Blow Up the Tax Code and Start Over

[adesigar]

All you have done on this thread is complain and whine about the poor little people living in tiny little 7 million dollar homes  and inheriting paltry 1.2  million dollars being grouped with the billionaires. For most of the U.S. population a 7 million home is more than most will earn in their entire life. So maybe you can come down to earth (just a little).

 

Jealousy looks a lot like that.

 

People with assets that don't want to be seized are just whiners.

 

Call the cops because you are being robbed.  Ah, whiner...  there are people who don't have televisions.

 

You provided a list of reasons why they need to be seized, and those reasons are wrongheaded.  A person inheriting $1.2m is not getting a dynasty and is not tipping elections.  Exasperated and defeated, you instead switch to name calling... "whiner".  Don't you have a logical argument you can present in lieu of character assassination?

 

Let's say it was $6m divided 14 ways... what is the social goal of limiting someone from inheriting $428k?  Does it "unfairly" get his children admitted to private school?  There must be something left you can argue after that pathetic mayoral race comment.  Can't you just live with the fact that life isn't fair and if your family wasn't frugal/lucky/etc... you may not have the same as everyone else?  Or is it absolutely necessary to take from other families what they may have amassed from 94 years of frugality and compounding (my grandmother is that person... died three months short of 94 with paint peeling from the ceilings because she couldn't justify the cost of repainting). 

 

I mean, you should have seen the stuff we had to go through -- horse hair mattresses brought over from England after WWII.  They even had an old brown upholstered couch that was inherited from my great-grandmother... and no, not the valuable type of antique, but rather the falling apart kind.  The kids playhouse in the yard was built from the packing crates that were used to bring their goods over from England when they moved.

 

Nothing but thrift and holding onto shares, reinvesting the proceeds.

 

Oh, and it's "too much" you say.

 

Okay, well it wouldn't have been "too much" if she had given it away to us all 30 years ago before it ballooned in size. 

 

But....

 

She....

 

Didn't...

 

Want....

 

To....

 

Ruin....

 

Us....

 

So she let us wait until we were graduated from college, married, 35+, etc...

 

And then left each grandchild $100,000 Australian, with the rest going to her children who had to wait until 65+.

 

Well since you are so fascinated with your family storyline and are too dumb to realize that this isn't the poor trying to rob the rich but a public discussion forum where a I gave an opinion on what I though was a dumb fairy tale proposal since the tax solution isn't so easy. Yes im exasperated that someone who is regarded so highly on this board had absolutely nothing to add to the discussion except drivel.

 

Heres a little family storyline from me.

 

Grandfather escaped what is now Pakistan in 1947 (after World War II) with wife and 2 kids. Lost everything thanks to the "people from England" who decided to divide the country before leaving. Their house was being raided by a mob so he got out with nothing. Came to India as refugees (no couch, no packing crates, no goods from the move). Lived in a refugee camp (what playhouse, what yard). MY family build up from a slightly lower start. When my Dad grew up and moved to a different city he spent months eating once a day so he could save. Walked 5 miles one way to save bus tickets. On my first job while in India I was earning $100 per month and saving/investing from that. 2 years ago my eldest daughter who was 7 years old bought her first share of Berkshire Hathaway (B) with her own (birthday and tooth fairy) money.  Don't lecture me on thrift, saving and investing. I am doing fine thank you.

 

[ERICOPOLY]

The current estate tax laws allow a family to make gifts (tax-free) up to their lifetime gift-tax exemption.

 

That exemption is the exact same size as the total estate tax exemption.

 

My wife and I can each give about $5.3m to our kids, who are currently aged 7 and 9.  That's $10.6 million total.

 

Our optimal tax decision is to go ahead and do that now.

 

So now a 7 year old boy has $5.3m and a 9 year old girl has $5.3 million.  Now, I can give it to a trust in their name instead, but they will (by law) learn about that trust and it's value when they turn 18, even if they are not allowed to take distributions until a later time.

 

So let's just assume they now both find out that they each have at least $10m by the time they are 18.

 

Bravo!  I just love your idiotic view of social justice.  THANK YOU FOR MAKING AMERICA LIKE THIS!!!!

 

Instead, in my view of the world I keep it in my own name until they're in their 40s or 50s before I let them know that they are getting anything.

