaceX. Has SpaceX had more absolute spending? Absolutely! The difference is that the spending is largely revenue from operations - providing goods and services to actual customers, getting actual payloads in orbit.

[GuitarStv]

Bezos is worth 184.6 billion and Musk $177.2.  Are we all agreed that there's no real benefit to society in having wealth at that level?

Depends how much you value accelerating the transition to electric vehicles and driving down costs on rocketry - plus the knock-on effects.

Providing global, low-latency high-speed internet to underserved areas at a reasonable price seems like a pretty huge benefit to society.  Folks who have gotten it to replace things like HughesNet have told me it's orders of magnitude better. Conventional aerospace (and conventional owners)  wouldn't have let SpaceX progress nearly as fast as they have.

EV adoption has continued to drive down the price of batteries, which is now cheap enough to allow a stupendous amount of grid battery storage to be developed over the next few years - which will allow much higher penetration of wind and solar power. How stupendous? ERCOT alone (yes, that ERCOT - most of Texas) had 20+GW of battery projects which had gotten to the Full Interconnection Study phase, which is reasonably correlated with project developers being serious about actually building.

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

[mathlete]

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

I'm on board with high taxes, but in the case of Bezos, how would this work, functionally speaking? Does the Federal Government seize some of his AMZN stock? Or do they just send him a bill that forces a sale?

This gets into the issue I posted about earlier, about quickly unwinding your ownership in a company that is so intertwined with your personal direction and success. 

[TomTX]

Yes, but... your parents’ and grandparents’ inherited wealth makes an awful lot of difference.

I was startled a few years ago to read that much of the land in England is still owned by the families that received it as a result of the Norman Conquest.

More recently transferred, but you really should look into how (largely English) landowners in Ireland became the big landowners.

[TomTX]

Bezos is worth 184.6 billion and Musk $177.2.  Are we all agreed that there's no real benefit to society in having wealth at that level?

Depends how much you value accelerating the transition to electric vehicles and driving down costs on rocketry - plus the knock-on effects.

Providing global, low-latency high-speed internet to underserved areas at a reasonable price seems like a pretty huge benefit to society.  Folks who have gotten it to replace things like HughesNet have told me it's orders of magnitude better. Conventional aerospace (and conventional owners)  wouldn't have let SpaceX progress nearly as fast as they have.

EV adoption has continued to drive down the price of batteries, which is now cheap enough to allow a stupendous amount of grid battery storage to be developed over the next few years - which will allow much higher penetration of wind and solar power. How stupendous? ERCOT alone (yes, that ERCOT - most of Texas) had 20+GW of battery projects which had gotten to the Full Interconnection Study phase, which is reasonably correlated with project developers being serious about actually building.

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

You are acting like they have this money sitting around in cash (literally in your final paragraph.) What Musk has is control  - which is what allows the companies to be so disruptive. Musk likely has debts in the billions (and not considered in the number above) - rather than sell shares, he borrows against them to fund his lifestyle and investments in new companies like The Boring Company.

Same amount of control and lower net worth? NBD. Slower investment in new companies, I suppose. Existing companies could continue as-is.

[GuitarStv]

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

I'm on board with high taxes, but in the case of Bezos, how would this work, functionally speaking? Does the Federal Government seize some of his AMZN stock? Or do they just send him a bill that forces a sale?

This gets into the issue I posted about earlier, about quickly unwinding your ownership in a company that is so intertwined with your personal direction and success.

Just tax it when:
- stock is sold
- stock is transferred to someone else

So, if Joe Blow has 999 billion dollars in stock, and then he wants to buy a new yacht . . . he needs to sell some of his stock.  Set a number . . . let's say 20-30% of the value of the stock that he can keep, and 70-80% is taken as taxes.

He'll have to sell stock to buy his house, pay off his multiple wives as they divorce him, buy groceries, pay the cleaning person, etc.  If he chooses to live as a pauper and accumulate more stock - more power to him.  When he dies it'll all go back to the government as the stock is sold off.  There are already people in government who handle the buying/selling of stock (remember when we bailed out various industries and got stock in return around the 2008 time frame?).

[mathlete]

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

I'm on board with high taxes, but in the case of Bezos, how would this work, functionally speaking? Does the Federal Government seize some of his AMZN stock? Or do they just send him a bill that forces a sale?

This gets into the issue I posted about earlier, about quickly unwinding your ownership in a company that is so intertwined with your personal direction and success.

Just tax it when:
- stock is sold
- stock is transferred to someone else

So, if Joe Blow has 999 billion dollars in stock, and then he wants to buy a new yacht . . . he needs to sell some of his stock.  Set a number . . . let's say 20-30% of the value of the stock that he can keep, and 70-80% is taken as taxes.

