I don’t like that the state can take part of the wealth you’ve worked for after you die. But obviously laws to steal money from everybody else are popular.
Sure. I don't like people using the infrastructures of the state and community plus community labor while privatizing their gains and socializing the costs.
Maybe we can compromise on you taking yourself to some remote spot cut off from a society and generating your wealth there? Then we can all be sure your gains are truly yours, and so nobody will mind you hoarding them.
A rich person already pays taxes at a rate that is currently heavily influenced by rich people, so I'm not seeing that as much of a justification.
But yes, when a rich person gives their money to another person, that other person now has to pay tax. An estate, gift, or income tax.
Many rich people pay their employees, some don't; wage theft is very popular, as are other forms of labor exploitation. But an educated, healthy, available labor force is a very expensive asset to create. We all invest in creating that through things like paying for schools, health care, and raising children. One of the ways we pay for creating that asset is taxes. Rich people, as the ones most benefiting from society, and also as the ones with the most spare money, should pay their fair share for that.
The recipient of a gift does not pay gift taxes. The payer does if they have not used up their lifetime exemption or unless it is belo the annual limit.
I believe in the US the current annual limit before a gift is taxed is $15,000.
EDIT: the point of raising it is in the context of this discussion, we are talking about the very wealthy. A $15,000 gift to their children isn't very much of a transfer as a percentage. To hand off large amounts of wealth to the next generation, for sure the annual gift exclusion isn't nearly enough to avoid inheritance taxes.
It's quite amazing isn't it? One minute you have the ability to direct wealth towards enriching your children's lives and then you're dead and the state says no we get to take 97% of all of it. It's no wonder wealthy people hoard wealth in none cash forms.
If you think death only takes away the ability to spend money, I have some bad news for you.
In any case, in the US the estate tax and the gift tax are basically the same thing, so rich people can give the same millions to their kids either before or after they die and pay basically the same taxes: https://www.cbo.gov/publication/57272
I was under the impression there's a large exemption for inheritances under a few million and then it's still a number lower than income tax on the rest.
Philosophically, you don't own anything after you're dead. Someone else, alive, is getting income in the form of an inheritance.
Of course 97% is nonsense. And $11.7M per family is completely untaxed, something the billionaires pushing for an end to inheritance tax do an amazing job of obfuscating.
Your money? It says right on them that they're United States Dollars.
Jokes aside, the rules of property are set up by society to encourage certain jointly beneficial outcomes. Money itself is an inherently social construct. (Imagine how far you'd get creating your own private currency that only you used.) And we are all temporary beings, here a little while and gone. Yes, some of the rules designate some of the property as yours to dispose of for the duration. Which is great! But make no mistake that these rules are contingent.
If tomorrow I hacked all the banks and land registries so I owned everything, people wouldn't say, "Well, I guess that's how it is now." The same is true if I did it technically within the rules. Everybody would make new rules. And they'd be right to. In the phrasing of James Carse, the current rules are the finite game, but like all finite games, the rules are generated by what he calls the infinite game: https://en.wikipedia.org/wiki/Finite_and_Infinite_Games
I think if modern life was a boardgame, no one would want to play because the system is too rigged.
To me it's silly to see how much unused land there is in the USA but people aren't allowed to use it because a few people showed up 150 years ago and claimed it for themselves. And when they did they stole it from other people. Now people are just supposed to respect that forever?
If more than one person is using a currency, it's definitionally a social activity then, and pretty clearly not what I mean by "your own private currency that only you used".
Money is already taxed multiple times though (in my part of the world NE US). If I buy a car with income received via dividends from Apple stock:
* state sales sax on car
* future city property tax on car
* fed dividend tax on money used to pay for car
* apple already paid state and fed corp income tax on money used to pay dividend
* some person already paid income tax on money used to buy iphones/macs/chargers etc.
Is your position that the estate tax in particular is egregious or that all taxes are egregious? If you only want money to be taxed once then you'd have to redo all the taxes no?
Observing the status quo isn't the same as rationalizing it. Many things exist in the world today which are unjust. Some are even common.
If it is possible for taxation to be egregious, then at some point there must be a boundary which is crossed. How can we define what is a just amount of property to confiscate with our subjective judgment?
It is a moral issue in principle. In practice it amounts to whatever politicians can get away with. Ideologues present wealth as evidence of greed. Envy is celebrated. The person with a bigger slice of pie is blamed for other's perceptions of insufficient portions, as if markets represent a zero-sum game.
Cries of, "You didn't build that" are overly simplistic and misleading. If they were valid, collectives and central planners could produce surpluses without need for individualized incentives. Yet history tells us a different story.
That slice of pie which so many here seem unhappy with is much bigger than what was eaten in years before. This is the result of individual profit incentives, competition and innovation, not taxation or central planning.
If it is to be a moral issue, perhaps we should start from the point of not coercing others or violating their property rights?
To emphasise this point, when an employer pays an employee wages, they pay it with a dollar that someone else earned (and paid tax on) and paid to them (and likely paid sales tax on). Money isn’t taxed, and neither are people; transactions are. An estate transfer is a transaction.
Once you've passed it on to them, it's their money, no longer your money.
The rule against perpetuities only prevents you from constructing a zombie legal entity which outlives you permanently. Some places have a fixed, high time limit; many merely have the non-onerous rule that you can only leave it to people who were alive at the time of your death.
