<p>I think this idea of taxing inheritance is morally skewed.</p>
<p>All politicians and moralists would avoid the cyclical poverty. Mom is poor so she cant afford college tuition for her kids, which in turn leads them to be poor, creating cyclical poverty. Most would argue that this is strongly detrimental to society.</p>
<p>But from the angle im looking at it, taxing the inheritance is kind of attempting to end cyclical wealth. Ending cyclical poverty is fine but why in the world would you want to prevent each successive generation from being rich? isnt the goal to elevate people into the upper class and to keep them there?</p>
<p>I don’t think a large upper class can develop without very efficient value adding along all stages of manufacturing, retail, financial markets, etc., </p>
<p>IMO, this can only really happen when a large chunk of the labor force are working and are judged by their output (that used to mean helping the bottom line; it’s starting to mean long-term equity and PR nowadays). </p>
<p>You only have a large labor force working effectively if either:
a) the upper class has an incentive to work. That means a high estate tax so there aren’t 15 generations of Vanderbilts that do nothing. This estate tax is a type of inheritance tax which you are against.
or
b) the upper class is small–which means you haven’t allowed successive generations to get richer.</p>
<p>Maintaining cyclical wealth would be nice. But I think that a bunch of wealthy heirs with no incentive to work slows the economy and prevents future generations from matching their wealth.</p>
<p>If you accept my assumptions, your idea is inherently flawed. Without inheritance taxes, a large upper class can only exist if there isn’t a large upper class.</p>
<p>It’s not so much that they shouldn’t be rich as it is that there are crazy people that think being born into a rich family doesn’t count as “earning” or “working hard” for your wealth.</p>
<p>And given that rich and poor are only meaningful as relative values, cementing the portion of the population that is rich would also cement the portion that isn’t rich.</p>
<p>Quick fact of the day. You are most likely not the god of the universe so who are you to dictate that the rich need more incentive to work? </p>
<p>Anyone who thinks that the rich aristocrats sit around all day is highly r*tarded. In 30 years, inflation will rob the old oil tycoon 70% of his money. In a single generation, the wealth will be gone if the heir squander the money. Thus, he MUST be productive or his wealth will diminish very quickly. Everyone has an incentive to make more money. Never forget that.
The Upper Class is not small. Over 3 million people belong to the upper class. It is only “small” because it compose 1% of the population. The number of people in the upper class grows every year. But this is also proportionately weighed by the growth of the entire population.
</p>
<p>That is the most ignorant statement i have ever head. The economy is not a 0 sum game. Just because someone is rich doesnt mean that someone else must be poor. And we dont run the world. Who are we to judge that rich people “arent working hard” for their wealth? IT is their wealth. If they want to squander it, eventually it will run out.Your neighbors dont judge you for wasting hundreds of gallons of water on your lawn. I suggest we stop criticizing those who are of higher social status.</p>
<p>Look, everyone in US is current about as rich as the aristocrats in the olden days. Thus is its inevitable that some day (far into the future) everyone will be as rich as Bill Gates in real gross income, adjusted for inflation.</p>
<p>Really, being born into a wealthy family counts as working hard? The funny thing is I didn’t even criticize people “of higher social status.” I made absolutely no judgments as to whether they work hard.</p>
<p>Please don’t be stupid and brash. What do you think an economy run on currency is about? It’s about providing incentive to work. Our entire economy runs because people want to get up and work. </p>
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<p>It’s not about having some minimal incentive to go out and work. It’s about maximizing this incentive to work so that the economy produces THE MOST OUTPUT AT THE MOST EFFICIENT RATE POSSIBLE WHILE MAINTAINING SUSTAINABILITY. This is done when ALL POTENTIAL LABOR IS UTILIZED. This is best done when there aren’t massive numbers of heirs that can avoid work and still have a luxurious lifestyle. </p>
<p>Will some of these heirs nonetheless work because they want a job? Of course, but in this case their job isn’t supplying necessary income. They are working for the sake of working–which is the same system that ran the USSR (in its crudest sense–non-ideologically speaking). It is not a sustainable system. The larger the upper class in a capitalist society, the more it resembles Communism–which will inevitably push these “upper” classes to a lower level of wealth.</p>
<p>The idea that you can maintain the same people in the upper class while pushing up the lower classes into that same upper class IS ABSURD. There is no efficiency is an economy where many of its workers have accumulated enough assets that their yearly income doesn’t matter. Such an economy doesn’t produce enough to pull lower classes upwards. Upper classes need turnover; new people need to enter it while those who don’t help out leave it.</p>
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<p>This statement is irrelevant. The upper class is huge compared to the population of Luxembourg. No one gives a damn–we’re talking about the USA and the relative size of the upper class.</p>
<p>What if the money garnered from taxes is used to subsidize better schools for the poor? There is no use in complaining about the thugs on the corner if you’re not willing to provide for a service that can help them.</p>
<p>It’s like talking to a moron. You quote parts of what I say and read them out of context. I only said the upper class needs an incentive to work IF you want to avoid inheritance taxes while helping future generations get progressively richer at the fastest rate possible. This was YOUR idea.</p>
<p>Pretty sure reesez was referring to jasonInNy, considering my stance was (oddly) liberal–which would not make me like a Tea Party Patriot at all. So I don’t feel marginalized, but thanks.</p>
<p>If there’s any confusion post #190 was directed at jason, not midnightmarauder.</p>
<p>The economy is not about maximizing output to whoever brought up that point. If that was the case, we wouldn’t have weekends and people would work 100hr weeks. </p>
<p>The rich work slightly more than the average person. They value their leisure just like everyone else.</p>
<p>@thiscouldbeheavn</p>
<p>please explain your post. By all indicators, the Americans in poverty are richer than aristocrats 1000 years ago. The poor now have access to antibiotics and color TV, luxuries that would have created a war in the olden days. It is inevitable in a long period of time that even the impoverished will be as rich as Bill Gates is today.</p>
<p>I’m just going to point out that aristocrats work just as hard ad everyone else: 40 to 50hrs a week. If every heir of fortunes was incentively inefficient, the old family aristocrats would have never lasted more than a generation or 2.</p>
<p>I said maximizing output while being efficient AND sustainable. Part of being sustainable is giving your labor force leisure time and a desire to work (most won’t don’t desire to work if they work 100hr/wk).