 

And that's the lesson you were supposed to learn from my grandmother anecdote -- under Australian law there is no estate tax and thus no incentive to give a huge sum of money to extremely young children who will then discover their fortune when they turn 18.

 

America will penalize my family for what I have done for my children.  We are not gifting them anything early, and thus the money will grow under my name and the future gains will be subject to estate tax.

 

So my family is voluntarily paying a ton more tax because we don't want to ruin our kids.

 

Other families are ruining their kids and you support this system.

 

You could ruin a great many less families by abolishing the tax for all but the very large dynasties which is ostensibly what you care about anyhow.

 

Does taking 45% of a $20 billion fortune keep inherited wealth from interfering with mayoral elections?  Does it break up a family dynasty.  Just apply a little bit of common sense to your logic and see if it does. 

 

A family with $20 billion holds pretty much the same amount of power as a family with $11 billion, no? 

 

It's families that break down the fortunes, not this estate tax.

 

$17 million of my grandmother's money was inherited by 22 different people.  I'll point out that it's less than a million dollars per person. 

 

Divided equally, each person has to grow it 22x in real terms just to restablish the power the family "dynasty" had before.  Bloody likely!!!  And yet you scoff at it.  What is not perfectly obvious about the math to you?

 

[adesigar]

Boy, a penis size debate about how poor your upbringing was.  "Oh yeah, you think your grandmother was poor, well my grandfather was poor!"  That was awesome.

 

So you mean I was the one who said

 

I mean, you should have seen the stuff we had to go through -- horse hair mattresses brought over from England after WWII.  They even had an old brown upholstered couch that was inherited from my great-grandmother... and no, not the valuable type of antique, but rather the falling apart kind.  The kids playhouse in the yard was built from the packing crates that were used to bring their goods over from England when they moved.

 

I just put you in your place. There are people who have been through worse and there are 5+ Billion people who are currently in that condition but man we need to think about the 5 million dollar estates and the families they are being ruined by estate planning. 5 million now or 40 million in another 30 years.

 

edit:

Done talking about this. Feel free to have the last word.

[ERICOPOLY]

I just put you in your place.

 

Yes, she had a frugal streak.  She really did have a horse hair mattress.  Lifestyles of the rich and famous in my "family dynasty".

 

I've pointed out that she was frugal.  She had money to spend but didn't waste anything and it grew to a huge sum over 94 years.  She could have remodeled her kitchen 50 years ago or bought a larger house, fancy cars, and wound up with nothing to tax. 

 

You countered that your grandfather was dirt poor.

 

And by doing that... you...

 

You put me in my place?   wtf?

 

Buffett points out that he lives relatively frugally -- he says he lives like most other people aside from how he flies.  Why don't you go put him in his place!

 

So everywhere you go it must be really frustrating for you -- you come across a very wealthy person who lives frugally despite conspicuous consumption all around them...  somebody heralds them as an example of thrift, and you put them in their place by saying your grandfather was poor.  Does this actually make sense to you, and do you think you should really be making that comparison?

 

How is your grandfather and 5 billion people an example of thrift if poverty leaves them with no choice?

 

you:

"Oh, that person had extreme self control?  Well that's nothing, in my family we were dirt poor and slept on horse hair mattresses too".

 

See?  it makes no bit of sense whatsoever for you to say that.  Your grandfather didn't live that way as an extremely rich person.  He had no choice in the matter. 

 

You were just bragging that he was poorer than my grandmother after I pointed out that she was just loaded with money when she died -- why would you do that?  I've got no damn clue -- it just makes no sense to me to have a penis judging contest over how your grandfather was poor after I pointed out that my grandmother had $17m and lived frugally despite the fact.  What logical point are you trying to make?

[Guest Schwab711]

Interesting proposals.  These are sane.  Instead of these here's what we'll get with "reform"

 

-Businesses in Iowa that have less than 35 employees get a special tax credit.

-Companies that employ specialty iron workers who only use hand tools will get a tax break

-Taxes will increase on large companies but they'll find a way to outsource their work to a tiny tax-free island in the Pacific to avoid the new taxes

-Somehow spending for a new highway will be included

-One category of taxes will drop by 5%, another increase by 5% and net to no difference.  Yet one side will tout the 5% reduction and success while the other will claim it's a 5% increase in our taxes.

