The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.
The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.
It's really not the easiest. You have to prevent gifting things at a lower tax rate while alive. That means it comes bundled with income tax or gift tax implications.
Fairest? I mean, land value tax is fair. So are Pigouvian taxes. In fact they're arguable more than fair. Not having these taxes is arguably unfair. Who deserves ownership of natural resources or to inflict negative externalities on others?
Taking things someone earned through labour and not letting them give it to who they want isn't very fair.
I think to everyone but a nepo baby it's clear that the children of the rich don't deserve their wealth.
Wow, someone downvoted me? The definition of the word "deserve" is:
> To deserve means to be worthy of, entitled to, or to have a valid claim to a reward, punishment, or treatment based on your actions, qualities, or circumstances
So you genuinely believe that nepo babies, despite not taking actions or creating any circumstances to earn their wealth .... nevertheless deserve to have it anyway?
I flip that around. People who have worked, earned, invested, AND paid taxes their whole life “deserve” to be able to give it to whoever they want.
> It is great to want to give your kids a head start in the world, it is terrible for them and the people around them to set them up for life.
How is it terrible for my kids to not have to break their back like I did to build the wealth I'm looking to pass on to them after I die? Why should they go through the same struggles that I did? It is up to them to squander it or transform it into even more wealth to pass it down to their children and so on. Ideally the former, but sometimes what parents dream for their children does not always come to pass.
Inheritance tax in practice is implemented above a certain threshold.
There is nothing wrong with striving to give a heads up in life to your kids, on the contrary, it's a core, visceral instinct of parents to do so, and removing that would be alienating.
There is a certain level of wealth though, where the "heads up" transforms to an unstoppable compounding lever.
France for instance has a progressive inheritance tax (starting at 5%, up to 45%), triggered for children inheriting at 100k€ per parent. In practice, 50% of the population inherits <70k€.
Also, the proposed Zucman tax in France for instance is triggered starting at 100M€ wealth. At these levels, a mere 2% risk free investment yields 2M€ annual income, this is enough to both compound and enjoy a very luxurious lifestyle. This level of wealth is unstoppably compounding, and that is why it is proposed to tax it.
If you don't, well you end up with a US situation, where disproportionate wealth (and thus power, influence) end up in the hands of random citizens with their own agendas, possibly (likely) orthogonal to the interests of the majority.
Unless i've misunderstood the text, the Zucman tax proposed a minimum 2% tax rate for the >100M€ rich bastards who don't already pay 2% of their income in taxes, not an additional 2% on top of existing taxes.
My grandparents didn't pass away until my folks were in their 60s, my remaining parent most likely won't die until I'm in my 60s.
I also went to give my children the world, but giving them a few million when they're about to retire doesn't really do much.
parents wanting to support their kids should do things like pay for college or a trade school, cover their grandkids daycare costs, help them buy their first home. We charge young parents so much money they don't have, and, much like covid, only seem to cater to old people for whatever reason. I guess because they have the money.
> wealth tax is on inheritance
As a point on terminology: That's not a really a wealth tax on the accumulated assets at-rest own by the (now eternally-resting) owner, but an income tax on the wealth as it moves to the recipients who didn't have it and are getting a massive gift.
It just happens to be a kind of gift/transfer we've decided because of tradition to consider as a special case, where (A) it happens right after a given dies and (B) the giver is frequently but not necessarily related to the recipient.
Just curious what you think the correct solution is? You're rich, you have a kid, you die when the kid is 2yrs old. So they get nothing? 12? 22? 32?. Is there some "correct" number? If you're raising them in some $100m home do they get booted out and put in a tenement?
On the other hand, most people die closer to 75-80 and their kids are 50+. Leaving inheritance to them isn't really spoiling them as they are alread adults with established lives.
In the US, the inheritance taxes don't kick in until $15M ($30M for married couples). Even at 2 years old, a child can inherit more money than most people will make in their lifetime before a dime is paid to the IRS.
Estate taxes kick in at much lower threshold in most States. Washington had to repeal their recently created 35% estate tax (for a combined 75% rate) due to overt capital flight to places like Idaho. The exemption in Washington is $3M.
I don't care about estate and inheritance taxes much but many people do and it empirically drives behavior.
Federal inheritance taxes. There are also state inheritance taxes in many states. NY, for example, kicks in at ~$7M. MA kicks in at $2M.
poor little multimillionaire :( my heart breaks for their 90th percentile wealth.