He'll have to sell stock to buy his house, pay off his multiple wives as they divorce him, buy groceries, pay the cleaning person, etc.  If he chooses to live as a pauper and accumulate more stock - more power to him.  When he dies it'll all go back to the government as the stock is sold off.  There are already people in government who handle the buying/selling of stock (remember when we bailed out various industries and got stock in return around the 2008 time frame?).

I can't believe I'm about to say this, but at a 70 to 80 percent effect tax rate, I think we would get to the levels where we'd see innovation, entrapanuership and capital markets slow or grind to a halt.

[mathlete]

FWIW a 75% wealth tax on all US billionaires would just about cover the deficit spending we did in 2020 for COVID.

[GuitarStv]

You believe that Musk would not be pushing the transition to electric vehicles (or Space X) just as hard if he had a paltry 70 billion dollar net worth?  Or that Bezos would give up on providing amazon internet if he was worth just a pittance of 84.6 billion?

These are such high levels of money that having more of it doesn't really matter in any way to the person with the cash - and doesn't really appreciably impact the businesses that they're running.

I'm on board with high taxes, but in the case of Bezos, how would this work, functionally speaking? Does the Federal Government seize some of his AMZN stock? Or do they just send him a bill that forces a sale?

This gets into the issue I posted about earlier, about quickly unwinding your ownership in a company that is so intertwined with your personal direction and success.

Just tax it when:
- stock is sold
- stock is transferred to someone else

So, if Joe Blow has 999 billion dollars in stock, and then he wants to buy a new yacht . . . he needs to sell some of his stock.  Set a number . . . let's say 20-30% of the value of the stock that he can keep, and 70-80% is taken as taxes.

He'll have to sell stock to buy his house, pay off his multiple wives as they divorce him, buy groceries, pay the cleaning person, etc.  If he chooses to live as a pauper and accumulate more stock - more power to him.  When he dies it'll all go back to the government as the stock is sold off.  There are already people in government who handle the buying/selling of stock (remember when we bailed out various industries and got stock in return around the 2008 time frame?).

I can't believe I'm about to say this, but at a 70 to 80 percent effect tax rate, I think we would get to the levels where we'd see innovation, entrapanuership and capital markets slow or grind to a halt.

Obviously the tax rate would change depending on total wealth.  That would be the higher end . . . for the folks with 200 billion in wealth.  For people with only a billion in the bank I'd expect it would be much lower.  For those broke ass rich people with under 500 million it would probably be closer to 30%.

[Tigerpine]

Is a wealth tax even constitutional?  Federal income tax is allowed because there is an amendment to the Constitution.  As a practical matter, income and wealth are not the same thing.

[GuitarStv]

Is a wealth tax even constitutional?  Federal income tax is allowed because there is an amendment to the Constitution.  As a practical matter, income and wealth are not the same thing.

Selling stock is generating income.

[Tigerpine]

Is a wealth tax even constitutional?  Federal income tax is allowed because there is an amendment to the Constitution.  As a practical matter, income and wealth are not the same thing.

Selling stock is generating income.

A transaction tax is not a wealth tax, though.

I thought that Sen. Warren, for example, wants to tax the wealth of "ultra-millionaires".  That's not the same as taxing equity transactions.

[mathlete]

Is a wealth tax even constitutional?  Federal income tax is allowed because there is an amendment to the Constitution.  As a practical matter, income and wealth are not the same thing.

I don't know. I was just openly speculating on what the cap for revenue raised from an aggressive billionaire tax might look like.

[mathlete]

Obviously the tax rate would change depending on total wealth.  That would be the higher end . . . for the folks with 200 billion in wealth.  For people with only a billion in the bank I'd expect it would be much lower.  For those broke ass rich people with under 500 million it would probably be closer to 30%.

We're in "drop in the bucket" realm then I think. Considering only double-digit billionaires, we're talking a few dozen people owning about $2 trillion in wealth. Even seizing 100% of that wouldn't have kept the United States from running a huge deficit last year.

Per the Federal Reserve, the 90th to 99% of households own about 38% of US wealth. There's no way to address deficits/fund ambitious new social programs without hitting this group in a meaningful way. And "this group" covers, or will cover almost everyone on this forum who wants to retire on median spending at a 4% withdrawal rate.

I just want to encourage a gut check about the banality of wealth and what it really means to be rich. Anyone on these forums, including myself, who wants our government and our tax policy to address widening inequality should be willing to work a few more years of their lives, maybe even a decade, maybe forgo FIRE all together, in order for this to happen.

