[astrodust]

At low levels, which aren't taxed, it's not going to affect anything.

At high levels, like giving your kid ten billion dollars, you're making it impractical or impossible for others to advance economically. You're creating a class of people with indestructible inherited wealth that never have to work, that only have to collect interest and rent on the backs of everyone else.

That's what inheritance tax and gift taxes seek to disrupt.

[user5994461]

I don't think so, this certainly has never been effective at that.

I'd say that historically billion dollars fortunes got diluted between the 10 children then the next generation, some of whom might actually burn it stupidly very quickly. Otherwise, it's diluted by wars and calamity.

However, there are no major disaster in the past decades and the number of children per family have dropped dramatically. It surely breaks the balance.

[liftbigweights]

> I'd say that historically billion dollars fortunes got diluted between the 10 children then the next generation

Throughout history and across most cultures, it was usually the first born son who got the father's legacy and the lion's share of the wealth. It's why it was so important for wives ( especially of the powerful and wealthy ) to produce a male heir. Sometimes it was a matter of life or death. We all know of king henry's wives.

"When Anne failed to quickly produce a male heir, her only son being stillborn, the King grew tired of her, annulled their marriage, and a plot was hatched by Thomas Cromwell to execute her."

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

[isostatic]

That explains why the Grosvenor Family, a family who've owned the same company for 100 years longer than the united states has been in existent, is so poor.

[ryacko]

Comcast is a better example of a family owned business.

[maerF0x0]

>You're creating a class of people with indestructible inherited wealth that never have to work, that only have to collect interest and rent on the backs of everyone else.

That wealth is invested in profitable ventures that either create benefits in the system (assuming rational actors) or 2) lose value due to poor choices.

Capital is rewarded because the investors are taking opportunity cost risks that advance the sum value of humanity's wealth.

[astrodust]

I think you have a profound misunderstanding of what someone with billions of dollars in inherited wealth does with their money.

It's not investing in "profitable ventures" that "create benefits", it's tied up in businesses they inherited, it's squirreled away in tax havens, it's spent on lavish properties, club memberships, expensive cars, and tuition for their children. If you're lucky a tiny fraction of that trickles down in the form of scholarships or charity work.

Then that money generates enough of a return that their kids can inherit billions in turn and the cycle repeats.

There's a point at which you have so much money that you will no longer ever have to work, but your kids will never have to work, and neither will their kids. It has such a heavy gravitational pull that in the long run there's no way you can lose.

If you have even half competent people managing your money an estate worth $10B can pretty much exist forever and grow at or beyond the rate of inflation even when extravagantly luxurious cost of living expenses are deducted. A million dollar a month allowance won't put a dent in this money.

[maerF0x0]

> it's spent on lavish properties, club memberships, expensive cars, and tuition for their children.

All of that is trickle down to workers for those jobs

> it's tied up in businesses they inherited

That means the sum benefit to humanity is still going!

> Then that money generates enough of a return that their kids can inherit billions in turn and the cycle repeats.

I cant imagine someone who more deserves to direct the money after their death than the one who earned it. I'm sure many parents (not Buffet though) would rather their child have it than the government.

> If you have even half competent people managing your money an estate worth $10B

I'm sure those half competent people are well compensated for their skills. Shame that billionaires are so evil as to provide those jobs...

[Faark]

You are missing the point. For a society to work, it's members have to perceive it as somewhat fair. The naive idealist would demand equal opportunity for everyone born. But we humans want to use the means available to us to directly improve out children's opportunities. Our freedom to do so makes our society inherently unfair. Especially when we expect those "investments" like education to pay for themself...

The interesting question is, like always politics, how to balance those trade-offs for bests outcomes.

Yes, that means both giving parents the chance to help their kids while also not having a disillusioned crowd without perspective demanding to tear down society in favor of whatever promises to be better. And yes, that requires some degree of wealth redistribution like decent public eduction.

[astrodust]

Working for less than minimum wage on a temporary worker permit is not in any way 'trickle down'.

These ultra-rich people can dictate terms, can sway policy, in ways you can't even fathom. The person earning almost nothing has no say, no vote, no power at all.

There's no benefit to humanity when all their money is being squirreled away in offshore accounts where it creates only a handful of jobs.

When you're talking about giving something to your kids you usually mean, at most, a million dollars. Estates under $4M aren't even taxed. It's only in cases beyond that where the taxes get stiffer, and they should.

You don't want what happened in Europe where for hundreds of years the same families control everything with almost zero change in the status-quo despite countries and empires coming and going, long, vicious wars, famines, disease and conquest. Money doesn't move down the chain unless you make it move.

Trickle down is what the ultra-rich tell people is going to happen so they can hoover up more money.

In a perfectly ideal society every child born has the same opportunity as any other, they're all free to make it or blow it. That's obviously never going to happen, but letting the ultra-rich maintain their wealth indefinitely creates a permanent and insurmountable advantage for that class to the detriment of everyone else.

