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Comment by speeq | Hacker News Reader

So the 7th Duke of Westminster is estimated to be worth £9 billion (US$13 billion), making him the world's richest person under age 30.

https://en.wikipedia.org/wiki/Hugh_Grosvenor,_7th_Duke_of_We...

> Upon his father's death, in August 2016, as well as the peerages, he inherited a wealth currently estimated at £9 billion, with considerable trust funds for his sisters. This wealth is held in a trust, of which the Duke is a beneficial owner but not the legal owner — an arrangement which received considerable press attention due to the inheritance tax exemption this confers.

The standard Inheritance Tax rate is 40% in the UK when above a certain threshold - https://www.gov.uk/inheritance-tax

Seems fair!

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I'm not sure why everyone thinks it's fair the government should get paid when a citizen dies.

Governments tax wealth and economic activity. Is there another system which is more fair? Lottery? Head count? Birthday?

I think estate tax should be 100% because you sure as shit don’t need your money when you’re dead. Change my mind.

You might not need your money when you're dead, but people you very much wanted to provide for and support, like your spouse or your children, certainly do need it if they survive you. Providing for one's family is one of the main motivations for people to do productive work and create wealth.

> Providing for one's family is one of the main motivations for people to do productive work and create wealth.

Do you have a dataset showing people without children work less hard and create less wealth?

> Do you have a dataset showing people without children work less hard and create less wealth?

That wouldn't be the right calculation. If a person has children, their children will contribute to future GDP. So a proper analysis of having children on the economy would compare the output of:

- someone without children; and - someone with children plus the net output of their children discounted to present day value.

I wouldn't be surprised if it turned out that the average person without children individually contributes more to GDP than the average person with children. However, that's largely because raising children takes time, labor, and resources. The person with children is sacrificing their own individual wealth and production and investing it their children. However, when the children's future production is taken into account, discounted by the future value of that production, I suspect that it turns out the other way.

I don't have data on this and although my suspicions feel correct, maybe they aren't. I'd be genuinely to see such data.

> That wouldn't be the right calculation. If a person has children, their children will contribute to future GDP

I think you're taking that in the wrong direction. The op was suggesting that the primary reason people work hard and create wealth is because they want to leave money for their children after they're dead, and that a redistributive estate tax would prevent that. Essentially: people are primarily motivated to create because of their children.

> The op was suggesting that the primary reason people work hard and create wealth is because they want to leave money for their children after they're dead

No, I was not. I was saying that that is one of the main reasons, not the main reason.

> Do you have a dataset showing people without children work less hard and create less wealth?

That's not what I was claiming. I was only claiming that providing for one's family is one of the main motivations for people to do productive work and create wealth, not that it is the only motivation.

Do you have a dataset showing that people with spouses and children do not do productive work and create wealth?

Does it matter what the motivation is if, at the end of the day, both set of people work equally as hard and create the same amount of wealth?

I don't think its to do with fairness, but as this exemplifies, wealth accumulates over generations. If left unchecked then over 400 years a few people own a huge chunk of the world. Why? Is that good for society? Doesn't seem so. Yet society spends a lot of time and money enforcing these laws. Certainly you want your children to inherit if you've done well, but hundreds of years later?

Ownership is a fiction of society, as are most rules, and its probably up to us to decide what "fairness" means. I find it hard to make an argument that someones great grandchildren to the nth level has any claim on this property. So inheritance taxes do seem reasonable.

I have wondered if the modern trend of the rich establishing "foundations" is a way to sidestep inheritance taxes. The foundation will accumulate assets that will be controlled by the heirs some goes to charity which is good for society, but still more and more assets will of necessity be controlled by the foundation and all tax free.

I don’t know. If I’ve been paying taxes over my income all my life, and I’ve chosen to do nothing with what remains, what business is that of the government? It’s just another way of double taxation.

> If I’ve been paying taxes over my income all my life, and I’ve chosen to do nothing with what remains

The problem is your small money has no power, rich people with their big money can buy governments and pass laws that benefit just the rich.

Yes, but the buying part is problematic. Not the fact that they are rich.

The law is fighting the symptom instead of the root cause there.

So what is your solution for fighting the root cause?

Does it make more sense to think that a grandson should get paid because the grandfather inherited a billion that the son (who dies) wasn't able to spend fast enough to squander? Both inheritance scenarios are conventions and both are a bit silly when presented nakedly without nuance.

Edit: reworded first couple of words

I'm sure why I need to pay for public goods and services when I'm alive either, or why we have gift tax.

You say that like it goes to the government and stays there. But really this would just be another part of the public budget. So try it the other way around:

I don't think it's fair that public services for all have to be cut so that some people who's parents (not themselves!) got very rich can stay rich. Let them start out from "wealthy" or from "well off" instead, and let everyone else go from "scraping by" to "okay" in return.

If you extend this logic then it would imply that government should simply prevent anyone from getting rich - dead or alive. If you were socialist then you still wouldn’t have issue with this but for all others this would be infringement on their right to own property and more broadly to achieve prosperity even while doing nothing illegal. In other words, becoming rich should not be an act of crime that leads to stiff penalties.

A more logical view is to think of inheritance as just usual income to other person and hence eligible for usual income tax as contribution towards shared goal of the society.

1. You can extend that argument like that, but I wouldn't. At least not to "there should be no rich people at all". But at some level of wealth, a difference in quantity (of money owned by an individual) becomes a difference in quality, and IMHO we should think really hard if we want that difference to exist in our societies.

2. I agree that an inheritance can/should be treated just like an income. And that's why I applied the usual tax fairness argument of "the more wealth you have, the more responsibility you bear for financing public services, because you have greatly (if perhaps indirectly) benefited from them."

You have it backwards. When a person dies, their property becomes unowned (dead people cannot own things). It is active government intervention that takes that unowned property and gives to rich kids on the basis of some scribbles on some pieces of paper.

> I'm not sure why everyone thinks it's fair the government should get paid when a citizen dies.

I'd argue that it's even less fair that the government feels it's entitled to a percentage of your income. Taking money from a dead person doesn't seem as bad as taking money from a living person.

Nobody likes taxes, but they have been a part of society for several thousand years.

Paying for services I actively make use of seems fair to me. It’s like a subscription to membership of a country.

They should ignore wills and run inheritance as a random lottery. Would be fairer and a lot more amusing.

Of course the thing about systems of rules with people is that they react to incentives in inconvenient ways. At best they would save less to pass on if nobody they cared about would receive any of it.

Really if we valued equality of opportunity at all cost we would either collectivize or randomize children but needless to say that would be incredibly unpopular and not lead to good outcomes given aspects of mammalian child-raising and bonds - we already know from our experience with orphanages that calling the results sub-optimal is an understatement.

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