When a human is able to amass billions today it is not because of their own abilities. With their own abilities alone they could at most build a mildly nice hut from mud and forest wood.
The reason they can build modern stuff is due to the work of billions of people networked in space and time (knowledge, processes & culture, tools, infrastructure) to which the "self-made rich person" has the extreme fortune to be able to build on (even today most people are born in places too far away to benefit equally from that network and are only able to access a tiny part of it, so no matter their own contribution they are lacking the base).
Tell me, why would a person whose accomplishments are ~99.99999% based on the work and accomplishments of others be allowed to monopolize it as if they were truly responsible for everything?
As far as I'm concerned the government should truly not be allowed to tax your entirely self-made mud hut disconnected from infrastructure in the middle of nowhere.
For all else, you benefit from gigantic network effects (in space: all other people alive making things, in time: everything we got from previous generations) and should pay your dues. Given that, even a very high tax rate especially after death is extremely generous. The descendants had even less to do with anything the person that sat in a perfect place in the human network accomplished by making use of their advantageous position (to be exact, zero). At most, their contribution is to be able to use said network very well - although it also happens a lot that they did so by preventing others from using it.
>Tell me, why would a person whose accomplishments are ~99.99999% based on the work and accomplishments of others be allowed to monopolize it as if they were truly responsible for everything?
Wealth is the incentive for the wealth creation you're observing here.
> Wealth is the incentive for the wealth creation you're observing here.
That's definitely not true. The great bulk of people, who do the great bulk of the work of value creation, can't possibly be motivated by wealth, because definitionally they won't receive it.
There's also no reason to think that the ecommerce revolution wouldn't have happened without Bezos or some other person becoming a zillionaire. There are plenty of entrepreneurs who are happy as long as they get to make things happen and make decent money.
Absurd levels of wealth are an incentive for wealth concentration, not wealth creation. The creation of value would certainly happen without that. And generally happens better without it, which is why we have things like antimonopoly laws.
Wealth is an incentive for wealth aggregation those aren't the same thing. More wealth would be created if companies payed their workers more (since poor people actually need the money to pay for things)
Businesses don't create value by overcompensating employees. Without the profit incentive for the entrepreneur there is no business. The consumer's problems are not solved, no jobs are provided and no value is created.
In some cases it does make sense for employers to increase compensation. Especially when productivity is high. Usually productivity gains are a result of innovation, which is incentivized by the profit motive.
> Without the profit incentive for the entrepreneur there is no business.
This just isn't true. I have entrepreneurs on both sides of family going back at least 3 generations. Many of them were happy just to create something and make a decent living.
I grant that part of corporate America's civic religion is pretending that greed is the only possible motivator for anything good. And maybe that's true for some people. But if you talk with actual entrepreneurs, especially ones outside the tech filter bubble, their true motivations are rarely about a chance at vast riches.
The profit incentive remains. The ends to which they apply those profits are up to the individual entrepreneurs. There's nothing wrong in my view with worker owned businesses, as long as it is a voluntary arrangement. From where I stand these businesses are entirely valid options which can exist in a free market. Where you paint them as as in conflict with the profit incentive or a 'civic religion of greed', you branch off into pure hyperbole.
Since we were talking about inheritance, how is this relevant? While alive the person has their wealth and the incentive you mentioned (if it's even all that relevant to them, but that's an unrelated question), and the next generation has the same incentive. More in fact if they have to actually do something compared to them simply inheriting a lot of wealth.
An easy hypothetical would be someone who is incredibly wealthy and near the end of their years. Inheritance and death taxes may reduce their incentives to contribute to the economy. Someone who is an experience job creator might choose leisure instead.
Keep in mind that death taxes may apply not only to what is inherited by family members, but charitable foundations created as well. Charity starts with the possibility of abundance.
Two wrongs don't make a right? I would agree that a free enterprise system
tends to grossly overcompensate its assignation of capital, but you don't cure
it with an even more inefficient system like taxes (which, if you've taken
econ 101, results in something more sinister called "dead weight loss").
Ultimately, it's not a question of how deserving billionaires are (they
obviously aren't). It's more a question of how to best advance the interests
of our species as a whole.
It sounds like you agree that billionaires are overcompensated relative to their contributions to society. If taxes aren't a good way to address this, what is a better solution?
Daytrader, yes. Flight controller, no. Unlike the buffoon with five kids who loses his shirt, your son's losses would presumably be limited to his allowance, at which point he'd learn canning might be more his calling. On the other hand, his chances of succeeding in forex are about as good as anybody else's.
Where do you see "two wrongs"? I don't understand this reply at all. I don't see the connection to what I actually wrote.
> Ultimately, it's not a question of how deserving billionaires are (they obviously aren't). It's more a question of how to best advance the interests of our species as a whole.
I agree, and I don't see any connection to what I wrote here either, meaning how this is supposed to be a contradiction to my point?
Everyone knows billionaires are standing on the shoulders of giants from Shannon to Shockley, neither of whom were billionaires. Getting these pioneers their just desserts from taxes, assuming they even wanted them, would be like using the wrong end of a hammer to nail a board. My initial response (the one you thought missed your point) assumed this and hopefully also disabuses you of the notion that life can or should be fair.
Maybe we can compromise on you taking yourself to some remote spot cut off from a society and generating your wealth there? Then we can all be sure your gains are truly yours, and so nobody will mind you hoarding them.