The Incredible Shrinking Incomes of Young Americans

[PJL]

Civilized countries don't have inheritance tax.

It's actually the opposite. Civilized countries have inheritance tax, uncivilized don't.

No.

Yes.

You're Polish so you can't override a no.

Actually precisely because he's Polish he CAN override a no. Liberium Veto.

[Valmy]

If you look at it from the public interest perspective, you probably want to encourage and reward people who get rich through their own work; then people who get rich through the use of their own capital; and in the last order only people who get rich because someone dies and leaves them with inheritance, right?

Yet, our tax systems are completely the opposite of that: you usually pay a progressive tax on the income coming from your own hard work; a usually reduced (often flat) tax on the income coming from your capital, such as dividend or, say, letting of a flat; and then usually no tax on what you inherit from your parents. This is fucked up.

Yeah that sounds like a great plan in an era of rapidly declining wages. No way out then, you cannot even steadily build of capital because it will just be taken back by the elites when you die.

[Jaron]

Can you just keep your capital invested? Is there a tax if say -- a corporation passes from parent to child?

[Admiral Yi]

Can you just keep your capital invested? Is there a tax if say -- a corporation passes from parent to child?

Yup.

[Valmy]

Can you just keep your capital invested? Is there a tax if say -- a corporation passes from parent to child?

This is my plan actually. Piketty's book influenced my thinking quite a bit.

[crazy canuck]

Can you just keep your capital invested? Is there a tax if say -- a corporation passes from parent to child?

Yup.

No.  Corporations do not pass through inheritance.  Shares may be bequeathed but then there is a deemed crystallization of the value of the share when the share is transferred and capital gains are owed by the estate.  At least that is how it works in countries that tax inheritances.

Can you just keep your capital invested? Is there a tax if say -- a corporation passes from parent to child?

This is my plan actually. Piketty's book influenced my thinking quite a bit.

You should get some tax planning advice.

If you look at it from the public interest perspective, you probably want to encourage and reward people who get rich through their own work; then people who get rich through the use of their own capital; and in the last order only people who get rich because someone dies and leaves them with inheritance, right?

Yet, our tax systems are completely the opposite of that: you usually pay a progressive tax on the income coming from your own hard work; a usually reduced (often flat) tax on the income coming from your capital, such as dividend or, say, letting of a flat; and then usually no tax on what you inherit from your parents. This is fucked up.

Yeah that sounds like a great plan in an era of rapidly declining wages. No way out then, you cannot even steadily build of capital because it will just be taken back by the elites when you die.

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

[MadImmortalMan]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

The "problem" with that is that the 99% aren't getting it too. Because they can't save money.

[crazy canuck]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

The "problem" with that is that the 99% aren't getting it too. Because they can't save money.

But that has a lot to do with vast amounts of wealth that is untaxed.  The 99% would be able to save if government provided basic support like a universal single payor health care system and more affordable education.  But that cant be adequately funded if the least wealthy think that the tax policy that only benefits the rich also benefit them.

[Valmy]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

Those people will benefit either way. They will have access to huge salaries and investments.

But most people will never have huge salaries but they can chip away through saving and investing.

[Valmy]

But that has a lot to do with vast amounts of wealth that is untaxed.  The 99% would be able to save if government provided basic support like a universal single payor health care system and more affordable education.  But that cant be adequately funded if the least wealthy think that the tax policy that only benefits the rich also benefit them.

Ok now you are talking about something totally different. I was responding to Marty's suggestion we should favor fat salaries and hammer savings. I guess the way it was presented it was just substituting one government revenue for another not huge increases in government funds leading to an expansion of the welfare state.

[crazy canuck]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

Those people will benefit either way. They will have access to huge salaries and investments.

But most people will never have huge salaries but they can chip away through saving and investing.

Yes, that is why an effective tax system would progressively tax all sources of revenue.  People who earn very little would pay no tax while people who earn progressively more will pay progressively more tax.

[Tamas]

Meh. Taxation should concentrate on consumption.

[crazy canuck]

But that has a lot to do with vast amounts of wealth that is untaxed.  The 99% would be able to save if government provided basic support like a universal single payor health care system and more affordable education.  But that cant be adequately funded if the least wealthy think that the tax policy that only benefits the rich also benefit them.

Ok now you are talking about something totally different. I was responding to Marty's suggestion we should favor fat salaries and hammer savings. I guess the way it was presented it was just substituting one government revenue for another not huge increases in government funds leading to an expansion of the welfare state.

Yes, I see your point.  It would make no sense to tax dividends progressively but not income.  It would be the same problem but with everyone taking out their money in salary and dividends would become a thing of the past.

[crazy canuck]

Meh. Taxation should concentrate on consumption.

That would be the best way to accelerate income disparity.

[Tamas]

You demonstrate the political problem of implementing sound tax policy.  The .01% are huge beneficiaries of preferential taxation of dividends.   The problem is magnified if there is no inheritance tax.  But people who will benefit very little from the current system seem to think it actually works for them.

Those people will benefit either way. They will have access to huge salaries and investments.

But most people will never have huge salaries but they can chip away through saving and investing.

Yes, that is why an effective tax system would progressively tax all sources of revenue.  People who earn very little would pay no tax while people who earn progressively more will pay progressively more tax.

When the minimum wage was tax free in Hungary, a lot of people (pretty much everyone who wasn't working for a corporation too big to try and cook the books) were on minimum wage on paper, then received extra in cash on the side from the employer.

the thing is, all these glorious plans of destroying savings, or preventing people from leaving something for their families after they die, they would just cuse angst and pain and they would fail. The more complex a taxation system is, the easier to find loopholes.

I would try to devise a taxation system that concentrates on taxing consumption (much harder to hide than income/wealth), and try to keep it as simple as possible.