 

All proposed bills in congress (I'd prefer just senate but then I'd be OT) must be read out loud by one of the sponsors prior to voting. The bill may only be read by a single person without restarting.

[ERICOPOLY]

I will not rip on adesigar any further. 

 

I've had a fairly unusual life experience that let's me see what's wrong with the estate tax system that others haven't contributed to the discussion.

 

1)  I grew up in a rich neighborhood and went to a private school.  Now that I'm 42 I can see how the kids with the trust funds were changed.  It altered their lives and generally in a negative way.

 

2)  My wife's family was rich once (wife's grandfather was in US congress when Eisenhower was president).  But it was dwindled away and my two brother-in-laws have been impaired by the money that was gifted to them every year under a scheme to reduce their estate taxes.  My father-in-law was an estate attorney and favored this kind of thing.  My mother-in-law's brother inherited businesses and was an alcoholic that wasted it all away.

 

3) In my own family the only wealthy person in my lifetime was my grandmother in Australia who didn't have to worry about estate taxes, so she just held onto all the money and nobody was spoiled by it.

 

 

The thing that is frustrating for me is that I could avoid most of my eventual US estate taxes if I just gave the money away to my children today.  That way it grows in their estate and not mine.

 

And that's what the estate tax code does -- it encourages families to do exactly that.  They'd rather roll the dice that it won't ruin their kids rather than risk the estate tax wiping out what they hope to leave to their families.

 

This is what an attempt to make things "FAIR" has done -- it has directed huge sums of capital into the hands children.

 

Yet, IMO, people don't see this because they are too busy with their jealousy and sense of fairness to see the second-order effects of their beloved estate tax.

 

What is more fair?  An America where children get their inheritance very young or one where they get it later in life after they've found their way in the world?

 

We have different ideas of what's fair apparently.

 

My strategy of letting my kids find their way will be taxed more heavily versus if I just gave them the money today.  Is that what the estate tax proponents want to incentivize?

 

 

 

[ERICOPOLY]

Well... actually the estate tax laws in Australia did cause one problem...

 

Early on when my father was younger, Australia had an estate tax.  My grandparents set up a family partnership in response and named my father, his sister, and his two brothers as partners.

 

The goal of the partnership was to ensure that future appreciation of the investments occurred outside of my grandparents' estate.

 

It was tacitly understood that while in the kids' names, they were not to touch the money and it was just an arrangement to reduce estate taxes.

 

Australia eventually abolished the estate tax and so this entire episode was unnecessary.

 

Before that happened my strong-willed aunt married a catholic and my grandmother was horrified and resisted the marriage.  Out of protest, my aunt demanded her inheritance which was legally in her name at this point.  She was in her early twenties.  She then proceeded to donate her entire inheritance to the Catholic church in order to spite my grandmother.

 

Rather than selling her shares, my grandparents cashed her out by mortgaging their real estate property. 

 

There was a huge fight when my grandmother died because my aunt believed that she was being cheated when she was left a relatively paltry amount compared to what my father and his siblings were left.  This is because the mortgaged land was a large property that today is known as the Avondale Golf Club in Sydney -- my grandfather purchased the land as a green belt and never thought it would be unlocked for development potential as soon as it did.  My aunt was cashed out when it was still a green belt and thus never shared in the astronomical appreciation that followed.

 

She wants that money today and regrets her decisions made when she was still relatively a child.

 

None of this would have happened and there would be more harmony within the family today if the tax code had not sucked my grandparents into a scheme of assigning the assets over to immature people without the proper life experiences to realize what they had.

 

We can return to the discussion about how people who oppose the estate taxes are just whiners -- that was a real discussion compared to my contributions.

[onyx1]

Eric,

 

I feel your pain.  For the expressing the desire to pass on the money you have worked your lifetime to accumulate as you see fit, you get called a whiner, a dummy, a jerk, insensitive to the poor, greedy, and in need of being put in your "place". 

 

According to the moralizers, you have enough acumen to accumulate wealth but lack the capacity to distribute it in the "right" way.  Of course what is "right" can only be defined by self-anointed intellectuals who want to compel their will on the masses in order to save the world from injustices.  What saints!

 

That these people believe that they know more about how much wealth your children should have than you do, can only be explained by arrogance.  To me, the greedy people are not those trying to control their hard earned wealth, but rather those who seek self-satisfaction by smugly demanding that your money be spent in a way that makes them feel good. 