</p>
<p>The fact that aristocrats only last a generation or two without working is mostly due to two factors: inflation and inheritance taxes. </p>
<p>Since you were trying to argue that inheritance tax is immoral, I was bringing up the point that if heirs had no estate tax, they would remain richer longer, thereby maintaining their wealth. This wealth would provide no incentive for income, and could lead to inefficiencies for those that don’t have some burning desire to work.</p>
<p>The whole point is that your argument (ban/lower inheritance tax because it prevents cyclical wealth and instead just let the lower class reach our wealth) inherently prevents economic efficiencies and prevents ALL classes from becoming wealthier. It’s just as stupid as the “tax the rich excessively to redistribute wealth” you abhor.</p>
<p>Factually incorrect. Within 30 years, inflation robs the rich of 70% of their value. Inheritance tax gets a much much much smaller portion of that. The tax is negligible.</p>
<p>I think the assumption that all rich people have no incentive to make money is plainly false. Lets look at Warren Buffet. Old man. Rich as hell. Yet he still tries to earn money like there is no tomorrow, consistently shifting Billions of assets around to catch the next Walmart or exploiting market emotions. I’d bet a tidy sum that he still spends a good 70-80hrs a week reading up stocks and investing. Occasionally, there is a spoiled rich kid who wastes money just like occasionally there is a “poor person turn Bill Gates” scenario. But on the whole, the top 1% is mainly composed of doctors, lawyer, businessmen, and other professionals. If anyone thinks running a monopoly is a piece of cake, they are wrong (think Microsoft, Xerox, and Apple in the future- blocking Adobe from the Iphone OS is an interesting move).</p>
<p>For all your talk of “efficiency,” you seem to forget that taxes create quite a bit of DWL.</p>
<p>Do you think that most rich people amass their wealth in their 20’s? No, people accumulate most of their assets when they are near retirement and old age, including the wealthy. </p>
<p>So, by the time they start making the most money in their 50s and early 60s, inflation will (on average) only have ~25 years to take effect before estate tax kicks in. And that’s if they live a long, healthy life to age 85 (we’ll assume wealthy individuals live longer than the average for your sake).</p>
<p>In a stable economy, inflation shouldn’t be more than 2-4 percent per year. At 3 percent per year and 25 years of inflation (keep in mind that they are accumulating wealth through their 50s and 60s, so this is actually an overstatement because we’re treating their future income as a lump sum rather than an annuity) their accumulated wealth valued at $1 becomes:</p>
<p>1/(1.03^25) = .47; => 53% loss in value</p>
<p>Meanwhile, the estate of the wealthy gets taxed ~45%</p>
<p>So I think it’s fair to say that both are contributing factors to a loss of wealth for the heirs of large estates. 45 is not much less than 53. </p>
<p>Also, keep in mind that most “wealth” ** is not some asset that sits around doing nothing**. Cash earns interest. Houses typically increase in value. Stocks earn dividends or gain value. Their wealth is not simply deteriorating due to inflation. So 53% is a gross overstatement that assumes that all their wealth is sitting around idly.</p>
<p>And no one doubts that those that amassed their wealth are typically hard workers that have an incentive to work regardless of their accumulated assets. Warren Buffet is a great example: he earns an income of $0/year and yet still runs Berkshire Hathaway. But we are talking about their ** heirs **. If these heirs inherit all the estate, they will have less incentive to work than if their estate was taxed.</p>
<p>In fact, notice that Warren Buffet has stated that he plans to leave all his money to charity and none to his heirs. What do you think this says about Buffet’s opinion on leaving estates to your heirs?</p>
<p>Okay, well I think you’re both making arguments above BIGeastBEAST’s caliber. No offense, BIGeast, but it didn’t look like you were putting much effort into your arguments…</p>
<p>This is true regardless of where the tax comes from: it’s an inherent attribute. Any reasonable fiscal conservative wants solid infrastructure to reduce transportation costs, military spending, etc., Many (like myself) even agree with social security and medicaid. </p>
<p>So, if you’re going to need non-private funding for these projects, it may as well be from inheritance taxes as opposed to increasing capital gains or corporate taxes which suffocate our economy. Why would you want to tax a part of the economy that clearly adds value when an inheritance tax could arguably BOOST the economy by incentivizing the rich to work?</p>
<p>For the record, I was talking about Jason…but I will give you that your arguments are above BIGeast’s caliber simply becsue you actually address the argument. Sorry if there was any confusion. Justtotalk, I was trying to support your point about quoting out of context and talking to a moron/robot, because I often feel that way when talking to Tea Partiers, so I apologize for the vagueness.</p>
<p>I’ll write more later, but right now I have to dash off to a soccer game. Adios!</p>