Edited to add sources that informed this post.

Billionaire data: https://docs.google.com/spreadsheets/d/1GcxHDqshl4b57ZgZd8OZ9O1d-BhyqTLcWo_emqVYvP0/edit?pli=1#gid=0
Household wealth data: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:2005.3,2020.3;quarter:124;series:Net%20worth;demographic:networth;population:1,3,5,7;units:levels

[Villanelle]

I've really been working lately on not judging others, so I read the question from that lens.  I'm not sure what the point is of examining this, other than to judge others.

Also, friends of my parents have a lot of money.  If I had to guess, I'd say that their NW is probably more than your $10m threshold.  They have to adult children. 

One of their sons is pretty significantly disabled.  He lives (thanks in part to their money) in a community that is semi-independent living.  I don't know the details, but I believe he has his own home but is provided with services, check-ins, and resources as needed.  He can hold basic jobs (bagger at a grocery store, that sort of thing).  They also live in a very HCOL area, but that is where they worked, and now it is where both of their children and their grandchildren live.  I'm sure they could find similar services for their son (though perhaps not in a LCOL area as this seems pretty specialized and unlikely to be in smaller communities), but that would mean moving away from their other child and grandchildren.  Is it excessive for them to want to leave enough money that he is taken care of for life and never becomes a financial burden on his sibling, and so that the sibling can use money to--to some extent--relieve himself of some of the responsibilites so he can care for his own family (spouse and 2 kids)? 

Oh, and the husband in the family has come down with a devastating, debilitating disease.  (Similar to ALS)  His mody is slowly failing him.  As it turns out, some of their many dollars are going to go toward caring for him: bringing in a daily nurse to get him in and out of the shower, to the bathroom, etc.  Of course they didn't know this would happen and didn't specifically plan for it, but they did plan to be able to cover whatever might come up--more than most people do--because they wanted to be dead certain their son was cared for after they were gone.

So, is their $10m+ unreasonable?  Are they "FAT pigs"?  Not in my book.

You never know what someone's life looks like, especially at a quick glance.  Rather than spending time deciding what is unreasonable for other people, spend it figuring out what is most reasonable for you. To my cousin who makes >$15k/year ad is pretty happy, I suspect most people here would have numbers that look pretty excessive to her.

You have named catastrophic health situations that would eat up $10 million pretty fast if that couple you’re talking about are in their 50s. No $10 million it’s not excessive at all for an ALS type of disease as well as a child who needs lifelong care.

I'm curious about this as someone with a serious and lifelong disease that's expensive to treat, and several immediate family with serious illnesses that are expensive to treat.

This is the reason I intend to have an extra 1-2M saved, because I can see needing tens of thousands of extra medical costs. But I live in Canada, is it really that much more expensive in the US to treat these types of conditions? Such that one couldn't live off of the 400K/yr that 10M would produce?

If that's true then how does anyone in the US with a serious chronic condition survive?

It’s not so much treatment of the health condition, it’s maintaining a living situation that is high-quality for adults who need some ( or lots of ) custodial care..

What are all the social services and living support services available to Canadians for custodial care? What is the nursing home situation in Canada? Are those free?

We used to have a poster on here who talked extensively about her own disability and her child’s disability and it seems to me she chased piece meal services which varied from province to province. She seldom had anything good to say about them.

No, those services are definitely not free in Canada, but they don't cost hundreds of thousands a year in my experience. They certainly would be well covered by a 10M stash throwing off 400K/yr.

As it would be for them, but they also have the special needs son's next 4-5 decades to fund as well. 

And sure, that's not a typical situation, but my larger point was that there are lots of non-typical situations so drawing a hard line on what is "too much" seems ridiculous.  In their shoes, when funding their regular lives, his medical care at a level they'd like to have it, plus trying to ensure their son is covered for any eventuality after they are gone, wanting more than $400k year doesn't seem all that opulent.   (Part time care coming in isn't sufficient as even with lots of muscle loss, he is a large--not fat just very big--man and his wife is unable to get him to the bathroom, the shower, if he falls, etc.  I mean, I suppose part time care is sufficient if if has to be, but it's certainly not the life any of us would choose in that situation.) 

For the average person, $10m+ is a ton of money.  But "average" is pretty meaningless. 

[NorthernMonkey]

This makes me feel like not making the pledge is a conscious choice on Jeff Bezos's part.

Probably is. He also owns Blue Origin, which is developing rockets and spacecraft. I read a couple years ago that he had been selling a billion dollars worth of Amazon stock a year to finance it. I wouldn’t be surprised if he’s upped it since then.

If you own $10b in stock, you can borrow $1b from the bank without ever selling a single share.

