Inheritance Taxes Discourage Oligarchy. Hence libertarian types hate inheritance taxes

First off, this is a terrible metric that one really wouldn't use, unless the other, more comprehensive metrics (such as the ones that Piketty uses or other common measures of wealth concentration/income mobility ) are against you. Sounds like something a hack from a wingnut econ department would use when preaching to the choir on a wingnut blog, because there he'd be able to cite it to a chorus of Amens without fear of contradiction....oh wait....

Second, where's the control group here? Why is it signficant that "only" 140 of the 400 most-superrich were born that way? Is this greater or less than that number in the past? (and btw, why cut it off at 400? Do the numbers change when you expand it out to 1000, or 10,000 or 100,000?)


Third, let's look at the self-made men on this list

1. Bill Gates - A self made man who worked his way out of his garage. Of couse his father was the founding partner biggest law firm in Seattle (currently known as K&L Gates after a series of mergers ) - he was merely born rich, not super rich, and ascended into the ranks of the super rich in the 80's, after slumming it at Harvard - which, by the way, was 30 years ago, last time I checked.

2. Warren Buffett - the genuine success story who worked his way up from nothing into becoming a billionaire- of course, he made his transition from nothing to very rich sixty years ago and was already extremely wealthy during the Kennedy administration. Please tell me how this reflects on the *current* state of affairs?

3. Larry Ellison - here's a hybrid of Gates and Buffet - born poor like Buffett, made most of his money in the 80's, a mere 30 years ago. Also an early computer revolution guy

10. Michael Bloomberg - Born middle class, another technology guy who hit the big time in the 80's

11. Sheldon Adelson - a Buffett contemporary who was a millionaire a decade or more before most of us were even born. So yeah, relevant to today!

Are you positing that people today should merely invent time machines, become white males, and go back 30-40 years with a copy of Windows 8 and then become billionaires, Biff from Back to the Future style by using a first mover advantage to establish market power?

Or is this argument just not very well thought-out?

 

Gates' innovations and accomplishments transcended anything his family wealth could have garnered. In fact it was such a bizarre confluence of events that you could still invalidate his abilities while also excluding his wealth as a factor. Also I'm not sure what the significance 30-40 years ago is to accumulating immense wealth, as though we won't have new billionaires 30-40 years from now.

 

I don't understand all the angst about a federal estate tax, or inheritance tax. I don't see at all how having one has damaged this country. It existed in the United States from 1916, some would say as far back as 1898, yet this country has managed fine with it in place. The number of wealthy Americans grew. Their children, by and large, benefited from those who had wealth to leave them. A country that has struggled to raise enough money to fund the government had a source of revenue that was, and is, badly needed. If a tax on inherited wealth was so god-awful, how on earth did we survive with that tax for 100 years? At the same time, growing to be the wealthiest and most powerful nation on the planet? All the crying and carrying on in the Republican Party about the evils of "the death tax" is just so much nonsense. The overwhelming majority who are impacted by the tax are those most able to pay it. The wealthy.

There are some confused people here, people I respect, but people who apparently don't understand that taxes are needed to run our government, pave our roads, fix our bridges and dams, pay for our national defense, see that the sick and the poor are helped to become well, and to become productive members of society. One could continue with a long list of things we need taxes to pay for. I certainly don't need to list everything. Of all the taxes people might complain about, and I can relate to some of the complaints (I pay taxes myself), the estate tax is one of the most benign taxes we have.

Aren't there more important things to get worked up about? Like what the hell is Russia doing all of a sudden in Europe? Are we going to have to build up our forces there again, when most of us thought those days of war in Europe were long gone? And how will we pay for that, and how will we pay for the forces needed to keep China from trampling on her neighbors, some of them close allies of many decades standing? We'll need taxes. How will we rebuild our decaying infrastructure, a national scandal coming to a boil after decades of neglect? Taxes.