[Tim Eriksen]

Eric, you have a blind spot here. You are being a real jerk. Stop.

 

I'm curious.  Why is adesigar not getting the same comment?

[one-foot-hurdles]

Eric, you have a blind spot here. You are being a real jerk. Stop.

 

I'm curious.  Why is adesigar not getting the same comment?

 

+1

 

[ERICOPOLY]

One thing that was argued is that the richest 40 families control more than a trillion in assets and will influence our politics with that money.

 

Well... a little bit of common sense I'll share with ye'...  they got that way DESPITE the estate tax.  The majority of those people didn't inherit their wealth.

 

So if the thing you want to get rid of is the richest handful of people having more than a trillion put together, then you need to think of another solution.  Obviously, the estate tax AIN'T doing it for ye!  Arrr.... matey!  That's a brain stumper for ya there.

 

You'll just have to pass a law that nobody can have more than X amount of money -- because that's your stated problem (that too few people have too much and that they'll therefore influence politics).  You have that problem based on what people are accumulating on their own -- it's not coming from gifts/inheritance.  Gates and Buffett, Soros, Munger... did they inherit it?  The Google guys, the Facebook guys, the Oracle guys, the Koch Brothers.

 

You just need to confiscate their wealth to solve this "problem".  Estate taxes obviously ain't doing it for you.

 

This discussion sort of reminds me of the drug discussion.  I think all the drugs should just be legalized because we've tried to throw everyone in jail already and here we are several decades later with as big a drug problem as ever.  Criminalizing it just creates criminals (very rich ones and violent too).  At least you could get rid of the criminals by legalizing it.

 

 

[Guest Schwab711]

It's actually 40 richest families in the world (and a loose definition of family), but not a big deal. It should be no shock that a few individuals control large sums of wealth. This has generally persisted throughout history. I also don't think it should be a shock that wealth rarely lasts. Families die out or gain so many branches that wealth is spread thin (as Eric points out).

 

I agree with Eric in general and I'd even add that the trend of hatred/jealousy towards the wealthy, seemingly gaining momentum over the past decade or so, is ridiculous! They went from being celebrated as carrying out the American Dream to being assumed to be evil. Every action is dissected with bias to support this belief of "evil". I also dislike the general consensus (not on this board - more so my generation) that assumes money fixes all problems.

[Jurgis]

Eric, you have a blind spot here. You are being a real jerk. Stop.

 

I'm curious.  Why is adesigar not getting the same comment?

 

Because Eric is being a jerk and adesigar isn't.

[ERICOPOLY]

Eric, you have a blind spot here. You are being a real jerk. Stop.

 

I'm curious.  Why is adesigar not getting the same comment?

 

Because Eric is being a jerk and adesigar isn't.

 

You might not have read the entire thread, but if you follow the plot he argued that people with $5m are swaying elections.  When I pointed out to him that $5m divided amongst many heirs in not enough to sway an election, he said I was a whiner.  So a person who has his argument knocked down and then resorts to calling you a whiner as a last resort, is not a jerk?  I don't really get why anyone missed that.  After that point, he argued that he was poor and that his grandfather was poor and that if I had 7m I should basically just shut up because he was poor and his grandfather was poor.  My property rights mean nothing because there are people out there with 1.4 trillion dollars and it's a big problem and I have 7m and I should stop whining because he is poor and so is his grandfather.  I'm supposed to put up with all of this and I just couldn't -- so I lost my temper and became a jerk too.

 

 

[Jurgis]

I agree with Eric in general and I'd even add that the trend of hatred/jealousy towards the wealthy, seemingly gaining momentum over the past decade or so, is ridiculous! They went from being celebrated as carrying out the American Dream to being assumed to be evil. Every action is dissected with bias to support this belief of "evil".

 

There's nothing to be celebrated about somebody being rich.

 

If they build great companies, create great inventions, help the humankind, that's something to celebrate. If they get rich on the way, great for them.

 

But just being rich or becoming rich is nothing great in itself. It's not gonna be popular sentiment on this board, but making a bunch of money by investing does not make you great.

 

On the other hand, making a lot of money is not evil either if done in legal and moral way.

[Valuebo]

It's actually 40 richest families in the world (and a loose definition of family), but not a big deal. It should be no shock that a few individuals control large sums of wealth. This has generally persisted throughout history. I also don't think it should be a shock that wealth rarely lasts. Families die out or gain so many branches that wealth is spread thin (as Eric points out).