He might be spending a lot more than he is selling.

You don’t have to guess! No point in blindly speculating...
Trades are reported to the SEC, and that is public knowledge

[Metalcat]

I've really been working lately on not judging others, so I read the question from that lens.  I'm not sure what the point is of examining this, other than to judge others.

Also, friends of my parents have a lot of money.  If I had to guess, I'd say that their NW is probably more than your $10m threshold.  They have to adult children. 

One of their sons is pretty significantly disabled.  He lives (thanks in part to their money) in a community that is semi-independent living.  I don't know the details, but I believe he has his own home but is provided with services, check-ins, and resources as needed.  He can hold basic jobs (bagger at a grocery store, that sort of thing).  They also live in a very HCOL area, but that is where they worked, and now it is where both of their children and their grandchildren live.  I'm sure they could find similar services for their son (though perhaps not in a LCOL area as this seems pretty specialized and unlikely to be in smaller communities), but that would mean moving away from their other child and grandchildren.  Is it excessive for them to want to leave enough money that he is taken care of for life and never becomes a financial burden on his sibling, and so that the sibling can use money to--to some extent--relieve himself of some of the responsibilites so he can care for his own family (spouse and 2 kids)? 

Oh, and the husband in the family has come down with a devastating, debilitating disease.  (Similar to ALS)  His mody is slowly failing him.  As it turns out, some of their many dollars are going to go toward caring for him: bringing in a daily nurse to get him in and out of the shower, to the bathroom, etc.  Of course they didn't know this would happen and didn't specifically plan for it, but they did plan to be able to cover whatever might come up--more than most people do--because they wanted to be dead certain their son was cared for after they were gone.

So, is their $10m+ unreasonable?  Are they "FAT pigs"?  Not in my book.

You never know what someone's life looks like, especially at a quick glance.  Rather than spending time deciding what is unreasonable for other people, spend it figuring out what is most reasonable for you. To my cousin who makes >$15k/year ad is pretty happy, I suspect most people here would have numbers that look pretty excessive to her.

You have named catastrophic health situations that would eat up $10 million pretty fast if that couple you’re talking about are in their 50s. No $10 million it’s not excessive at all for an ALS type of disease as well as a child who needs lifelong care.

I'm curious about this as someone with a serious and lifelong disease that's expensive to treat, and several immediate family with serious illnesses that are expensive to treat.

This is the reason I intend to have an extra 1-2M saved, because I can see needing tens of thousands of extra medical costs. But I live in Canada, is it really that much more expensive in the US to treat these types of conditions? Such that one couldn't live off of the 400K/yr that 10M would produce?

If that's true then how does anyone in the US with a serious chronic condition survive?

It’s not so much treatment of the health condition, it’s maintaining a living situation that is high-quality for adults who need some ( or lots of ) custodial care..

What are all the social services and living support services available to Canadians for custodial care? What is the nursing home situation in Canada? Are those free?

We used to have a poster on here who talked extensively about her own disability and her child’s disability and it seems to me she chased piece meal services which varied from province to province. She seldom had anything good to say about them.

No, those services are definitely not free in Canada, but they don't cost hundreds of thousands a year in my experience. They certainly would be well covered by a 10M stash throwing off 400K/yr.

As it would be for them, but they also have the special needs son's next 4-5 decades to fund as well. 

And sure, that's not a typical situation, but my larger point was that there are lots of non-typical situations so drawing a hard line on what is "too much" seems ridiculous.  In their shoes, when funding their regular lives, his medical care at a level they'd like to have it, plus trying to ensure their son is covered for any eventuality after they are gone, wanting more than $400k year doesn't seem all that opulent.   (Part time care coming in isn't sufficient as even with lots of muscle loss, he is a large--not fat just very big--man and his wife is unable to get him to the bathroom, the shower, if he falls, etc.  I mean, I suppose part time care is sufficient if if has to be, but it's certainly not the life any of us would choose in that situation.) 

For the average person, $10m+ is a ton of money.  But "average" is pretty meaningless.

Yeah, I wasn't arguing anything to do with the main point of the thread, I was genuinely curious if chronic conditions were that much more expensive in the US compared to Canada and why.

Again, I have a family full of people with serious medical conditions, myself included, and contemplating how much I could possibly need is a big deal for me. So it struck me as notable that you said a family could easily run out of money even with 10M.

[GuitarStv]

Obviously the tax rate would change depending on total wealth.  That would be the higher end . . . for the folks with 200 billion in wealth.  For people with only a billion in the bank I'd expect it would be much lower.  For those broke ass rich people with under 500 million it would probably be closer to 30%.

