It's Not Just Income Taxes. Billionaires Don't Pay Inheritance Taxes Either. | Hacker News Reader

It's Not Just Income Taxes. Billionaires Don't Pay Inheritance Taxes Either.

motherjones.com

37 pointsmaxwell21 comments

> What about rising from rags to riches? In the US, 8% of children raised in the bottom 20% of the income distribution are able to climb to the top 20% as adults, while the figure in Denmark is nearly double at 15%.

Whenever these comparisons are done, they always use percentiles instead of raw numbers.

So let's look at raw numbers in USD.

In Denmark using Statbank https://www.statbank.dk/statbank5a/selectvarval/define.asp?P...

You can calculate the 20th and 80th percentiles:

In Denmark(2019):

The 80th percentile is: 27,893.10 USD

The 20th percentile is: 59,261.18 USD

You can calculate the USA numbers from https://dqydj.com/average-median-top-individual-income-perce...

In the USA(2019):

The 80th percentile is: 18,324.02 USD

The 20th percentile is: 81,368.00 USD

The US has quite a bit more gap between the 80th percentile and 20th percentile.

I am not sure the issue is mobility as much as the baseline income equality. I think it should be expected to be easier to go from $28K to $59K than from $18K to $81K. I have not seen any analysis on how easy it would be to go from $28K in the US to $59K or from $18K in Denmark to $81K.

Contrary to what a lot of people believe, it is actually pretty difficult to go from rags to riches in the USA, compared to other countries. One of the reasons is the low inheritance tax.

[0]https://www.theguardian.com/commentisfree/2021/mar/13/americ...

How does making it cheap and easy to pass money to your children make them less likely to succeed?

I'm a layman, so correct me if I'm misunderstanding, but I thought inheritance tax only occurs north of ten million dollars, so nobody in a "rags" position is being helped by a lower inheritance tax. If you believe financial success is largely a zero-sum game, then a low inheritance tax hurts the poor. Alternatively, even if you don't believe that, a low inheritance tax still doesn't help the poor.

A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one. I'm not sure what your point is.

In general, of course. I was disagreeing that it helps the poor, specifically. Is what I said untrue?

> A low inheritance tax can't possibly be worse for building intergenerational wealth than a high one.

It absolutely can for the people who wouldn't, in either scenario, pay inheritance tax in the first place, since for them a low inheritance tax means only less wealth distributed out from those who already have enormous generational wealth from which they might build intergenerational wealth, but not any advantage in passing the wealth they do acquire.

Making it easier for the super-rich to pass money to their children makes everyone else’s children less likely to succeed, because people’s ability to succeed dependent primarily on absolute resources (once you get beyond the most abject poverty).

There's only one class of person that pays inheritance taxes: Dumb rich ones. If you aren't rich, don't worry about it. If you are rich, hire someone to structure your estate to avoid the taxes.

Here's my solution:

Make inheritances cap out at 500k, that's the max you can give anyone. Period.

So at least in that way, if you're a billionaire you'd need at least 2000 people on your will to give out just 1 billion dollars.

If you don't have enough people on your will, it'll go into a lottery system where anyone who's net worth is under 200k gets a chance to win 100k until it's all gone.

This seems like a far bigger deal in terms of 'justice' outcomes than getting worked up over the capital gains from people who earned their stakes.

There is nothing wrong with earning money.

The problem is that this money usually works against all the other people who made different life choices.

For example, excess money can be invested in real-estate, and this can cause housing prices to surge, which can hurt the normal guy.

In the UK home ownership rates are at about 2/3 of the population, so here the normal guy owns their own home.

Because taxing things multiple times is only "justice".

What if you don't believe 100% of capital gains over a certain acceleration threshold are "earned" by the colloquial definition?

I love how this article blatantly lies in the title when there's clearly an inheritance tax which actually has not been adjusted with inflation so it keeps hitting more and more people who aren't billionaires and the fact that it's a literally a double dip tax which is on money that has already been taxed. And the fact that it literally doesn't even matter. Inheritance tax is such a small part of the federal income. Just increase taxes on capital gains above 10 million a year and call it a day.

> there's clearly an inheritance tax

The point is if you're rich enough to pay the inheritance tax, you're rich enough to hire professionals to structure your estate so that you never actually pay any inheritance tax.

> small part of the federal income

It would be a bigger part of federal revenue if rich people actually paid it.

Taxing everything doesn't work. Rich people will just leave the country while alive and still pass on their wealth to their children. It's as easy as buying a painting and hanging it in your kid's house.

So another class warfare propaganda article. Let's see ..

- Takes as many digs at Trump as possible .. check

- Uses outrageous language like "America’s ultrawealthy already get away with murder" .. check

- Article title which lies and states that they "don't pay inheritance taxes" yet even the article itself then explains how much they DO pay .. check

- Constantly takes digs at Republicans, because of course there's no rich Democrats that take advantage of anything, just evil Republicans .. check

- Buries deeper in the article the fact that non-billionaires can also leave literally all their money to their kids, tax free, it's not some secret loophole that only billionaires have access to, in fact billionaires are the only ones that DO pay inheritance taxes .. check

- Uses the article as clickbait to promote their book .. check

This isn't a left vs right issue, it's a top vs bottom issue.

All of the criticisms seem relevant to me. There is definitely a political bias, legally speaking, on this topic, so that makes sense. Maybe they could have tried to make it clear this isn't exclusively the result of conservative policies, if that's the case, but their criticisms are hardly misleading or irrelevant.

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