 

One of the first hits on google:

http://www.theguardian.com/society/2015/jan/31/inheritance-britain-wealthy-study-surnames-social-mobility

 

After examining the records of 18,869 people, and dividing them into three categories, the rich, the prosperous and the poor, Clark and Cummins agree. They suggest that the passing on of wealth is far more persistent over the generations than previously acknowledged, noting that there is a “significant correlation between the wealth of families five generations apart”. Put simply, the descendants of the wealthy of 1858 are still much wealthier than the average person in 2012.

 

The economists calculate that this “elasticity” of intergenerational wealth is a remarkably stable 0.75. A zero rating would indicate that no wealth at all was transferred down the generations, while a figure of 1 would suggest the “perfect transmission” of wealth between parents and their children.

 

Or doesn't that count as lasting? Imo it does... Social mobility is still nowhere.

 

So nope, plenty of people do inherit their wealth. I'm not pro a heavier inheritance tax (Eric made a good point with the problem of wealthy and f*cked up kids) but pro a yearly wealth tax above a certain threshold (of many hundreds of millions or even billions). Make it 12-month LIBOR rate with a maximum, idk... Decent wealth management can keep up with this and you can view it as an annuity to society. That way when the rich get richer, they are at least paying more YoY as well... It's a better investment for society to let those people keep compounding their wealth and letting them give a certain percentage/year than trying to tax them big just once (which fails anyway).

 

[rkbabang]

Eric, you have a blind spot here. You are being a real jerk. Stop.

 

I'm curious.  Why is adesigar not getting the same comment?

 

+1

 

+1  My ancestors were all poor (my father grew up with dirt floors/no plumbing/no heat/ac/ never learned to read etc... in fact except for me most of my family are still what many here would consider poor.  Yet I agree with Eric 100%, and don't think he is being a jerk in the least.  You should keep what you create and be able to do whatever you wish with it before and after you pass on.

[Guest longinvestor]

It's actually 40 richest families in the world (and a loose definition of family), but not a big deal. It should be no shock that a few individuals control large sums of wealth. This has generally persisted throughout history. I also don't think it should be a shock that wealth rarely lasts. Families die out or gain so many branches that wealth is spread thin (as Eric points out).

 

One of the first hits on google:

http://www.theguardian.com/society/2015/jan/31/inheritance-britain-wealthy-study-surnames-social-mobility

 

After examining the records of 18,869 people, and dividing them into three categories, the rich, the prosperous and the poor, Clark and Cummins agree. They suggest that the passing on of wealth is far more persistent over the generations than previously acknowledged, noting that there is a “significant correlation between the wealth of families five generations apart”. Put simply, the descendants of the wealthy of 1858 are still much wealthier than the average person in 2012.

 

The economists calculate that this “elasticity” of intergenerational wealth is a remarkably stable 0.75. A zero rating would indicate that no wealth at all was transferred down the generations, while a figure of 1 would suggest the “perfect transmission” of wealth between parents and their children.

 

Or doesn't that count as lasting? Imo it does... Social mobility is still nowhere.

 

So nope, plenty of people do inherit their wealth. I'm not pro a heavier inheritance tax (Eric made a good point with the problem of wealthy and f*cked up kids) but pro a yearly wealth tax above a certain threshold (of many hundreds of millions or even billions). Make it 12-month LIBOR rate with a maximum, idk... Decent wealth management can keep up with this and you can view it as an annuity to society. That way when the rich get richer, they are at least paying more YoY as well... It's a better investment for society to let those people keep compounding their wealth and letting them give a certain percentage/year than trying to tax them big just once (which fails anyway).

 

 

While the discussion over tax policy rages on, the real significance of the Giving Pledge (Gates/Buffett) is that it addresses redistribution directly with the super rich versus roundabout ways like taxation, where 5 billion people have to come to consensus. In the first decade alone, a trillion dollars has been pledged. As many of these donors have noted in their letters, it is not that they started their philanthropy now, but the sharing of their views in the context of "give away half" is a very powerful idea that works on the good side of human sensibilities. Although they started with the super rich with >10 digit wealth, it has touched me and many people I come across as well, with several digits less wealth. 

