Should the government seek equal prosperity?

[Damuri_Ajashi]

@Der_Trihs

Of course, the rich and powerful want you to believe America is some kind of meritocracy, because that makes you easier to screw. They want you to believe that hard work or skill will let you prosper, because that gives you false hope and diverts blame from them.

To be fair, you probably can’t point to a more economically mobile developed country than America.

[WillFarnaby]

@Damuri_Ajashi

In what world is this even close to being approximated?

In a free market economy with fraud and corruption minimalized. I already made exception for nepotism and charity. So do you want to eliminate charity and nepotism? How is that realistic?

@Damuri_Ajashi

You do realize what the world looked like before unions, right?

So you attribute the improvement in working conditions to organized labor. I attribute the improvement to the free market. Only a small percentage of employees belong to unions. If you’ve ever worked in a modern union shop you would know why manufacturers are going overseas in droves.

@Damuri_Ajashi

And what did the Mars family heirs provide? What did the heirs to the Wal Mart fortune provide?

What is this jealousy people are unafraid to show for heirs of great fortunes? If you want to end nepotism of any kind good luck with that.

@Damuri_Ajashi

See the last ten years in America.

I would argue that it was free market interventionism that made that consolidation possible.

[Damuri_Ajashi]

@WillFarnaby

You can’t make someone work harder for less pay. In a true free market there will be competition over labor due to the scarcity of labor.

let me introduce you to China and the concept of countervailing power. Countervailing power - Wikipedia

That’s like saying gravity isn’t the magic solution to keeping everything on the ground. These laws are not disputable.

Are you serious? Like gravity? Not disputable? Of course they’re disputable, you simply can’t hold up your end of the dispute so you claim that it is an axiom. The market breaks down all the time. An unregulated market leads to monopolies which leads to lower welfare for everyone but the monopolist.

If you have the ability to produce a good more efficiently than a large firm, they will not be able to screw you with money or power.

ROFLMAO, predatory monopolistic behaviour happens all the time.

[gonzomax]

@Damuri_Ajashi

To be fair, you probably can’t point to a more economically mobile developed country than America.

The upward mobility gap There are lots of them. You are living in the past. Part of the stratification in America is they take care of their own. The poor and low middle class are not being dealt in anymore.
This article points out Canada, France, England and others as easier to move upward.
That is one of the problems with the gathering of great wealth. They don’t want to share it .America is changing in fundamental ways .It is more than just taking the money. The very rich think only they should have the control of the world, because they are special and chosen by god to lead.

[Little_Nemo]

@WillFarnaby

If you’ve ever worked in a modern union shop you would know why manufacturers are going overseas in droves.

Is that supposed to convince us that unions are bad? Because management doesn’t like them? Of course management wants a system that favors management and will seek such a system out.

[PigArcher]

@WillFarnaby

In a free market economy with fraud and corruption minimalized. I already made exception for nepotism and charity. So do you want to eliminate charity and nepotism? How is that realistic?

How does the free market minimize fraud and corruption? Can you explain the mechanism by which you believe this works or is this just more wishful thinking on your part? Some data that confirms this would also be nice.

@WillFarnaby

So you attribute the improvement in working conditions to organized labor. I attribute the improvement to the free market. Only a small percentage of employees belong to unions. If you’ve ever worked in a modern union shop you would know why manufacturers are going overseas in droves.

How does the free market result in improved working conditions? Again, explain the mechanism and give supporting data.

@WillFarnaby

I would argue that it was free market interventionism that made that consolidation possible.

Then please argue so. You know, with facts and data and all that, not just pithy statements.

[Damuri_Ajashi]

@Terr

The right to property includes the right to give said property to anyone you want. And that right is in the Constitution.

Which right is that?

I see where the right to tax is inn the constitution, I don’t see the right to inherit anywhere in the constitution.

[Damuri_Ajashi]

@Terr

If you cannot transfer the property to someone else, then it’s not yours to begin with. The right to property implies the right to transfer ownership.

where is the right to property in the constitution?

[Damuri_Ajashi]

@msmith537

“Bordering”?

Fifth, actually:

“No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty,** or property, without due process of law;nor shall private property be taken for public use, without just compensation**”

You seem to be missing the part where we can in fact deprive you of property with due process of law. You are also missing the taxing power altogether.

[Damuri_Ajashi]

@Terr

No. There is also nothing in the Constitution that would make an income tax unconstitutional - in fact it explicitly is Constitutional. So what? What’s your point?

if you make the “estate tax” too onerous, and there will be myriads of ways invented around it. You try to stop those ways and myriads of new ones will spring up. You try to clamp down on all of them and the “rich” will start moving the wealth out of the country. It is a natural, biological, instinct to provide for your progeny. You will not stop it by onerous “estate tax” or any other means.

In this case “onerous” means letting the first 3.5 or 5 million get transferred without a tax and then taxing the rest on a graduated basis up to 40% or so.

[Damuri_Ajashi]

@Terr

The inheritance is given to you by a contract that was signed by the giver. The death of the giver does not invalidate the contract.

A will is not a contract.

[Damuri_Ajashi]

@Terr

First of all, I don’t see such a claim. Can you point to a specific post where such a claim was made?

There is the “right to give your property to whoever you want”. It’s the same right as the “right to own property” - since owning it means you can give it away. That doesn’t mean that the property cannot be taxed.

An onerous estate tax would be a violation of that right. And as I pointed out above, people usually find ways around such violations. There will be such ways found.

Shit, didn’t we just have this conversation?