We're in "drop in the bucket" realm then I think. Considering only double-digit billionaires, we're talking a few dozen people owning about $2 trillion in wealth. Even seizing 100% of that wouldn't have kept the United States from running a huge deficit last year.

I guess I don't understand why this argument matters at all.  Out of control US spending is an issue that's unrelated to the the issue of concentration of wealth beyond any reasonable expectation of being able to spend it.  Neither are great for society, but I wouldn't reject a solution to one problem simply because it doesn't solve the other.

That aside, the chart you just linked demonstrates that the top 1% control 30% (36/116 trillion) of the wealth.  That's pretty fucked up.  I don't see how you can argue that 30% is a 'drop in the bucket' or how that wealth distribution is somehow beneficial for society.

Per the Federal Reserve, the 90th to 99% of households own about 38% of US wealth. There's no way to address deficits/fund ambitious new social programs without hitting this group in a meaningful way. And "this group" covers, or will cover almost everyone on this forum who wants to retire on median spending at a 4% withdrawal rate.

I just want to encourage a gut check about the banality of wealth and what it really means to be rich. Anyone on these forums, including myself, who wants our government and our tax policy to address widening inequality should be willing to work a few more years of their lives, maybe even a decade, maybe forgo FIRE all together, in order for this to happen.

Edited to add sources that informed this post.

Billionaire data: https://docs.google.com/spreadsheets/d/1GcxHDqshl4b57ZgZd8OZ9O1d-BhyqTLcWo_emqVYvP0/edit?pli=1#gid=0
Household wealth data: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart/#range:2005.3,2020.3;quarter:124;series:Net%20worth;demographic:networth;population:1,3,5,7;units:levels

[/quote]

Honestly, if my working for another few years would guarantee reduced wealth disparity in our country . . . I've got no problem with doing that.  That's fair.  While there was certainly hard work involved too, an awful lot of my wealth comes from circumstance - and I can see that this is fundamentally not fair.  Even if I've never made anywhere near 90th percentile household income.

[mathlete]

I guess I don't understand why this argument matters at all.  Out of control US spending is an issue that's unrelated to the the issue of concentration of wealth beyond any reasonable expectation of being able to spend it.  Neither are great for society, but I wouldn't reject a solution to one problem simply because it doesn't solve the other.

That aside, the chart you just linked demonstrates that the top 1% control 30% (36/116 trillion) of the wealth.  That's pretty fucked up.  I don't see how you can argue that 30% is a 'drop in the bucket' or how that wealth distribution is somehow beneficial for society.

I largely work under the assumption that we need to spend more money at the Federal level to reduce inequality. I don't think US spending is particularly out of control. We deficit spent big time last year, and I think that was a fantastic given the challenges we faced (and still face).

It is crazy that the top 1% holds so much wealth. It's a drop in the bucket though, because your loose proposal was for cap gains to be taxed at around 30% for the broke loser range of the top 1%, up to 70%-80% for the Bezos crowd. The Bezos crowd (which I put at anyone with a net worth of $10bn) owns just $2 trillion of that $36 trillion. The vast majority of that 1% is the broke loser range. For them, we're talking about a cap gains tax hike of 10% over the current 20%. A good start, but only enough to affect one side of the wealth inequality equation. Realistically, we'd be looking at raising on the order of tens of billions of revenue from an effective capital gains hike.  It's nice to take money from rich people, but it's gotta be enough to help poor people too. For that, I think we need to look at a lot of the stuff that makes FIRE accessible for people who make decent money sitting at a desk and posting all day.

I'm glad you're willing to work longer to reduce inequality. I am too. The good news for both of us is that this kind of major structural change probably won't happen and we'll be able to retire early with the confidence that working longer would have done nothing to reduce inequality anyway.

[Bloop Bloop Reloaded]

Inequality is only bad if it perpetuates (through inheritance).

Imagine that we put in an estate tax which removes most inter general perpetuation. We use the revenue from that to make sure every kid gets a reasonable chance at school and in early life. If we can do that, why is inequality bad, at all? Everyone has an opportunity and a safety net. Why is inequality bad then?

[Villanelle]

I've really been working lately on not judging others, so I read the question from that lens.  I'm not sure what the point is of examining this, other than to judge others.

Also, friends of my parents have a lot of money.  If I had to guess, I'd say that their NW is probably more than your $10m threshold.  They have to adult children. 