[ERICOPOLY]

It's actually 40 richest families in the world (and a loose definition of family), but not a big deal. It should be no shock that a few individuals control large sums of wealth. This has generally persisted throughout history. I also don't think it should be a shock that wealth rarely lasts. Families die out or gain so many branches that wealth is spread thin (as Eric points out).

 

One of the first hits on google:

http://www.theguardian.com/society/2015/jan/31/inheritance-britain-wealthy-study-surnames-social-mobility

 

After examining the records of 18,869 people, and dividing them into three categories, the rich, the prosperous and the poor, Clark and Cummins agree. They suggest that the passing on of wealth is far more persistent over the generations than previously acknowledged, noting that there is a “significant correlation between the wealth of families five generations apart”. Put simply, the descendants of the wealthy of 1858 are still much wealthier than the average person in 2012.

 

The economists calculate that this “elasticity” of intergenerational wealth is a remarkably stable 0.75. A zero rating would indicate that no wealth at all was transferred down the generations, while a figure of 1 would suggest the “perfect transmission” of wealth between parents and their children.

 

Or doesn't that count as lasting? Imo it does... Social mobility is still nowhere.

 

So nope, plenty of people do inherit their wealth. I'm not pro a heavier inheritance tax (Eric made a good point with the problem of wealthy and f*cked up kids) but pro a yearly wealth tax above a certain threshold (of many hundreds of millions or even billions). Make it 12-month LIBOR rate with a maximum, idk... Decent wealth management can keep up with this and you can view it as an annuity to society. That way when the rich get richer, they are at least paying more YoY as well... It's a better investment for society to let those people keep compounding their wealth and letting them give a certain percentage/year than trying to tax them big just once (which fails anyway).

 

Hard to say though if it's the money or the education.

 

There are families where education is crucially important -- the grandparents were physicians, the parents were engineers, the children were PhDs.

 

Those families tend to earn higher than average with each generation.  That describes my family.  I earned higher than average but it wasn't due to any inheritance.  It was my education.  My father earned higher than average but it wasn't due to any inheritance.  It was his education.  My grandparents earned higher than average but it wasn't due to any inheritance.

 

It's hard to come up with a destitute generation when each successive son in the line is an engineer, a physician, etc...  Family culture is responsible for this (in my family).  In modern times it applies to the daughter (not just the son).

 

Typically wealthy families favor education and so the data can show you whatever it is you want to find.  If you want to find that the money created the higher incomes, you can find that in the data.  OR if you want to find that the education created the higher incomes, you can find that in the data.

 

In my familiy the incomes came before the inheritance.  It cost my grandparents little to send my father to engineering school at the University of Sydney.  He didn't inherit any money until in his 60s/70s.  But the data will tell you that he had above-average income and that he inherited money -- take that data with a grain of salt.

 

The US tax code encourages giving money to kids while they are still infants -- so you might find in the data for the US that higher incomes came after inheritance.  Beware of drawing conclusions from that.

[adesigar]

So I had said I was done with this thread  but I just had to add this new link I found on a new site I discovered yesterday night.  Sorry for interrupting.

http://waitbutwhy.com/table/taxes-thought-experiment

[rmitz]

You and rmitz are a couple of whiners.

 

Hopefully name calling is still grounds for being a jerk.  Therefore it settles the argument and we can agree at least that adesigar was a jerk for name calling instead of listening to a dissenting opinion.

 

Eric, I deliberately avoided getting in a discussion on the actual topic.  My comment was made to YOU specifically, as you have gotten overly agitated on this topic in the past.  I wanted to speak up as someone who has been around here for a while.

 

I haven't said anything about what I believe or not, but I am not responding to just one specific message.  Your opponents are not blameless, no.

 

Let's do better.

 

 

 

 

 

[ERICOPOLY]

You and rmitz are a couple of whiners.

 

Hopefully name calling is still grounds for being a jerk.  Therefore it settles the argument and we can agree at least that adesigar was a jerk for name calling instead of listening to a dissenting opinion.

 

Eric, I deliberately avoided getting in a discussion on the actual topic.  My comment was made to YOU specifically, as you have gotten overly agitated on this topic in the past.  I wanted to speak up as someone who has been around here for a while.

 

I haven't said anything about what I believe or not, but I am not responding to just one specific message.  Your opponents are not blameless, no.

 

Let's do better.

 

I am passionate about this topic.