> NY, for example, kicks in at ~$7M.
Won't someone think of the children? The very wealthy children paying a 3% marginal tax rate on some of their multi-million dollar inheritance?
Honestly my experience with most of these kids is they are so innumerate they won't even notice the tax
The problems with inheritance tax is that they can be avoided through trust structures and insurance schemes. In theory it's a good tax, but in practice many wealthy people figured out how not to pay it.
Those schemes are also human-created though, and can be human-fixed. I've never really understood the arguments that go like: "This regulation won't work because the people it targets will avoid it through loopholes and other schemes." Well, get rid of the loopholes and schemes, then!
Granted, this requires lawmakers to explore more of the "exploit space" around their proposed regulations, but I don't think that's really asking a lot of them.
The only way to get rid of tax avoidance is to simply tax transactions, every time, for every person, on every transaction.
“Oh, that’s regressive” they will say.
Make it small per transaction. A rich person spending 100x what a normal person spends will pay 100x as much tax. A billionaire spending 10000x what a normal person spends will pay 10000x as much. And they will also be taxed if they borrow money (that’s a transaction) against assets so they don’t have to sell them.
And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.
> And when someone inherits, that’s also a transaction. Money moves from one person to another. So that same tax applies.
This is a big one—we continually decrease the estate tax, which is already waived until you get to 'fuck-you-money' at the federal level (around $11 M)
> It is great to want to give your kids a headstart in the world
I might live till 72, my kids will be my age right now when they hit inheritance instead.
That's not a headstart.
I would disagree, I think income taxes and inheritance taxes are morally wrong. Earning money to support oneself and family instead of relying on public largesse should not be taxed. Passing the fruits of a lifetime of work to ones heirs so they can continue do productive work instead of relying on public largesse should not be taxed.
> Earning…
Inheritance is, notably, not earning it.
> continue do productive work
That's a pretty bald assertion. Useless nepo babies abound.
> relying on public largesse
Any chance the existence of a stable, well-educated, high-trust society benefits the children of wealthy people at all?
Yes.. spend enough time amongst the inheritocracy and you'll see the wealth is as often as not wasted on them.
There's just too much fun to be had with 0.1% wealth that you didn't have to sacrifice your 20s, 30s (and maybe 40s) to build. Coast at some job with a top 25-50% income and 0.1% inheritance in NYC and live the life.
So if you're spending your inheritance living the high life, that economic activity benefits a lot of other people. Still a net positive in my view.
I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.
The problem is that theres a lot of stuff in the tax code that allows those at the higher end to also defer taxes indefinitely. So not taxing estates/inheritance, and allowing these deferrals leaves assets untaxed at the high end forever.
For example, step up basis allows inherited assets to have their cost basis re-struck at the value at time of inheritance. So if there is no inheritance tax, the assets transfer to a new owner and a large chunk of value is forever untaxed, even when/if they eventually sell.
Similarly all sorts of interesting stuff that can be done with trusts. Again stuff that's only accessible / worth the hassle to 1%.
In a world with extreme outcomes due to scaling, we might accidentally be re-inventing the hereditary aristocracy if the assets can accumulate outside the tax system.
I'm curious how you envision money ever leaving politics. I hear this phrase often and every time I do it feels more and more nonsensical. Politics is what we call the social aspect of resource management (it's often called "political economy" for this reason). The only way I can see to remove money from politics is to create a society that has no money at all. I assume that isn't what you mean?
I'm sure it can't be removed entirely, but we could, for example, start imprisoning people who give or accept bribes.
We already do that.
- Bob Menendez (Senator)
- Randy Cunningham (Congressman)
- William J. Jefferson (Congressman)
- James Traficant (Congressman)
And a bunch more at more "local" level...
If we already did that, half of governemnt members across the globe would be in prison. And as much as i would enjoy to see all french politicians rot in jail, i don't think that's happening anytime soon.
Anything recent? The practice seems to have fallen off in recent years.
My dude, Menendez was imprisoned in 2025...
Still doesn't seem to be happening as much as it should lately. We have worse things being done by people currently in office. Maybe I should ask, any recent Republican examples?
Right it seems like one of those libertarian perfect-world talking points that ignores the impossibility of implementation.
