# The best division of wealth in a society **URL:** \ **Category:** Great Debates\ **Created:** [December 11, 2017, 1:55pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193 "2017-12-11T13:55:41Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [December 13, 2017, 9:29pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/101 "2017-12-13T21:29:38Z")
> [@puddleglum](#): > > The second benefit to society is that rich people invest their money in the capital markets as you mentioned before. This is a productive use of their money. When taxes are high such as the estate tax that money goes from being used for the highest value investments to tax shelters. Plus, the federal government spends most of its revenue on Medicare, Medicaid, Social Security, defense, and interest on the national debt. Not investment in the capital markets. Regards, Shodan ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [December 13, 2017, 9:32pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/102 "2017-12-13T21:32:21Z")
> [@Little\_Nemo](#): > > Are you rejecting the entire notion of taxation and government and embracing anarchism as a viable political system? No. > [@Little\_Nemo](#): > > Or do you accept that some level of taxation is necessary for a normal society to function? Yes. Ideally that necessary level would be quite low. > [@Little\_Nemo](#): > > If you accept the general idea of taxation then explain why you and I should pay taxes and Grandpa Hilton shouldn’t have to. I don’t follow you. I’m not suggesting he not pay taxes, I’m suggesting it’s a moral wrong to make him pay rates ‘that approach 100%’. ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 13, 2017, 9:56pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/103 "2017-12-13T21:56:01Z")
> [@Steve\_MB](#): > > I find this thesis highly implausible in view of the [income trendlines](https://inequality.org/wp-content/uploads/2017/05/after-tax-income-768x424.png) – the trendlines for the bottom 20%, the 21%-to-80% range, and the 81%-to-99% range track each other quite closely in their anemic upward crawl over the decades, while the top-1% trendline soars above them. > > Worse, it’s a rather pernicious myth that plays into the hands of the plutocratic interests, as in the parable of the struggling blue-collar worker, the somewhat more comfortable white-collar worker, and the billionaire who find a dozen cookies, whereupon the billionaire diverts the other’s attention, stuffs eleven cookies into his pockets, and warns the blue-collar worker that the pampered union pencil-pusher is trying to steal the last cookie. I probably did not do the book justice. The main point of the book was how rigid a class structure we have in the US. As far as division of wealth, I found this WaPo [article](https://www.washingtonpost.com/news/wonk/wp/2017/12/06/the-richest-1-percent-now-owns-more-of-the-countrys-wealth-than-at-any-time-in-the-past-50-years/?utm_term=.6413f627bf5d) interesting. Mapping wealth (net worth) by quintile it presents a survey that gave the ideal division as 32/22/21/13/11. Our actual division is 90/8/2/0/-1 Looking at just the top quintile, that 90 breaks out as Top 1% - 40 Next 4% - 27 Next 5% - 12 Last 10% - 11 the remaining 80% is 60-80 - 8 40-60 - 2 20-40 - 0 0-20 - -1 I’m not sure where the plutocrat line starts and the top 1% certainly does well - but the folks from 80-99 have five times the wealth as the bottom 80. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [December 13, 2017, 10:06pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/104 "2017-12-13T22:06:07Z")
> [@jasg](#): > > … Our actual division is 90/8/2/0/-1… The bottom quintile averages negative net worth? ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 13, 2017, 10:18pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/105 "2017-12-13T22:18:20Z")
> [@HurricaneDitka](#): > > The bottom quintile averages negative net worth? Yes I think it’s actually not until partway into the second quintile that you get above $0 net. ---
**Author:** ![Ruken](https://avatars.discourse-cdn.com/v4/letter/r/f475e1/32.png) [@Ruken](https://boards.straightdope.com/u/Ruken)\ **Post date:** [December 13, 2017, 10:19pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/106 "2017-12-13T22:19:52Z")
Eh poking around it seems people are pegging the percentile all over the place. I’m not sure if they’re measuring differently, incompletely, or what. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 13, 2017, 10:38pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/107 "2017-12-13T22:38:26Z")
> [@HurricaneDitka](#): > > I don’t follow you. I’m not suggesting he not pay taxes, I’m suggesting it’s a moral wrong to make him pay rates ‘that approach 100%’. You made two separate arguments in that post. > [@HurricaneDitka](#): > > Almost no one pays the estate tax too, and that number will get closer to zero the closer the estate tax gets to 100%. and > [@HurricaneDitka](#): > > As I’ve said before, it’s not society’s money, it’s Grandpa Hilton’s, and he ought to be free to decide what to do with it. If he wants to give it to Paris to waste in riotous living, that’s his prerogative. Which is the part of your post that I quoted and is what I was responding to. Your argument here is that it’s Grandpa Hilton’s money and he can spend it however he wants. This argument has nothing to do with percentages. So is it a moral wrong to place a tax on Grandpa Hilton’s money if the rate does not approach 100%? Would you have a problem if Grandpa Hilton’s gift to his granddaughter Paris was taxed as if it were regular income? Would you have a problem if Grandpa Hilton died and the inheritance Paris received was taxed as if it were regular income? ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [December 13, 2017, 10:56pm UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/108 "2017-12-13T22:56:59Z")
