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Comment by ericra | Hacker News Reader

Curious to not see inheritance/estate taxes listed among the possible solutions here, but I guess that a "wealth tax" could indirectly address this by whittling away at large fortunes over time while people are still alive. This may help avoid the issue of people using trusts to sidestep estate taxes (although I'm sure they would find a way!).

More generally, I highly recommend any of Thomas Piketty's books for detailed discussion about the history, causes, and consequences of inequality. They are exceptionally well-researched. And while you may not agree with all proposed solutions, they are well-written (and well-translated into English) and provide a great historical overview.

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I'm not an expert here but my understanding is that most generational wealth is gone by the third generation anyway. Even if you outlawed inheritance entirely it seems like it wouldn't make a huge marginal difference?

I don't think there's been 3 generations to test this across, since the post-war boom.

Sure there's data from before, but society hasn't been "at scale" for very long. It sure seems like the recently emerged mega-economies have a few star powers, ever consolidating their hold.

Squeezing out other wealthy families isn't helping the total distribution, if that is the case. Companies keep getting bigger and bigger & the ultra rich get ultra-richer. Families could keep falling like flies, but wealth could still be ever more owned by ultra-wealthy.

Historically true but definitely not once rich people figured it out. They created all sorts of financial and societal instruments to solidify this (various trusts and non profits as examples). There are many many families that are much older than 3 generations at this point.

Today's rich families in Florence, Italy, were rich 700 years ago: https://www.vox.com/2016/5/18/11691818/barone-mocetti-floren...

Inheritance in a republic is disgraceful.

Three generations of wealth is a common belief, but the research doesn't bare it out. Try 28 generations.

https://qz.com/301150/this-is-the-proof-that-the-1-have-been...

That is a truism that applies mainly to the US, if it applies anywhere. The US differs from a lot of places in, say, Europe in that partible inheritance is almost universally practiced. That is, inheritances are divided equally between children. This accelerates the drawdown of the fortune.

In Europe I have heard it is more common, although perhaps not a norm, to practice a meritocratic form of primogeniture. One child, who is not necessarily the eldest son but who is seen as the best steward, is chosen to receive most of the fortune, and is trained how to maintain it. Other children may receive much smaller amounts.

The fortune is much more likely to persist if not divided, preventing the liquidation of large holdings and more importantly managing expectations among the gaggle of heirs about how much they'll get.

Maybe the median family does, but where do you think the money they lose ends up? In the hands of the families who don't squander their wealth, further concentrating it into generational wealth.

I disagree.

I'm in favor of a wealth tax, but a strong proponent of any inheritance tax (and income).

A wealth tax is more fair. Avoiding it is way harder than for inheritance taxes and it's a constant spend for any estate (avoiding issues around a one time big taxable event, easing planning).

If we as society want(need!) to redistribute wealth we should not wait for people to die!

'Proponent' means you are in favor of a thing. I assume that's not what you intended?

I agree.

Inheritance is extremely unmeritocratic yet is somehow completely acceptable even among hardcore libertarians. Why?

Most 'tax the rich' talk revolves around income. But real rich people don't make an income. They make capital gains or take loans against assets. It's a complete red herring.

Gifts and inheritance should be the target of any fair-minded individual. As with any power passed down by familial connection, it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea.

People who earn their wealth in life have, as good as any, a justification to know something of how to allocate it. That is, in the ideal society where wealth is a reward for growing the economic pie. We're not there yet. But this is the closet thing we've got.

People who inherit their wealth have no such justification. Let wealth die with the person.

> yet is somehow completely acceptable even among hardcore libertarians. Why?

A common area of concern for libertarians is the balance of power between citizens and government. In this case, the power of the government to take your (or your family's) stuff after you die, despite you already having paid taxes on it.

Through a libertarian lens the government "stepping in to make everything fair" can be viewed as unwarranted interference. Especially when a politician's idea of "fairness" might not square up with yours and be subject to political winds.

(I have some libertarian leanings but wouldn't call myself one, overall I believe wealth and inheritance taxes make sense, the big question is "what rate").