 

But it's not the topic per se that agitates me.

 

On any topic, I am agitated by disingenuous debaters.  Somebody says they want the estate tax because of the top 40 families and their potential for powerful dynasties.  I point out that it applies to me and I'm not in the top 40 or anywhere near it.  Then they claim that even the 5m could sway an election, and I point out that if there are multiple heirs then there is no such worry.  It goes on and on and on. 

 

I would rather the person just start out from the very beginning saying that no amount of inheritance is fair without a tax, no matter how small.  Don't make up a bunch of false reasons for the point of view that sound better before the crowd -- I can't help it, I will debate them on those points.  They then just iteratively walk down their argument until we finally hear that even a tiny inheritance should be taxed.  Okay, if that's the point of view then why wasn't that put forth in the very beginning instead of the very egalitarian sounding commentary on how the top 40 families are a big problem and that's why we need the tax?

[John Hjorth]

It would be much appreciated, if a fellow board member would provide a link to a website explaining the US estate tax on the rim. It's important for non US residents board members understanding of what's going on in this topic.

 

Thank you in advance.

[ERICOPOLY]

It's actually 40 richest families in the world (and a loose definition of family), but not a big deal. It should be no shock that a few individuals control large sums of wealth. This has generally persisted throughout history. I also don't think it should be a shock that wealth rarely lasts. Families die out or gain so many branches that wealth is spread thin (as Eric points out).

 

One of the first hits on google:

http://www.theguardian.com/society/2015/jan/31/inheritance-britain-wealthy-study-surnames-social-mobility

 

After examining the records of 18,869 people, and dividing them into three categories, the rich, the prosperous and the poor, Clark and Cummins agree. They suggest that the passing on of wealth is far more persistent over the generations than previously acknowledged, noting that there is a “significant correlation between the wealth of families five generations apart”. Put simply, the descendants of the wealthy of 1858 are still much wealthier than the average person in 2012.

 

The economists calculate that this “elasticity” of intergenerational wealth is a remarkably stable 0.75. A zero rating would indicate that no wealth at all was transferred down the generations, while a figure of 1 would suggest the “perfect transmission” of wealth between parents and their children.

 

Or doesn't that count as lasting? Imo it does... Social mobility is still nowhere.

 

So nope, plenty of people do inherit their wealth. I'm not pro a heavier inheritance tax (Eric made a good point with the problem of wealthy and f*cked up kids) but pro a yearly wealth tax above a certain threshold (of many hundreds of millions or even billions). Make it 12-month LIBOR rate with a maximum, idk... Decent wealth management can keep up with this and you can view it as an annuity to society. That way when the rich get richer, they are at least paying more YoY as well... It's a better investment for society to let those people keep compounding their wealth and letting them give a certain percentage/year than trying to tax them big just once (which fails anyway).

 

Here is the major logical flaws in that article that mentioned wealth 5 generations apart.

 

1st generation: 

it is wealthy and has 5 children

 

2nd generation:

Out of those 5 children 4 are wiped out

1 of them is wealthy and has 2 children

 

3rd generation:

1 child loses 1/2 of his fortune (enough to remain in the upper middle class) and the other is wiped out.  The one in the upper-middle-class has 4 children

 

4th generation:

1 of those children marries the daughter of a successful businessman and they have 3 children

 

5th generation:

the children benefit from their mother who inherits the business from her father.

 

 

It can now be concluded that the family wealth has survived 5 generations?

 

There is a lot that goes on.

 

A family over 5 generations has a lot of branches.

 

If JUST ONE of those branches is very wealthy after five generations, it is concluded that there is no social mobility???

 

 

 

 

 

[ERICOPOLY]

Let's suppose you start with a very poor family in the first generation.

 

With each passing generation, the number of branches of the family explodes.

 

The further along we go down the generations, the more likely it will become that you will find a wealthy family.

 

By the 5th generation or the 10th generation or the 15th... etc... etc... , it becomes ever more likely that there will be a rich family.

 

So is that rich family a result of what happened in the first generation?

 

And of course if you start with an educated poor family in the first generation, I would bet that you would need to wait fewer generations before finding a wealthy family.

 

All that study did is look at wealthy family today and ask if that particular branch was wealthy five generations ago.  It did not say that every branch remained wealthy over the generations, or even that an above-average number of branches remained wealthy.