> [@Little\_Nemo](#): > > … So is it a moral wrong to place a tax on Grandpa Hilton’s money if the rate does not approach 100%? Would you have a problem if Grandpa Hilton’s gift to his granddaughter Paris was taxed as if it were regular income? Would you have a problem if Grandpa Hilton died and the inheritance Paris received was taxed as if it were regular income? There may be some practical issues that should be addressed (e.g. when a son inherits his father’s farm and is cash-poor) that ought to be dealt with a bit more compassionately, but I don’t have a philosophical disagreement with any of those, no. ---
**Author:** ![elbows](https://avatars.discourse-cdn.com/v4/letter/e/b3f665/32.png) [@elbows](https://boards.straightdope.com/u/elbows)\ **Post date:** [December 14, 2017, 1:37am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/109 "2017-12-14T01:37:43Z")
Forget inheritance tax, I say, and focus on any money moved off shore/out of the country. Tax THAT wealth at 50-75% and see if that doesn’t improve investment at home. If you won’t address the cash moved to tax havens, you’re just spinning your wheels, tax wise, in my humble opinion. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 14, 2017, 2:17am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/110 "2017-12-14T02:17:26Z")
> [@Ruken](#): > > I find removal of the basis step-up much more agreeable than taxing the assets at a high rate. My father owns some stocks with a basis damn near zero. It feels very odd that they would be treated so differently if he were to sell them vs if I inherited them and sold them. I think the best path would be to mark to market at death, allow a generous exclusion of say $5 million and then tax the rest at progressively higher rates reaching 50% somewhere around $100 million. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 14, 2017, 2:24am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/111 "2017-12-14T02:24:56Z")
> [@puddleglum](#): > > The benefit to society is that it has benefit to the grandfather knowing he has provided for his grandaughter (although in the specific case of Paris Hilton he is giving almost all of his money to charity and her inheritance, though quite large is likely to most, would be less than one year’s salary to her). > The second benefit to society is that rich people invest their money in the capital markets as you mentioned before. This is a productive use of their money. When taxes are high such as the estate tax that money goes from being used for the highest value investments to tax shelters. There is an entire industry devoted to helping rich people give their money to their heirs and not to the government. All of that money spent for lawyers, accountants, and tax specialists is a waste to society since smart people are being diverted from productive uses. To stop this would mean changes to the tax code like you mentioned before about gift taxes. It is in society’s best interest for taxes to destroy as little value as possible through deadweight loss. Since the estate tax raises so little money, less than 1 percent of revenue, and the costs are so high, it would be better for society to lower the estate tax and raise money for the government in a more efficient way. There is a limit to how much of your estate you can shelter. At some point you just pay the tax because there aren’t enough rocks to hide the estate under. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 14, 2017, 2:26am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/112 "2017-12-14T02:26:55Z")
> [@Shodan](#): > > Plus, the federal government spends most of its revenue on Medicare, Medicaid, Social Security, defense, and interest on the national debt. Not investment in the capital markets. > > Regards, > Shodan Tax revenue allows us to issue less debt. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 14, 2017, 2:28am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/113 "2017-12-14T02:28:01Z")
> [@HurricaneDitka](#): > > No. > Yes. Ideally that necessary level would be quite low. > I don’t follow you. I’m not suggesting he not pay taxes, I’m suggesting it’s a moral wrong to make him pay rates ‘that approach 100%’. I’ve recanted and said 50%. So we cool now? I certainly think that the repeal of the estate tax as contemplated by the recent tax deal is a bad idea. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [December 14, 2017, 2:30am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/114 "2017-12-14T02:30:31Z")
> [@elbows](#): > > Forget inheritance tax, I say, and focus on any money moved off shore/out of the country. Tax THAT wealth at 50-75% and see if that doesn’t improve investment at home. > > If you won’t address the cash moved to tax havens, you’re just spinning your wheels, tax wise, in my humble opinion. We should leave Iraq alone and invade the Cayman Islands. ---