There's so many indirect ways of influencing politics given lots of money - alternative media, buying out local news, controlling national news.. making entertainment media of your own ideology. Fund interesting groups around particular topics. Give poor Ivy League grads a job and groom them for higher office.. oh wait.
Sure, and rape helps the therapy industry.
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
I think there a a long way to go between inheriting money and rape.
Bastiat was opposed to inheritance taxes. He wrote about this in Economic Harmonies. I think he'd call the connection you're trying to make a stretch
Yes, the famous bourgeois economist Bastiat is certainly a reference in how to provide economic justice on this planet. /s
To be clear, i'm not exactly defending inheritance tax if resources are shared another way. For instance, it would make sense to let people keep a − modest − home across generations. But i'm tired of rich capitalist tech bros saying income taxes are unfair because they've worked so hard, and inheritance taxes are unfair because they've already been taxed.
> Useless nepo babies abound.
Useless non-nepo babies abound. Useless rich people abound. Useless poor people abound. And?
>I would disagree, I think income taxes and inheritance taxes are morally wrong.
So what taxes aren't "morally wrong"?
Consumption taxes and sin taxes.
Consumption tax is sales/VAT tax excluding some necessities and capital goods. Yes, there are some awkward edge cases: in the UK the exclusions were food and children's clothes, which leads to battles over prepared cold food (e.g. sandwich), takeaway and restaurant dining.
Sin taxes are obviously things society might want to discourage, mainly for health reasons, like alcohol and smoking, but also gambling and externalities, like pollution. Some might stretch that to all carbon emissions to moderate climate change.
Don't tax things you want: working / income and investment / capital gains.
Inheritance tax is doubly wrong because the wealth is already taxed, and death is unavoidable (but emigration is possible, which might help in some countries).
Consumption taxes disproportionately impact the less wealthy, who spend most of what they earn on consumption of necessities.
> Don't tax things you want: working / income and investment / capital gains.
What if I don't want hoarding of wealth?
Canada just gives you a fixed amount of cash every year for the sales tax that they estimate that you paid on a regular amount of consumption (HST credit) which solved that problem.
I don't think it's fair that someone who earns $400k and spends $400k is paying roughly the same taxes as someone earning $400k and spending $100k. You should pay more taxes the more luxurious your life is, not the more productive you are.
Where's the other 300k going? If you aren't spending it, what does it matter if it all gets taxed to nothing? And if you end up spending it, then boom there's your consumption that needs to be taxed.
In a world where you are the supreme ruler, then what you individually want matters. In our actual world, it’s more about what the society in general wants.
> In our actual world, it’s more about what the society in general wants.
God, if only!
In the actual world, it's more about what the powerful want.
Why do you think billionaires spent more fighting Mamdani than they stood to lose in new taxes?
> So what taxes aren't "morally wrong"?
Taxes on somebody else.
Property taxes on real property or possibly land value tax (it's a limited resource, at least in places where people want to live, and requires a lot of public infrastructure to support its value there).
Tariffs, various usage taxes and fees.
Need a mechanism to address the regressiveness of some of this but that's an implementation detail.
How is dynastic wealth not immoral?
Their take on inheritance taxes is insane, but I tend to agree that income taxes are immoral. Corporations get taxed on profits: If OkayPhysicist, Inc. spends $200 to make $300, it would be taxed some fraction of $100. Individuals, on the other hand, get taxed on revenue. It doesn't matter if it costs me $4000 in rent, groceries, transportation, etc., to make $6000, I'm getting taxed on that full $6000.
Capital gains taxes, on the other hand, are completely moral, and should be much, much higher. Capital investment benefits enormously from the State protecting their property "rights" (you don't need to hire a private army to prevent the workers from just deciding to run your factory for their own benefit, that's what the cops are for), and at a minimum the state would be justified in collecting that dividend for itself. Bootlickers and profession bootlickers (i.e., economists) would complain that a high capital gains tax disincentives investment, but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
>It doesn't matter if it costs me $4000 in rent, groceries, transportation, etc., to make $6000, I'm getting taxed on that full $6000.
So if I spend $5000 on groceries because I'm eating wagyu steak and lobster everyday, is that a fair "expense" too? You might retort that's obviously a luxury and there should be some baseline that's tax free, but then you're just describing the standard deduction.
>but as long as the value of investment is positive, that is, outpacing inflation, it makes zero sense to let your money languish in a Scrooge McDuck pile rather than get some value out of it.
