Tax avoidance by the obscenely wealthy

[The Minsky Moment]

The main strike against it is it interferes with a person's right to dispose of their accumulated wealth as they so please.

Since such a right does not exist and has never existed, a better justification is required.

[Tonitrus]

The main strike against it is that it is a horrible, destructive idea.

Yeah. That is the main thing.

I guess if Disney Corporation loses everything to the state everytime the CEO changes it might be fair. Institutions? Keep your shit forever! Families? Give us all your shit peasants.

And that would be the main dodge...individuals hiding assets inside corporations/institutions.

[Malthus]

Also I am not sure it is even something we should strive for. Corporations and other entities can accumulate wealth and assets over decades but people cannot? Seems like such a system is designed to empower institutions and hamstring individuals. Also most estates are not cash but things like a house. So we take some family's home once grandpa dies? Seems pretty draconian.

But I understand the sense of fairness and incentives it wants to create.

Well, institutions accumulating power can be dealt with in other ways - such as expanded anti-trust legislation. Ideally, some balance would be struck to avoid everyone being owned by either Microsoft or Bill Gates personally ...

The issue is one of which values you want to preserve. A society in which wealth and power is more or less permanently stratified and in which social mobility is very difficult - that is the direction the West is heading (and the US more than most). Or a society in which there is greater equality of opportunity, but less control over one's family legacy.

[Berkut]

How about we just get most wealthy people paying a significant estate tax, rather then trying for something that is totally impossible to get passed right now?

[Valmy]

How about we just get most wealthy people paying a significant estate tax, rather then trying for something that is totally impossible to get passed right now?

I think we already had that at one point and it was fine.

[Barrister]

I've always thought there were good arguments in favour of it. The notion being that wealth 'ought' to be earned by the person earning it, not merely accumulated. Though the children of the wealthy would get a major boost nonetheless, having grown up with the benefits of having wealthy parents ... after all, given average lifespans, they would be teaching retirement age themselves by the time such a tax would affect their parents.

The main strike against it is the difficulty in preventing the wealthy from getting around it in various ways.

The ways of getting around it can be closed.  Tax tangible gifts over some small threshold as income, for instance.  You could buy your child a car, but not a house.

But there are so many ways around it.  Even with comparatively low estate taxes right now my understanding is if you have to pay them you have an idiot for an estate planner.

You tax gifts over a certain amount - so instead of a gift it's a sale at below-market rates.  You guarantee a loan which is used to make investments.  You hire someone to a position with lots of compensation but little work.  You do the same with spouses or children.

Or you set up a trust or foundation.  Having control over a multi-billion dollar charitable foundation is almost as good as being worth multi-billion dollars to begin with.

And that's without me being an expert in any of this.

[Malthus]

How about we just get most wealthy people paying a significant estate tax, rather then trying for something that is totally impossible to get passed right now?

If we are gonna limit the discussion of reforms it to what is actually possible in the current US political system, it will be a very brief discussion. 😄

[The Minsky Moment]

If an estate tax is a form of wealth tax - and cleary it is - then it's not obvious to me why the most rational way of imposing taxation on wealth is on the basis of the occurrence of an unpredictable event.  What not impose a wealth tax regularly every 10 years or every 5?  or why not every year? If the concept is sound, why not do it in a rational and systematic way.

[Admiral Yi]

It doesn't dispose of those rights at all...you have them for the rest of your life.

It certainly interferes with people who wish to pass along wealth to their offspring.

[Habbaku]

How about we just get most wealthy people paying a significant estate tax, rather then trying for something that is totally impossible to get passed right now?

Because getting most wealthy people paying a significant estate tax is likely also impossible to pass.

[Berkut]

What if we had a much more agressive estate tax, but it was easily avoided by simply donating, tax free, large portions of your wealth to defined and vetted charities (like the Gates Foundation)?

Basically, if you don't want the government getting your shit, give it away to some humanist charity. If you don't....then Uncle Sam gets to decide what to do with it all.

[The Minsky Moment]

How about we just get most wealthy people paying a significant estate tax, rather then trying for something that is totally impossible to get passed right now?

If we are gonna limit the discussion of reforms it to what is actually possible in the current US political system, it will be a very brief discussion. 😄

Right.  All we'll have left to discuss is the Beat Up on China Bill of 2021, and the resolution in favor of apple pie.  Except even the latter will fail as the Squad condemns agribusiness and the GOPers refuse to have anything to do with fruit picked by illegal labor.

[Malthus]

If an estate tax is a form of wealth tax - and cleary it is - then it's not obvious to me why the most rational way of imposing taxation on wealth is on the basis of the occurrence of an unpredictable event.  What not impose a wealth tax regularly every 10 years or every 5?  or why not every year? If the concept is sound, why not do it in a rational and systematic way.

The main reason seems to be based on a notion of fairness. It seems more fair to strip away wealth that was (notionally at least) earned, when the person who has earned it is no longer around - they cant, as the saying goes, take it with them.

Also - death unpredictable? The insurance industry would like a word. 😄

[Tonitrus]

If an estate tax is a form of wealth tax - and cleary it is - then it's not obvious to me why the most rational way of imposing taxation on wealth is on the basis of the occurrence of an unpredictable event.  What not impose a wealth tax regularly every 10 years or every 5?  or why not every year? If the concept is sound, why not do it in a rational and systematic way.

One could counter that the likely targets of your wealth tax, with the wealth being mostly in the form of stock holdings, is that said imposition...or at least the level of impact it has...is also based on unpredictable events (namely, the stock price at any given time).

For example, you give Elon Musk a tax bill for 10% on his $100 billion-dollar Tesla stock value on 1 Jan 2022.  On 3 Jan 2022, his Tesla stock value crashes to $1 billion.  Ouch.

[Valmy]

If an estate tax is a form of wealth tax - and cleary it is - then it's not obvious to me why the most rational way of imposing taxation on wealth is on the basis of the occurrence of an unpredictable event.  What not impose a wealth tax regularly every 10 years or every 5?  or why not every year? If the concept is sound, why not do it in a rational and systematic way.

The main reason seems to be based on a notion of fairness. It seems more fair to strip away wealth that was (notionally at least) earned, when the person who has earned it is no longer around - they cant, as the saying goes, take it with them.

Yeah I get the concept. I just think it would be terrible in practice and again it seems to me would be to make sure almost all the wealth of a country belongs to institutions with only scraps for people. I mean we already have that problem, this would just make it far worse.