People care before they are dead about what is going to happen after, and this changes their behavior.
I'm not saying anything about your conclusion, but your reasoning is flawed.
I'm not saying anything about your conclusion, but your reasoning is flawed.
Now, if i decided to give all of this to my hypothetical kids -right now-, potentially decades before I'm dead. They could grow up with it, invest it, make money, and be reasonably "rich" (not 1%, but better off than most) by the time they are in their 30s. And then they could give THAT right away to their kids, again, decades before they are dead.
Repeat the cycle. So my grand-grand-grand-etc childrens could be absurdly rich, technically thanks to me, but where do you draw the line between whats inheritance and what is not? I gave the money while I was alive (taxed and stuff, but still), they were the one who invested it and made that additional money through their own action (though it was super easy, it was still them clicking the buttons on their investment account's website, and according to taxes, they made it).
So how to you stop that from happening? I can't give money to my kids while I'm in my 30s?
Now ok, let say I can't give money. Instead I take my money and I spend it on private school, tutors, private college, etc. Even if living in a place where education is free, you can certainly have a lot of influence through money.
No matter how you spin it, somewhere down the road, this effect will compound. Starting from scratch in a videogame means you'll take longer to catch up than someone who's been playing the game for a while and twinked their subsequent characters. No way is it going to be different in a system as complicated as real life.
There's pros and cons on the various ways they can happen, but it does not change the fact that the kid of several generations of successful/influencial/rich/whatever people will do better for themselves on average than someone fleeing a poor country who just came in this one.
Actually, you don't need to draw the line. It's covered in the tax code. There's this thing called the "gift tax." People moan about the complexity of the tax code but a lot of it is there for a reason, so you can't just go AHA and pivot a little bit and subvert the entire intent.
If you give enormous wealth to another who is not a spouse or a charity, while alive, or while dead, then you (or your estate in place of your dead spouse) will, in fact, have to pay the taxes due.
The thing is the taxes are too low and the Republicans keep zeroing them out when they get in power.
A parent is willing to save a lot of money to give a bigger inheritance for his children, even knowing that his children will be much richer than he ever was at any point. That is irrational, but in the end is a huge part of the economic progess of society. Why would we want to deny some people the opportunity to do what they want AND benefit society as a whole at the same time?
Isn't spending better than hoarding for the economy?
And I see no indications there will be a pile of money for my kids once I die. So, intellectually, it's easy for me to agree with you.
But if by a turn of events my life transforms from being a financial disaster into a money-making success story and I end up with money at the end, I would like to give them what I feel every human being should have: a chance to find themselves, to find out what they are good at and what they love, without wrecking their finances. Because you only live once and you should try not to give your small amount of hours on earth to someone or something you do not believe in. So I would like to give them each a little "go and find yourself" fund that they could utilize once they're, say, 20 or 30 years old.
That feels wrong, intellectually, but if I have money and we haven't yet scrapped the notion of inheritance, then there will be "find your true you" funds for my kids. No doubt. Because if my kids find what they're really good at, they'll kick your kids asses ;)
That's what life's all about right? Setting things up for your genes. Bootstrapping your gene carriers lives, not with money in particular, but with the things they'll need to out-perform the rest or more importantly, to be as happy as they can be. Anything else we do with our time are just hobbies.
My point was this: will you not create such a trust yourself, for your kids, if there does not exist one that is available for all, if you had the means?
I hope Bill Gates starts a trend. I'm sure he'll give away all of his money except for that 100M trust fund for his kids. What if they then turn that measly 100M into billions and then repeat what their father did? That would be pretty cool. How could laws about inheritance stop that from happening, I wonder.
I think laws about inheritance are mostly good because they protect the inheritor. The money would go that way either way, unless the parents and their kids ave afalling out. If a child has a falling out with his parents, parents could easily cut him out of the heritage if it were not for laws protecting those children. I think those laws are mostly good. Because rebelling against your parents is mostly a good thing, to society that is, because there is a very good chance you are smarter than them.
Any evidence of the income from labor of children that came from wealthier family is very likely to point that the highest income jobs go to people with richer parents. That points to the exact opposite: the inherited capital allows them to pursue higher education and more perfectioning of skills, even if they dont need that labor.
But even if at some point of inheritance, people developed a significant dissuasive to work well paying jobs, it would be a drop in the bucket. The labor of the people who's inherited capital allows them to never work, and not only that but never for their children to work, is not a significant population and clearly, managing the capital is worth a lot more than their labor.
But lets say that even then, we want to squeeze as much as possible. Why stop at life? Lets just confiscate everything at any point in a mans life: someone that IPO'd and made 50 millions by 30y-old is tempted to never work by that same assumption, shouldnt we tax it all away? Of course, we know that taxing in that way is not only not to the liking of many, but it has economic consequences. SAme with the inheritance tax.
> Isn't spending better than hoarding for the economy?
I need more context for this, im not sure i get it. Spending by itself is not good for the economy, its actually terrible. Frivolous spending is not good for the economy: it creates jobs that have limited use beyond basic wealth transfer. If you spend your money on maids and people to afford luxury to you, once the capital is spent, all that value goes with you when you die. But if that capital goes into something that lasts after you perish, the economy gets richer. For example, if you buy 200 cars, at least after you die ,there are more assets in the overall economy.
> the inherited capital allows
> them to pursue higher education
> Why stop at life? Lets just
> confiscate everything at any
> point in a mans life
>> Isn't spending better than
>> hoarding for the economy?
> I need more context for this
If you mean the Paradox of Thrift [1], I remember that class in macroeconomics. But it was quickly followed up with the point that funds that aren't spent are either (a) invested in capital which increases society's productive capacity, or (b) made available as loanable funds to others.
So it's really not a paradox at all. Whether you're spending, investing or saving, you're still making an important contribution to the economy.
I guess it depends on how you define or implement inheritance tax. If you can afford your kids your entire capital while you are alive, the inheritance tax will only affect the unprepared. In argentina there is a sizable estate tax , so people transfer all their deeds to their children in their 60's. Of course such implementation would not render the kids unable to live without wages.
> Because I can assure you that once dead, you will maintain no further interest in your assets. While alive, I suspect you will.
I dont see how this follows what I said. I said that if the goal is to maximize the amount of labor in the system (adding inheritance tax so children of welathy people also have to work) then we could just ban wealthyness altogether and truly maximize the amount of people that work. by making it a necessity. I dont know what interest in assets means in this context.
> They were teaching it in highschool economics when I was a kid.
I dont know what model they taught you, but if spending by itself were the undisputable best use of capital, then we should collectively just ban savings from ever existing and reap the rewards.