...or they take their money elsewhere instead.
Businesses don't pay extra tax because they chose to met their needs at a greater-than-minimum cost. If my boss buys some reagents from Dave for $300 bucks instead of Bill's $200 offer, the company's not paying taxes based on a hypothetical $200 cost basis.
If we want to tax "luxury" expenses, we have excise taxes for that.
I would disagree. How else would you pay for the schools, roads and hospitals so that you and your heirs can "do productive work"? I mean i could imagine alternatives, but none that's compatible with a capitalist system.
And I think that inheritance, while a natural desire, is morally wrong. It's an example that desires aren't always congruent with morality. People will go to great lengths to justify their conclusion.
Are gifts morally wrong? If I'm near death is it wrong for to give my assets to my children beforehand, or does it only become immoral if done via a will?
Yes. I get the desire, but gifts of wealth when done at scale contribute to the destruction of society. Quantity is a quality all its own.
> while a natural desire
Or look at monarchies and titles of nobility. In the past direct inheritance of political assets was common, and acting on that natural desire, the people involve claimed that parents deserved to direct what they (and their ancestors) had accumulated on to the next generation of their own family.
Yet nowadays most countries and people have decided it is immoral, and they also took steps to make common forms of it extremely illegal.
My point is that economic inheritance today is just as much a social-construct as political inheritance was then. It exists because we permit it to exist, don't be fooled by anyone claiming it's an intrinsic law of the universe or a divine mandate by god that must be obeyed.
I think if we're saying inheritance (at least beyond some point) is morally wrong, then we're really just saying that achieving a certain level of wealth is morally wrong. So deal with that directly, rather than putting your hand in someone's wallet after he dies.
That is dealing with it directly.
If I had diabetes, taking insulin is an acceptable remedy even if there is no cure for diabetes.
First one makes sense, second one I’m quizzical about.
Inheritance taxes tend to only kick in at the 8+ digit range.
If anything, taxing that should encourage descendents to do productive work, eh? Since not taxing it, but taxing other things actually discourages it?
I can’t imagine how it would result in anyone relying on public largesse either unless they are really terrible with money. In which case a few extra zeros is unlikely to help any?
I suppose like with many things it's a question of scale. A little is good, more is better, but at some point it may start to have negative consequences.
Not taxing inheritance is morally wrong because it supports generational wealth and inequality.
The federal estate tax is 40%. NYC adds in another 16%.
> The federal estate tax is 40%
It's misleading to cite that since it basically never happens.
The tax doesn't even come into the picture for fortunes below $30 million dollars (for two parents), and the rest of the time it averages ~14%.
https://www.cbpp.org/research/federal-tax/the-federal-estate...
Why not repeal it, then?
Is this perhaps some sort of badly-signaled satire, or a comment mis-submitted to the wrong thread?
I cannot understand what though-process led you to suggest repealing "it", whether that means the entire tax or whether it means reducing the number of brackets.
16% on the portion over $10M
Sure, but we're talking about rich people.
So you want to tax something that has already been taxed throughout the course of someone's life, just because they want to give it to their kids?
The only tax that is fair to everyone is a sales tax.
I live in South Africa where we have 15% VAT.
When I was little and playing SimCity 2000 I looked at the tax rates for the city and noticed that the sales tax rate was like 2%, and based on our 14% VAT at the time, it seemed super low to me so I upped it to 12% and was surprised at how unhappy the citizens were.
This gave me the impression that Americans wouldn’t be happy with a significant sales tax, or perhaps this was a city sales tax on an existing state sales tax, which yes, would be outrageous, or maybe Americans get taxed in some other way which makes up for our VAT.
Anyway, I look back and chuckle at my own lack of knowledge at the time.
I would love a VAT tax instead of the never ending stream of taxes we pay on everything else.
Americans are stupid. They see a higher tax on an iPhone they don't need, they will cry about it.
But they pay more at the end of the year on income tax, property tax, car registration, etc., they could care less.
Most Americans don't even look at their pay stub, and are more than happy to overpay their income taxes every paycheck so they get a bigger tax return at the end of the year.
They don't realize that money was theirs to begin with.
They complain about not being able to become wealthy while they give the government an interest free loan, when they could be investing that money and earning on it.
All of the money has already been taxed countless times.