One could go on. Taxes are not inherently evil. They are a necessity required by a modern nation. The tax structure can always use improvement, but the estate state is not one of the problems, it is one of the solutions, and getting rid of it would not only be foolish, but reckless. We have to pay our bills. The estate tax is merely one of the ways we do that, a method we have used for a century.

 

I think the current system is fine. Basically if the estate is less than a certain amount, there isn't any tax. Which is great. They only tax large estates - on a federal level it's 5 million dollars. I think that's high, probably should be 2 or 3. But for most Americans, they won't have to pay estate taxes on anything they inherit.

 

Bill Gates in this instance is being held up as a self made man who refutes the idea that opportunity is vastly tilted in favor of a privileged few.


He was born as the scion of a wealthy family that dwelt in an elite, fractional tier of society - then he parleyed that into being super mega rich 30 years ago.

That's not exactly a shining example of income mobility today - and Bill Gates would p probably be the first person to tell you this.

 

I didn't realize that an econ department that (until recently?) had two Nobel prize winning economists was considered "wingnut."

Perhaps because the Forbes list only goes to 400?

You're right that several of these people started out with advantages, but the point is that they didn't inherit their wealth.

I'll admit I didn't spend hours or days working out the logic of the argument, but rather that this thread reminded me of a post I saw on a blog very recently, so I thought I'd share it. I didn't realize that I would be provoking the outrage of internet tough-guy SamFisher, a man whom I've rarely seen put forth a well thought-out argument of his own, but who sure does enjoy harassing people for failing to live up to his exacting standards while posting on a f***ing basketball forum.

 

I could perhaps be convinced to vote in favor of an inheritance tax that applied to all estates equally.

However, I have a problem setting a cutoff that basically turns it into an exercise in getting a large percentage of the population to agree to confiscate the accumulated wealth of a small group. It's always easy to keep pushing that boundary of where you're sufficiently rich that your heirs don't really "deserve" to inherit your full estate. That's how you end up with 1%'ers like Paul Krugman trying to tell the world that the problem isn't really people like him, it's those "undeserving rich" who just so happen to occupy a slightly more rarified strata (say, the top 0.1%) than our humble NYT columnist.

If an inheritance tax is good policy, let's have it apply to everyone.

 

I have absolutely no illusions that I'm ever going to strike it rich. For me, it all comes down to this: I know better than anyone in city hall, the state capital, or Washington D.C. how I'd like to live my life and what I'd like to do with the money I make. I assume the same is true for almost every other person in this country, so I'd prefer to have government interfering in people's lives as little as possible.

To paraphrase Einstein, I'd like my government as small as possible, but not smaller.

 

the state has no moral right to confiscate and dispense the fruits of a life's work

it's theft, motivated by greed, a desire to claim that which one has not earned

 

You have no right to complain if your car hits a pothole and you ruin a tire. No right to complain if a dam breaks, and you and your home are washed away. No right to complain if a bridge collapses while you or someone you care for happens to be driving across it. I could make a very, very long list just like this very short one, listing those things that taxes pay for, that you enjoy, and that you just said shouldn't be paid for with taxes because "the state has no moral right to confiscate and dispense the fruits of a life's work."

You seem like a reasonably intelligent fellow. Do you seriously believe these absurd "talking points" you are spitting back out to us here? I hope not. Perhaps you've become like basso, who just posts crap in D&D because it amuses him to do so, with all due respect. I hope not.

 

Bill Gate's dad did a lot of work for IBM and made the introduction between him and IBM execs. Without his dad Gates would not be a billionaire. At least not as easily as he did.

 

why not just tax everyone the same?

 

Well then consider this a moment of clarity. GMU is a commuter school in Fairfax county which made a name in the 80s/Reagan era by revolving dooring various hacks in and out of AEI, Heritage and the like. But thats actually not the substance of my critique so go ahead and read again.

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And do the numbers look any different at 401? Or 4100? And - vastly more importantly - where is the counterexample/control? You're a purported man of science. You get this.

 

What does that have to do with estate tax? Will we be taxing family business connections?