[Damuri_Ajashi]

@Terr

Such fees exist. They are not unconstitutional.

A fee for a parade is a reasonable restraint on the right to free speech. There is no analogous right to inheritance, not even a derivative right through your limited right to property through the takings clause.

[Damuri_Ajashi]

@Terr

It is, effectively, 35% on amounts higher than $5M. I consider 35% to be too high. So do most of the wealthy, thus the various methods that are used to go around it.

I don’t know how to break it to you but the wealthy would consider 5% too high. There are countries where the top marginal income tax rate is 15% and people cheat on their taxes, places where the estate tax rate is 10% and people hide their assets offshore to pass on to their heirs.

The various methods of getting around it are basically built into the Unified Gift and Estate Tax system. We can make an estate tax airtight if we had the will to do so.

[Damuri_Ajashi]

@Little_Nemo

Most people do not have an estate of five million dollars so effectively their estate tax rate is zero.

Ten years ago, the estate tax rate allowed an exemption of the first $675,000 with a tax of 55% of everything above that. During the Bush administration that was lowered to an exemption of the first $5,000,000 with a tax of 35% of everything above that. These changes obviously benefit people with family fortunes.

As I’ve said above, there’s no economic justification for family fortunes. They don’t fit in with capitalism or free market principles. The United States is a republic so we have no reason to base policies on dynastic and aristocratic principles.

We should restore the pre-Bush estate tax rates.

There was pretty wide consensus that the pre-Bush estate tax exemption was too low.

If you want to prevent dynasties while encouraging entrepreneurs to earn more than they could possibly spend in their lifetime, you lift the exemption to 5 million and you impose a more progressive tax rate. Back when the estate tax debate was active in DC, there were two camps, on the one side you had the small business owners who wanted the exemption lifted to 2.5 million dollars and you had the heirs to large family fortunes who were more concerned with the top estate tax rate because they were in a position to inherit hundreds of millions if not billions and the exemption was a drop int eh bucket. In the end we gave them a higher exemption and a lower top marginal rate.

A more progressive estate tax structure (and you really can’t shelter hundreds of millions of dollars from the estate tax) with a high exemption would encourage folks to earn beyond their capacity to spend while encouraging charitable giving from the really large estates.

[Damuri_Ajashi]

@Terr

Only if that’s the way they choose to leave the money to their progeny. There are lots of ways to do it. You make the estate tax too onerous, and other ways will be used.

I don’t think you know what you are talking about.

[Damuri_Ajashi]

@bldysabba

I was addressing the justification for estate taxes that the descendants of the deceased have done nothing to ‘earn’ the inheritance, and more meritorious people abound who ‘deserve’ the money more. That’s why I suggested the VC idea. Nor did I say government has to do it. Let there be a market of VC’s that the deceased can will the amount to.

There is, sorta. There are charities that you can donate your money to that will put the money to use in microfinance.

As for the government’s slice of the pie - won’t they get it anyway? For example - The people who inherit the money will be put to use - and they’ll pay taxes on proceeds thereof.

No, they can leave the country.

[Damuri_Ajashi]

@Terr

As I said, there is a multitude of methods to transfer wealth that is not inheritance-based. Most of those methods have inherent costs. When those costs are about the same or greater than the estate tax, those methods are not used. When those costs become significantly smaller than the estate tax you can be sure those methods will become more popular.

Either that or you really end up collecting the lions share of your estate taxes from a few thousand estates that have tens and hundreds of billions of dollars and the rest barely make a dent.

[Damuri_Ajashi]

@bldysabba

How does long term capital gains tax work right now? Septimus said capital gains tax does not perfectly capture capital appreciation because asset prices are considered from when they are inherited, not from when they were acquired by the person who passed them on. To me, a much fairer solution to this would be to apply capital gains tax based on the initial price of acquisition rather than use this as a justification for estate tax. To use an example - say stock is purchased at 100 by the father, passed on to a daughter when it hits 150, and sold by the daughter at 160, the tax to be paid by the daughter should be whatever the capital gains tax is applicable on the appreciation from 100 to 160. Why this is fairer than using estate tax as a solution is obvious. Lets say the stock was bought at 200, went down to 150 when it was inherited and then goes back to 200 by the time it is sold. Capital appreciation in this case is actually 0, but the asset will now get taxed twice(once at father’s death and then when it is sold) simply because it is held by the daughter instead of the father.

Historically one reason for stepped up basis and an estate tax was that you frequently had no idea what the basis was and had no way to prove it. Also the Estate tax predates the income tax.

[Damuri_Ajashi]

@bldysabba

Apology accepted. Partly also my fault to wade in on an issue that everyone else is discussing grounded in the US situation It appears to me that the US has become so ideologically divided that everyone seems to argue points on the understanding that other people are necessarily coming in with pre-formed opinions that they will not change no matter what.

As for the issue of legal obligation to record prices - yea I thought about this. For one thing, it doesn’t seem like a very onerous requirement, particularly for rich households who probably manage and record their financial transactions anyway. For another, most purchases of assets like stocks, land etc. these days are recorded in computerised databases(at least in my country, which is borderline third world, so I assume this is the case in the US as well), so the record will likely not have to be maintained separately going forward. For yet another, even if the record isn’t there, it shouldn’t be difficult to reconstruct from dates of acquisition and prevailing market prices, but I’m not sure of this, and in those situations where it is impossible to ascertain original acquisition prices, maybe a flat inheritance tax would make sense.

There is no basis reporting requirement on the part of broerkages right now (this is supposed to change soon) but brokerages have been resisting the requirement to report basis to the IRS for decades.