A fair point. However, unless they are the kind of libertarian that believes in no tax, the government is still going to tax something. And in doing so will decide who is taxed and who isn't. Taxing fundamentally must answer the question of what is fair to tax.

I believe the reason that income is taxed is mainly because it's much easier than wealth for governments to determine and is generally more liquid.

I guess my issue with inheritance is less economic and more moral. It just doesn't seem to fit with modern values yet is untouched as a debate topic. I'm curious as to why that could be.

People want to make sure their loved ones are taken care of / will be financially secure, even after they die. This is a fairly core desire.

Family businesses, family farms, family homes - if you hit people there you have to expect an emotional reaction.

People who think "bigger than individuals" - their families, their communities, their churches, their businesses, how to build up productivity and abundance in those spheres. Some people view economic activity as a multi-generational effort and the government stepping in to take everything just because an individual happens to die is kind of a norms violation.

[I get that none of this justifies generations of economic parasites never having to lift a finger, which is why I think the implementation details matter a lot].

I appreciate your sincerity here.

It is indeed emotional! This multi-generational effort kind of view is key to many people. And to them, building wealth for their children is the most moral thing they can think of. You're right to point that out and you saying it reminds me of a friend who said something similar about the topic.

My critique on this side is that the receiver of the wealth seems often to not be happy with it. I'm sure that is not true up to a certain point but past that, the trope of the meaning crisis in some way seems to be accurate from those I've known. I think the giver does not follow the logic to the end that indeed the giving is a gift to themselves and not to their children. They are granting their own dream at the cost of their child's. This is where I think the moral failing is.

I certainly believe in contributing what you can to your community and that those whom have the wealth should indeed allocate it as they see fit. I guess my question is in the wisdom of some specific allocations.

The generational economic parasite is not happy to be so but is made into the unhappy abomination. It costs both them and society.

>I guess my issue with inheritance is less economic and more moral. It just doesn't seem to fit with modern values yet is untouched as a debate topic.

Ensuring that your kids are well taken care of is a core biological imperative, let alone a "modern value".

There's currently a 40% estate tax rate for amounts above the generous exemption. Are you suggesting a 100% inheritance tax on death? With no exemption?

The estate tax is extremely avoidable through trusts and gifts before death. I've not seen any stats but I doubt many pay that 40% in any significant number - it would just be poor planning.

I am suggesting a 100% inheritance tax. As impossible to enforce as it would be. Why should someone have wealth by accident of birth? Children of the wealthy already have advantage from the upbringing bought by the wealth.

I only make this argument as a point of philosophy. It's completely infeasible because the values of society are warped here. Inheritance is virtue. Maybe the overtone window could shift a bit, though?

>Inheritance is extremely unmeritocratic yet is somehow completely acceptable even among hardcore libertarians. Why?

I think you grossly misinterpret the philosophy of serious libertarians. It's not simply about meritocracy, it's much more about being free to control what's lawfully yours such as personal and business assets (including your body and voluntary economic agency). This of course includes having the right to decide who gets your money after you die.

>it leads to a less efficient use of resources. We have all of history to tell us it's a bad idea.

Do we really? Inheritance taxes are a minority of government revenues, and they fall well into being offset by the sheer waste of resources and money that most governments routinely practice. You consider them being handed down into often useful foundations worse than this?

>People who inherit their wealth have no such justification. Let wealth die with the person.

How about letting the people who created their wealth decide what's a fair use of it? They're in a practical sense more justified than anyone else in having that decision. You or some bureucrat are somehow more justified than the creator of a body of wealth in deciding what should happen with it? How so pray tell?

> How about letting the people who created their wealth decide what's a fair use of it?

Because the whole point is that they are unlikely to have been the person who actually created that wealth, the majority of wealth is inherited or created because they inherited wealth in the first place to be able to create their revenue streams.

If I died and left my heirs $10001 that I had made from my business but I inherited $10000, to be able to set up my business did I actually create any meaningful wealth?

Should I be able to decide what happens on anything more than the $1?

Also, "Capital in the 21st Century", in nice hardback editions barely used, are available in many used bookstores. :) All joking aside, it is a good read.

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