One of their sons is pretty significantly disabled.  He lives (thanks in part to their money) in a community that is semi-independent living.  I don't know the details, but I believe he has his own home but is provided with services, check-ins, and resources as needed.  He can hold basic jobs (bagger at a grocery store, that sort of thing).  They also live in a very HCOL area, but that is where they worked, and now it is where both of their children and their grandchildren live.  I'm sure they could find similar services for their son (though perhaps not in a LCOL area as this seems pretty specialized and unlikely to be in smaller communities), but that would mean moving away from their other child and grandchildren.  Is it excessive for them to want to leave enough money that he is taken care of for life and never becomes a financial burden on his sibling, and so that the sibling can use money to--to some extent--relieve himself of some of the responsibilites so he can care for his own family (spouse and 2 kids)? 

Oh, and the husband in the family has come down with a devastating, debilitating disease.  (Similar to ALS)  His mody is slowly failing him.  As it turns out, some of their many dollars are going to go toward caring for him: bringing in a daily nurse to get him in and out of the shower, to the bathroom, etc.  Of course they didn't know this would happen and didn't specifically plan for it, but they did plan to be able to cover whatever might come up--more than most people do--because they wanted to be dead certain their son was cared for after they were gone.

So, is their $10m+ unreasonable?  Are they "FAT pigs"?  Not in my book.

You never know what someone's life looks like, especially at a quick glance.  Rather than spending time deciding what is unreasonable for other people, spend it figuring out what is most reasonable for you. To my cousin who makes >$15k/year ad is pretty happy, I suspect most people here would have numbers that look pretty excessive to her.

You have named catastrophic health situations that would eat up $10 million pretty fast if that couple you’re talking about are in their 50s. No $10 million it’s not excessive at all for an ALS type of disease as well as a child who needs lifelong care.

I'm curious about this as someone with a serious and lifelong disease that's expensive to treat, and several immediate family with serious illnesses that are expensive to treat.

This is the reason I intend to have an extra 1-2M saved, because I can see needing tens of thousands of extra medical costs. But I live in Canada, is it really that much more expensive in the US to treat these types of conditions? Such that one couldn't live off of the 400K/yr that 10M would produce?

If that's true then how does anyone in the US with a serious chronic condition survive?

It’s not so much treatment of the health condition, it’s maintaining a living situation that is high-quality for adults who need some ( or lots of ) custodial care..

What are all the social services and living support services available to Canadians for custodial care? What is the nursing home situation in Canada? Are those free?

We used to have a poster on here who talked extensively about her own disability and her child’s disability and it seems to me she chased piece meal services which varied from province to province. She seldom had anything good to say about them.

No, those services are definitely not free in Canada, but they don't cost hundreds of thousands a year in my experience. They certainly would be well covered by a 10M stash throwing off 400K/yr.

As it would be for them, but they also have the special needs son's next 4-5 decades to fund as well. 

And sure, that's not a typical situation, but my larger point was that there are lots of non-typical situations so drawing a hard line on what is "too much" seems ridiculous.  In their shoes, when funding their regular lives, his medical care at a level they'd like to have it, plus trying to ensure their son is covered for any eventuality after they are gone, wanting more than $400k year doesn't seem all that opulent.   (Part time care coming in isn't sufficient as even with lots of muscle loss, he is a large--not fat just very big--man and his wife is unable to get him to the bathroom, the shower, if he falls, etc.  I mean, I suppose part time care is sufficient if if has to be, but it's certainly not the life any of us would choose in that situation.) 

For the average person, $10m+ is a ton of money.  But "average" is pretty meaningless.

Yeah, I wasn't arguing anything to do with the main point of the thread, I was genuinely curious if chronic conditions were that much more expensive in the US compared to Canada and why.

Again, I have a family full of people with serious medical conditions, myself included, and contemplating how much I could possibly need is a big deal for me. So it struck me as notable that you said a family could easily run out of money even with 10M.

Ah, I see.  The answer is "it depends".  But there is a basic floor of care that someone would receive as long as they are old enough (or have qualified based on disability) for the government medical care. 

But also, yes, I suspect care is much more expensive in the US than Canada, and the "why" of that is just our entire fucked up medical system, and the same reason it probably costs a Canadian $20 for a monthly prescription that might cost an average American $500+. 

[GuitarStv]

Inequality is only bad if it perpetuates (through inheritance).

Imagine that we put in an estate tax which removes most inter general perpetuation. We use the revenue from that to make sure every kid gets a reasonable chance at school and in early life. If we can do that, why is inequality bad, at all? Everyone has an opportunity and a safety net. Why is inequality bad then?

The purpose of having a capitalist system is to provide motive for people to work and innovate.  At a certain point on the extreme high end, I don't believe that more wealth really does motivate this any more.  Hence my earlier questions about Musk/Bezos.  Would they just stop doing what they do with half the wealth?  At that point it would be more beneficial for society to reclaim some of that wealth.

