Net worth break downs for the US

[Parsad]

Creating wealth, though, is not a zero sum game and as someone gets wealthy they are also benefiting others in tandem. You don't get to take what you don't give.

 

Yes, of course.  You're totally correct there in regards to the individual building the wealth and creating employment.  That being said, getting rich through inheritance is actually a zero sum game, unless that wealth continues to trickle down.

 

And of course I'm not saying that no one should try and amass a fortune, or that they shouldn't pass a portion of that fortune down to their children.  We all work hard to build something for our children, and even their offspring, so that they have opportunities that we may not have had.  But sometimes, that desire can create inefficient anomalies in the system...the symptoms of which may include inequitable distributions of wealth.  Cheers!

[cwericb]

This is a bit off-topic, but related in a way. Nothing irritates me more than those big lottery prizes. I would like to see a legislated maximum that can be awarded of say $2,000,000. When we have winners of $50 mil and greater it can take a lot of that money out of circulation. Sure the winner may build a nice new house, buy a couple of cars, and give some to family or whatever, but if that $50 mil was given out as 25 $2 mil prizes we might have 25 new houses 50 new cars etc. In other words, it puts much more of the money back into circulation and probably would spread the funds over a wider geographical area as well. It also gives ticket buyers a better chance of winning. Just my little rant. Anyway, I rarely buy lottery tickets and confine most of my gambling instincts to the TSX, etc.

[rmitz]

Creating wealth, though, is not a zero sum game and as someone gets wealthy they are also benefiting others in tandem. You don't get to take what you don't give.

 

Something I was thinking about lately is how planned obsolescence amounts to a kind of extra confiscation of wealth from the purchasers back to the product creators. The fact that the wealth that has been created has an artificial time limit on it seems...not fraudulent, but unethical at least.

[nodnub]

This is a bit off-topic, but related in a way. Nothing irritates me more than those big lottery prizes. I would like to see a legislated maximum that can be awarded of say $2,000,000. When we have winners of $50 mil and greater it can take a lot of that money out of circulation. Sure the winner may build a nice new house, buy a couple of cars, and give some to family or whatever, but if that $50 mil was given out as 25 $2 mil prizes we might have 25 new houses 50 new cars etc. In other words, it puts much more of the money back into circulation and probably would spread the funds over a wider geographical area as well. It also gives ticket buyers a better chance of winning. Just my little rant. Anyway, I rarely buy lottery tickets and confine most of my gambling instincts to the TSX, etc.

 

cwericb,

 

I read once that within 10 years of winning a large payout in the lottery, a large percentage of winners have spent the vast majority of the money or are completely broke.  (I wish I could remember the source of that quote). A majority of people that buy lottery tickets are bad at managing their money. Winners also have trouble managing the expectation of friends, distant relatives, etc.  In many if not most cases, that money gets blown pretty quickly.

 

It's kind of like NFL players, NBA players, etc. within 10-15 years of retirement many of them have no savings left and have to come out of their retirement and get a real job.  Most of these guys had no training for handling money, and consequently spend foolishly, get swindled in business deals, etc.  This becomes a problem when the endorsement and sports salaries stop coming in.

 

[turar]

Agree with nodnub about the lottery. In addition, most would choose a "lump sum", which is a lot less than the advertised sum, and then get taxed heavily on that remaining amount. So real payouts are usually a lot less massive than the headline numbers, albeit still large.

[cwericb]

Nonub...

 

"I read once that within 10 years of winning a large payout in the lottery, a large percentage of winners have spent the vast majority of the money or are completely broke."

 

Funny you should mention that. Years ago I knew a carpenter who won $1,000,000 in a lottery when a million was a million and interest rates were in the 15%+ range. Rather than investing the money and living on the $150-$200,000 yearly interest, he squandered the money on renovations to his house in a very low rent district, bowed to pressure put on him by his "friends" to pay off their mortgages, bought all his kids 4-wheelers and cars, etc. About 10 years later he was broke.

 

However I still think that spreading the money around would be of greater benifit in general. If nothing else, some of that money would filter down into numerous smaller communities where it really would make a difference.

 

Turar - I know what you mean, but things are a bit different here in Canada as usually the full amount is paid out and I think it is tax exempt.

[Hawk4value]

I agree with you for the most part Hawk, but at the same time, the inherited wealth that passes amongst the top 10% is also contrary to the workings of a free-market system.  That capital becomes stifled in inter-generational wealth, and does not go to where it could be used most efficiently.

 

Two things will happen with inherited wealth:  It will spent or squandered;  or it will be invested and allocated properly and mutiplied. Either way society will benefit, the capital is not "stifled", it goes back into the system one way or the other. The important thing is that the individual decides the disposition of the capital, not the gov't. I don't need gov't to social engineer further with money that I have already paid taxes on during my lifetime. Hence I see no need for an inheritance tax.

[ragnarisapirate]

Regardless, I am always shocked at peoples willingness to tell other people what they should do with their money, which is essentially what an estate tax is; the mindless masses telling the rich how their capital should be distributed after their demise...

 

That's partly true College, but the fact remains that no one becomes a success without some opportunities being provided to them already...both by the mindless masses and the rich.  Your subsidized schooling, healthcare, etc, along with your work ethic, talents and some good fortune, have provided you with the opportunities that you have now.  Everyone does it with some help...including the rich who would not be where they are without some of that mindless mass.  Cheers!

 

The rich (or rather, producers) fulfilled their obligation to the mindless masses (or, society) once the transaction that they had was completed. For example, Bill Gates owes me nothing after I give him my money and he in turn, gives me the latest version of Windows. This is sheerly from an ethics point of view on my part... If you want for a stable society, a high wealth gap probably isn't the way to keep it. People, as behavioral economics indicates, are far to animal to accept what is perceived as mass failure- even if it is the failing parties fault.

 

I will qualify my mindless masses label as simply, society, which, I think is generally pretty mindless (and, I for one, am not exempt!).

[Guest]

I don't buy the argument that higher taxes is disincentive to wealth accumulation. Like Sanj said, a 10% bump in taxes won't stop somebody from working that much more. Also, I'd make the argument that the true game changers don't do it for the money anyway. They do it for the passion of the work, not the financial rewards.

[Guest Bronco]

What's the estate tax in Canada, like 6% or something.  We have a GIANT estate tax in the US.

 

You can't even give away money to people (over $10,000+) without paying a tax.  So much for freedom.