End of inheritance for the middle class

[seattlecyclone]

Imagine a world where we had no income tax, sales tax, or property tax - only a steep estate tax. Each new generation would start over in something more like a meritocracy. Business and employment would boom without the other taxes / deadweight losses. Plus, each individual would get to enjoy the benefits of 100% of their earnings, perhaps for the first time in history. Meanwhile taxation and government financing would be dead simple, if you’ll excuse the pun.

I’d give it a try. Attaining FIRE would be a lot simpler.

If there's only a steep estate tax, there's nothing to prevent Mr. Moneybags from distributing his fortune to all the little moneybags before he kicks the bucket. Maybe you'll catch people like the billionaire who died in that helicopter crash last week, but anyone who has time to plan can mostly avoid this tax.

And this is why the gift tax was invented. The entire point is to make sure that people can't make an end run around the estate tax by giving away large sums of untaxed money to their relatives before they pass away.

[Davnasty]

Imagine a world where we had no income tax, sales tax, or property tax - only a steep estate tax. Each new generation would start over in something more like a meritocracy. Business and employment would boom without the other taxes / deadweight losses. Plus, each individual would get to enjoy the benefits of 100% of their earnings, perhaps for the first time in history. Meanwhile taxation and government financing would be dead simple, if you’ll excuse the pun.

I’d give it a try. Attaining FIRE would be a lot simpler.

If there's only a steep estate tax, there's nothing to prevent Mr. Moneybags from distributing his fortune to all the little moneybags before he kicks the bucket. Maybe you'll catch people like the billionaire who died in that helicopter crash last week, but anyone who has time to plan can mostly avoid this tax.

And this is why the gift tax was invented. The entire point is to make sure that people can't make an end run around the estate tax by giving away large sums of untaxed money to their relatives before they pass away.

But if there were no income tax, they could "hire" their children and pay them huge salaries.

I am in favor of more tax on inheritance but there are serious complications to enforcing them.

[BeanCounter]

Just what we need, a big money grab by the government that further incentivizes people to NOT save.

I think the estate tax should only apply to those inheriting over $1M rather than basing it on the size of the estate, since it may be split among a group of people getting smaller slices, but it shouldn't be so high of a tax rate as to disincentivize saving.  So maybe 10% tax at the low end and 30% on inheritance over $2M.  There may need to be different rules applied for inherited businesses and farms to keep them solvent.

You would be surprised how easy it is to have an estate of $1-$2M. Especially if people are planning for a long retirement or to pay for long term care expenses.
If we are going to have an estate tax, then I think the current $11M and over is a good threshold.

[BeanCounter]

I still think higher capital gains taxes and sales tax is the answer. Get them when they sell assets or buy goods and services.

[zolotiyeruki]

Imagine a world where we had no income tax, sales tax, or property tax - only a steep estate tax. Each new generation would start over in something more like a meritocracy. Business and employment would boom without the other taxes / deadweight losses. Plus, each individual would get to enjoy the benefits of 100% of their earnings, perhaps for the first time in history. Meanwhile taxation and government financing would be dead simple, if you’ll excuse the pun.

I’d give it a try. Attaining FIRE would be a lot simpler.

If there's only a steep estate tax, there's nothing to prevent Mr. Moneybags from distributing his fortune to all the little moneybags before he kicks the bucket. Maybe you'll catch people like the billionaire who died in that helicopter crash last week, but anyone who has time to plan can mostly avoid this tax.

Well, actually there is--there's a gift limit in the US of $15,000 per recipient per year.  Of course, Mrs Moneybags could also give $15,000 to each person, so they could give Little Moneybags and his wife a total of $60,000 per year. And if Mr. and Mrs. Little Moneybags, have kids? Well, that's another $30k/year per kid.

Or, Mr. Moneybags could "hire" Little Moneybags for $250k/year as a "consultant" of some sort for his company.  Or set up a trust.  Or create a partnership business.

Personally, I like the idea of replacing the current gordian knot of tax law with a straightforward consumption tax.

[TheContinentalOp]

Imagine a world where we had no income tax, sales tax, or property tax - only a steep estate tax. Each new generation would start over in something more like a meritocracy. Business and employment would boom without the other taxes / deadweight losses. Plus, each individual would get to enjoy the benefits of 100% of their earnings, perhaps for the first time in history. Meanwhile taxation and government financing would be dead simple, if you’ll excuse the pun.

I’d give it a try. Attaining FIRE would be a lot simpler.

If there's only a steep estate tax, there's nothing to prevent Mr. Moneybags from distributing his fortune to all the little moneybags before he kicks the bucket. Maybe you'll catch people like the billionaire who died in that helicopter crash last week, but anyone who has time to plan can mostly avoid this tax.

And this is why the gift tax was invented. The entire point is to make sure that people can't make an end run around the estate tax by giving away large sums of untaxed money to their relatives before they pass away.

But the OP posited that there were NO taxes other than a steep estate tax.

[afox]

on a related note- i hate that those in the position to give an inheritance buy expensive gifts for people. i understand that people need to get rid of their money but the gifts are rarely items that would be purchased anyway and they are often a waste of money and bad for the planet. if you are in a position of planning your estate give your loved ones money not overpriced useless crap that clutters up their houses.

[KBecks]

Advantaged families, smart ones, will
Advantage their kids with or without money, consider the inventor 's kid who has access to scientists and learns to invent, winning a scholarship. Skills are worth a lot. Connections are worth a lot