[Plina]

Sweden has had both estate tax and wealth tax but both former was stopped in 2004 and the latter in 2007. Both contributed to wealthy entrepreneurial familys leaving the country sometimes to enable keeping the company in the family when death occured.

The estate tax was also seen as taking already taxed money. It was mostly paid by regular people that didn’t plan for avoiding it.

The wealth tax was about 0,3-0,5 % of the tax incomes of the state. It was 1,5 % over 1,5 million crownes, about 150000 USD, for singles and 3 million, about 300000 USD for couples. It seems like most of the EU-countries have taken away the wealth tax.

I would be really satisfied with 2 million dollars, which is a lot more then I expect to have when I fire but it would give a large cushion.

[ericrugiero]

... The problem I see is that nobody pays those tax rates.  A $1 Billion estate is almost always going to go into a trust or some other scheme which DRAMATICALLY lowers the tax rate.  They can afford the best lawyers and accountants with the $400 Million they stand to avoid in taxes. 
..

I’m not aware of any schemes which subvert inheritance tax via trusts. If you know of one, I am all ears.

https://smartasset.com/taxes/5-ways-the-rich-can-avoid-the-estate-tax

I'm no expert but I'm pretty sure these are just a few of the ways. 

[scottish]

Is a wealth tax even constitutional?  Federal income tax is allowed because there is an amendment to the Constitution.  As a practical matter, income and wealth are not the same thing.

Selling stock is generating income.

But this is already taxed.   If Elon sells some of his Tesla shares, for example, he'll pay tax on the capital gains.    do you mean tax beyond capital gains tax?

[iris lily]

....
No, those services are definitely not free in Canada, but they don't cost hundreds of thousands a year in my experience. They certainly would be well covered by a 10M stash throwing off 400K/yr.

I’m very conservative so I don’t count on the 4% rule to provide my income.

If I was age 55 and had a spouse with a debilitating illness and I knew he would probably live for 20 more years, and at the same time I had a disabled son who I knew would live for 50 years, I would not think that $10 million was too much money to have at all to cover those needs for custodial care.

[ericrugiero]

So, for all of us on this site having Billions of dollars is so far beyond the reality of what we will ever see that it seems ridiculous.  We think it's crazy and can't fathom how anyone would ever spend all that money.  How many people look at millionaires the same way?  For someone who isn't good at math and has never had a check bigger than their Covid stimulus check, what's the difference?  Is there a slippery slope of saying as a society, "It's not fair, they don't need all that money.  Let's tax it and redistribute the money."?

I'm absolutely on board with taking a hard look at tax rates.  Billionaires should pay their fair share.  But, as I said above, a big problem is that the really truly rich folks don't pay anywhere near their stated tax rates.  We don't really need to raise the rates, we need to eliminate the exemptions and deductions that allow people to pay so much below what they are supposed to pay. 

Regarding estate tax.  I absolutely want to leave my kids a healthy inheritance.  That's part of the reason I'm saving.  Do I think that's right? Sure, I'm their Dad.  If I save for years to allow me to give them an inheritance I should be able to do what I want with my money.  Should their be a cap on how much I can leave tax free?  Definitely.  I'm not trying to leave them so much they can live a life of consumption and leisure. 

I work with lots of people who make what I make and don't have two nickels to rub together.  They spend it all on trucks, houses, vacations, and other consumption.  Is it fair for me to live frugally my whole life while they spend every dime and then the government takes my money and gives it to them?  I don't think so. 

[mathlete]

Inequality is only bad if it perpetuates (through inheritance).

Imagine that we put in an estate tax which removes most inter general perpetuation. We use the revenue from that to make sure every kid gets a reasonable chance at school and in early life. If we can do that, why is inequality bad, at all? Everyone has an opportunity and a safety net. Why is inequality bad then?

Generally agree. If we invested heavily in universal childcare and healthcare and quality education, I really wouldn't care if Bezos had a million billion trillion dollars. I guess "equity" is the term people are using more and more these days. In the meantime though, as long as we have preventable mass suffering, I think it's okay to take rhetorical shortcuts and whine about inequality. So that's what I'm gonna do!

[mathlete]

Inequality is only bad if it perpetuates (through inheritance).

Imagine that we put in an estate tax which removes most inter general perpetuation. We use the revenue from that to make sure every kid gets a reasonable chance at school and in early life. If we can do that, why is inequality bad, at all? Everyone has an opportunity and a safety net. Why is inequality bad then?