**Author:** ![HurricaneDitka](https://avatars.discourse-cdn.com/v4/letter/h/96bed5/32.png) [@HurricaneDitka](https://boards.straightdope.com/u/HurricaneDitka)\ **Post date:** [December 14, 2017, 2:44am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/115 "2017-12-14T02:44:15Z")
> [@Damuri\_Ajashi](#): > > I’ve recanted and said 50%. So we cool now? > > I certainly think that the repeal of the estate tax as contemplated by the recent tax deal is a bad idea. Sure. While I certainly have a general preference for lower tax rates over higher ones, I’m not philosophicaly-wedded to the elimination of the estate tax entirely. I don’t particularly mind if Jeff Bezos’ heirs will have to scrape by on a measly $50B. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 14, 2017, 3:12am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/116 "2017-12-14T03:12:16Z")
> [@Damuri\_Ajashi](#): > > I think the best path would be to mark to market at death, allow a generous exclusion of say $5 million and then tax the rest at progressively higher rates reaching 50% somewhere around $100 million. What’s the justification for the exclusion? I don’t get to exclude the first five million dollars of my income. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 14, 2017, 5:26am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/117 "2017-12-14T05:26:07Z")
> [@HurricaneDitka](#): > > … I’m suggesting it’s a moral wrong to make him pay rates ‘that approach 100%’. I’m not going to waste the energy on the scroll-bar, but yes, I think some leftist up-thread did propose a 100% tax. Lucky for you! — You needn’t address a 20% tax or a 40% tax now, you can vent all your spleen against the strawman. And many extremists on the right, including the people now in control of the U.S. Congress, propose that the estate tax be 0%. If the defense for eliminating the estate tax altogether is to be based on “0 is less than 100%”, maybe that’s why we can’t have good debates here at SDMB anymore. @ **Hurricane** — can you pretend that not all centrists support 100% estate tax? If you can do that, perhaps us centrists can pretend that you don’t support the Ryan-Pence Theft with its 0% estate tax. Then progress can be made. > [@Damuri\_Ajashi](#): > > I think the best path would be to mark to market at death, allow a generous exclusion of say $5 million and then tax the rest at progressively higher rates reaching 50% somewhere around $100 million. Reasonable compromise? 😕 An estate tax larger than Zero, but smaller than 100% 😕 😕 At this point I’m afraid you’ll be booed down by both sides: by the right-wingers AND by the straw-men the right-wingers have invented. Where the Farnabyists lose their grip is in failing to see humans as part of human society. “You didn’t make that” — Sam Walton didn’t build his stores on a desert island; he provided them to human society. The idea of redressing wealth and income inequality in human society didn’t begin with FDR or even Karl Marx. Have you heard of [Hammurabi the Great, King of Old Babylon](https://books.google.co.th/books?id=0HuSPDtiLwsC&pg=PA327&lpg=PA327#v=onepage&q&f=false) who lived 3800 years ago? (I’m not addressing this to Farnaby himself, who surely thinks the early civilizations set back the cause of, well, civilization; that we’d have colonized Mars by now if not for the government thefts at gun-point in ancient Egypt and ancient Babylon — I’m addressing the rest of you right-wingers.) ---
**Author:** ![jasg](https://avatars.discourse-cdn.com/v4/letter/j/f0a364/32.png) [@jasg](https://boards.straightdope.com/u/jasg)\ **Post date:** [December 14, 2017, 6:15am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/118 "2017-12-14T06:15:43Z")
> [@HurricaneDitka](#): > > The bottom quintile averages negative net worth? Payday loans? Credit cards? ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 14, 2017, 6:23am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/119 "2017-12-14T06:23:29Z")
> [@septimus](#): > > Reasonable compromise? 😕 An estate tax larger than Zero, but smaller than 100% 😕 😕 At this point I’m afraid you’ll be booed down by both sides: by the right-wingers AND by the straw-men the right-wingers have invented. I’ve always favored what I see as the simplest solution. Stop taxing different sources of money at different rates. Income, capital gains, inheritances, gifts, whatever. Just figure out how much money you received last year and then apply a basic set of rates to it. I don’t see why $400,000 in income should be taxed at 33%, $400,000 in capital gains should be taxed at 15%, and $400,000 from an inheritance should be taxed at zero percent. And I definitely don’t see why $40,000 in income should be taxed at 25%, $400,000 in capital gains should be taxed at 15%, and $4,000,000 from an inheritance should be taxed at zero percent. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [December 14, 2017, 7:09am UTC](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193/120 "2017-12-14T07:09:06Z")
> [@septimus](#): > > I’m not going to waste the energy on the scroll-bar, … > > Reasonable compromise? 😕 At this point I’m afraid you’ll be booed down by both sides: by the right-wingers AND by the straw-men the right-wingers have invented. > > Where the Farnabyists lose their grip is in failing to see humans as part of human society. … Skimming recent additions to the thread, it appears it is _I who has lost his grip_ :o, and who should have wasted energy on the scroll-bar after all. The lions and the lambs are lying down together and a medium estate tax is being agreed to by all but the Farnabyists! Should we take a vote? Has Susan Collins been informed? [Previous page](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193.md?page=5) [Next page](https://boards.straightdope.com/t/the-best-division-of-wealth-in-a-society/804193.md?page=7)