[ska]

  assuming rational actor

There is a reason such toy models are called "toy models". They are very useful for understanding and interrogating ideas. They aren't so useful for modeling real systems. One can only hope that policy making is a little more sophisticated (alas, often in vain).

[ahoy]

> Capital is rewarded because the investors are taking opportunity cost risks that advance the sum value of humanity's wealth.

And the vast majority of that advance in humanity's sum wealth accrues in the hands of those very capitalists. How peculiar!

[refurb]

How does someone having $1B of inherited wealth have any impact on my own life?

I’d be paying rent to someone, whether they have $1 or $1B to their name.

[paulddraper]

> like giving your kid ten billion dollars, you're making it impractical or impossible for others to advance economically.

Zero-sum is one perspective, but not one that I subscribe to.

Does your neighbor having $10b of stuff make you better or worse off than if than if there's $10b of stuff at the bottom of the ocean?

[mmcconnell1618]

I don't believe the economy is zero-sum either but handing $10B in capital to your child gives them a significantly unfair advantage compared to most others.

Image that the economy is a field of wheat. It grows bigger every year as workers become more productive and learn how to fertilize and water more efficiently. At the end of the season, everyone gets a chance to head into the field and collect some wheat.

Some people don't have any tools. They pick the wheat by hand. Others have managed to fashion scythes and can collect a little more. But, the kid who inherited $10b has a fleet of combines that race into the field and collect 75% of the wheat in a flash.

The economy (wheat field) grew bigger and everyone had a little more wheat but the $10b kid got way more than the others and can now buy another combine for the fleet to get even more next year.

Without some rational tax on inherited wealth, we will create (and already have created in the United States) a plutocracy.

[breakpointalpha]

I'm sorry if someone mislead you into thinking wealth was, or could be, fair.

Your analogy is so far off the mark on how wealth is created, it's laughable.

$10 billion in family wealth is almost never held in cash, it's invested in companies, land, and other ventures. Wherever an investment is made, people are put to work collecting salaries and benefits, generally speaking.

You've made a gross oversimplification, and a misleading one at that.

[mmcconnell1618]

I never said everything had to be fair. If a worker with a scythe hands it down to their child, that child has an unfair advantage compared to the child of a worker with no tools. It's the degree of the unfairness that matters.

No, not misleading at all. I never said the $10b kid had cash. Obviously, wheat expires (cash) and would be converted into another form of wealth. In this instance, he buys combines which have to be built by someone. You might even say he's a job creator.

But.... and this is a big but.... all investments are not job creating investments. Financial services, speculative investments, automation and robotics that increase worker efficiency but reduce the number of workers. I would argue that the efficiency of $10b in capital in the hands of a single person is far, far less efficient than $10b distributed across many people who use it to consume goods directly. The control of wealth by a small group produces a system where the rules favor the wealthy minority at the expense of the less wealthy. You can only go so far before the guillotines come out and the people take matters into their own hands.

[hedvig]

Yeah but a majority of us believe it should be taxed and not just cross our fingers that some jobs are created for a while.

[paulddraper]

Image the economy is a field of wheat.

Someone comes in with a tractor plough and plants twice a much wheat as last year. There is now lots of food in the economy and bread and pies.

In fact, the tractor plough plants so much wheat year after year that a few of the farmers stop planting and start working on building and maintaining tractors.

Eventually the tractors do well enough and wheat is cheap enough that the some farmers can afford to raise wheat-fed cattle.

[refurb]

Reading to your kids gives them a huge leg up. Should we stop parents from doing that?

[Frondo]

It's a problem if you care about any of the measurable real-world consequence of wealth inequality.

It's also a problem if you view it as a symptom of a system that isn't functioning well at giving everyone a fair shake in life, in participating economically or politically.

The number itself isn't a problem, it's what it causes and what it's caused by that's the problem.

Get money out of politics, get everyone a vote and the capacity to use it, make sure everyone's fed and housed adequately, everyone has access to health care and education ... make it so we're living in a Star Trek TNG universe, and I don't care about how much the next guy has either.

Until then, it's worth looking at, at least the very least to help us to see why we don't have all those nice things.

[nicoburns]

No, but other people having $10bn of disposable income increases prices for you. Or if you look over the long term, skews the economy towards producing luxury goods rather than meeting the basic needs of ordinary people.

[refurb]

Pretty sure a guy/gal who has $10Bn of disposable income isn’t buying underwear at Target like me, driving up the price.

[nicoburns]

They're not driving up demand, they're driving down supply, by making it relatively more profitable to make the goods that they do want, and thus relatively less profitable to make budget underwear (and other basic goods).

[chrisbennet]

But owning property in your neighborhood my drive up your rents so you need to move.

[ahoy]

It does when that neighbor buys my apartment building and hikes my rent.

[astrodust]

It also does when your neighbor wields such enormous political power they can get you evicted from your building under eminent domain, bulldozes it, and replaces it with condos you can't afford.