The purpose of having a capitalist system is to provide motive for people to work and innovate.  At a certain point on the extreme high end, I don't believe that more wealth really does motivate this any more.  Hence my earlier questions about Musk/Bezos.  Would they just stop doing what they do with half the wealth?  At that point it would be more beneficial for society to reclaim some of that wealth.

Wealth likely isn't a motivating factor for Musk at this point, as he's pledged to give most of his away, like many of the super rich. Bezos is the big question mark. No idea what that guy is doing with it all.

Charitable giving is one advantage to the accumulation of massive wealth with only one or a few trustees/stakeholders. As much as I'm desperate to see an expansion of healthcare and childcare in the states, I can't deny that every dollar spent by the Gates Foundation on eradicating malaria has an order of magnitude great impact on the reduction of suffering vs. say, spending a marginal dollar to get someone off an ACA exchange and on to a public option health plan. Private foundations can spend money in ways that the Federal government cannot without fear of political reprecussions.

[joe189man]

if you asked me today how much is more than enough i would say $10-12 million

if you asked me at 25 i would have said $5 million, 15 years from today... who knows what i would say, $25 million?

this thread scares me, on two fronts

1) some billionaires like Musk are doing extraordinary things by working hard, compounding their wealth, creating jobs and helping change the world for the better, faster than most governments could ever dream, others haven't done anything for anyone, and i would argue they have no obligation to anyone, whether the earned it or inherited the cash/stock.  because...

2) this whole thing (the game of life) is a lottery, sometimes you win and sometimes you don't. Do you want to prohibit Lebron James' kids from playing sports because they inherited superior genetics or just make them wear special braces to slow them down so he is just like the other kids?  What if we taxed the the sale of Paypal when Musk sold it to Ebay to the point where he couldnt start SpaceX or Tesla? how different would the world be today?

What would i do if i had $12 million to retire today? you could be damn sure i would spend up to the 4% minimum and likely try to maintain it and spend any excess each year. that spending would contribute to my community, supporting local businesses, Think big, money can do so many amazing things

and i will do as much as possible to teach my kids about money and hard work and caring for others so that if i can realistically leave them an inheritance some day, they become stewards of that money, and i hope the government never requires me to donate to some pre-approved charity or takes an unreasonable estate tax because my family was lucky enough to win the game

[jeroly]

OP again.

This discussion has partially run off the rails from the original question into political philosophy on taxation vis-a-vis estate taxes, wealth taxes, etc.  Not necessarily a bad thing, just an observation ;-)

I will note that my original question was intented to provoke discussions more along the lines of 'when I hit $XXX (the 'too much' number of your choice - as originally stated, my theory is that it's $10MM for a family of four), I will do Y' (VOLUNTARILY, not because of some government mandate) and for us to consider what can be done and how - via QCDs, CRTs, CLTs, etc.

While I'm 'here,' though, I'll throw my $0.02 (after taxes) into the mix.  I'm very favorably disposed towards very high estate taxes.  Why?  Not because I'm a raving mad socialist (well, not the raving mad part anyway) thinking that we have to redistribute wealth, but because of the alternative.

In a rational system of government, the government calculates what is necessary for it to do, and collects enough taxes to pay for those activities and expenditures, modulo whatever is required for fiscal stimulus or restraint in order to achieve economic stability.  (For example, extra stimulus during COVID economic crisis).  The taxes have to come from somewhere.  If people thought about the question in terms of 'who should pay for stuff - dead people or living people?' I think most would agree that having dead people pay for stuff is a better option.  N.B. I don't propose that there should be no allowable estates or even that there should be a cap, just that we don't leave too much on the table when there is so much that needs to be done... for the living.

When it comes to the question of wealth taxes, I'm not a huge fan. Granted, this is possibly coming from a selfish perspective as I would be affected, but it feels like double taxation to me.  However, it does seem to me perfectly reasonable for there to be some sort of 'asset protection fee' that the government charges for all the services it provides to protect assets - functions like the SEC aren't free.  Now how much should that be? Well, I'd say that the gov't does more for my money than Vanguard does, and they charge 0.03% or so... maybe 0.1% would be reasonable? (That would raise $85 billion a year by the way, which wouldn't cut the annual deficit by even 10%, so we're not talking about a radical measure here.)

[joe189man]

I will note that my original question was intented to provoke discussions more along the lines of 'when I hit $XXX (the 'too much' number of your choice - as originally stated, my theory is that it's $10MM for a family of four), I will do Y' (VOLUNTARILY, not because of some government mandate) and for us to consider what can be done and how - via QCDs, CRTs, CLTs, etc.

support conservation and regenerative agriculture initiatives, provide a scholarship to my alma mater, buy a ranch to support the first two