God Save The King

[crazy canuck]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

[Sheilbh]

This debate is interesting because - for me my support for absolutely prohibitive inheritance taxes, I think, come from the same source of why I'm against the monarchy in general. They're really linked in my mind (as is banning private schools - although there's a bit more there).

[The Brain]

Sweden has famously had very aggressive income taxes for ages. I think there was a situation in the 1960s where tax rates could actually get to 102% in Sweden. I think like in most of Communist Scandinavia that was toned down in the 90s and beyond, but top marginal rates and effective paid rates are much higher in Sweden than in say, America.

I think it is generally much harder to accrue wealth in Sweden than most countries. Obviously there have been a few odd Swedish billionaires, and plenty of ultra rich, but on a society wide level wealth inequality is not a significant problem in Sweden to begin with because they make it hard to get truly wealthy.

I generally am fine with people getting wealthy, even very wealthy, with their own efforts in their lifetimes, so take issue with Sweden's high income taxes. But I have little real sympathy for people who want to pass on intergenerational wealth. I do not want my children to inherit money from me, and I did no inherit anything from my parents. My wife came from a wealthy family and she did inherit some, and she actually also is not a big fan of perpetuating the practice.

Sweden is one of the countries in the world with the most billionaires per capita, so I don't think it's hard to get truly wealthy in Sweden.

[Barrister]

The problem with an inheritance tax is it is relatively easy to avoid if you take the right steps during your lifetime, through gifts or trusts or similar measures.  So you wind up not taxing the wealthy, but only those unwise enough to take proper tax-planning advice (or those who die young or unexpectedly).

[Sheilbh]

The problem with an inheritance tax is it is relatively easy to avoid if you take the right steps during your lifetime, through gifts or trusts or similar measures.  So you wind up not taxing the wealthy, but only those unwise enough to take proper tax-planning advice (or those who die young or unexpectedly).

Oh to be fair we absolutely need to smash trusts as well

I'm more tolerant of gifts though

[The Brain]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

How do they stop people from succeeding?

[Tamas]

The problem with an inheritance tax is it is relatively easy to avoid if you take the right steps during your lifetime, through gifts or trusts or similar measures.  So you wind up not taxing the wealthy, but only those unwise enough to take proper tax-planning advice (or those who die young or unexpectedly).

Oh to be fair we absolutely need to smash trusts as well

I'm more tolerant of gifts though

So I am a rich guy I put most of my assets into a company together with my children then on retirement I sell my share of it to the kids ona form of equity release where I get use of the properties and a stipend until I die. Should the whole company be taken away from the children on my death and if yes on what basis? That it was at some point in my life owned by me and it is now owned by blood relatives?

I admit this nationalisation would work much easier with poorer people who can't really afford fancy legal trickeries.

[crazy canuck]

I get that and again I am in favour of finding constructive ways of reducing inequality, but the kind of drastic inheritance task OvB was arguing for is one of the most drastic options imaginable.

And, BTW, a more mild inheritance task isn't that rare is it? I believe there is certainly a form of it in Hungary and England, but I can be wrong.

The kind of "take it away from you because I didn't have it growing up" is just monstrous, and I can't really see the difference between that and for example preventing talented people from seeking education focusing on their talent, e.g. if your kid is great at math, why not forbid them from any math specialisation? Their inherited ability will put them leaps and bonds beyond those not lucky enough to inherent such a potentially lucrative talent from their parents, so why make that inequality worse by leaning into it? Let's send the kids struggling with math to math school, and lets send the math genius to regular state school, so the playing field is more level.

Agreed, that is where I was going with my post 

I don't think we create an equitable society by having the kind of one size fits all rule that Otto advocated for.  The only way it would work under his scheme is if there was also a massive redistribution of wealth in order to make a completely level playing field in terms of access to educational opportunity and access to career opportunities.  But that is a utopian pipedream that has a number of problems that are bigger than the ones we are talking about now.

But there is a pretty large middle ground between the two extremes of no inheritance tax vs complete confiscation of wealth, in which a tax can be reasonably formulated. 

[crazy canuck]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

How do they stop people from succeeding?

There is not need to do so.

[The Brain]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

How do they stop people from succeeding?

There is not need to do so.

Maybe this is a cultural difference between Sweden and Canada? In Sweden you wouldn't call someone who simply inherited money "successful".

[crazy canuck]

The problem with an inheritance tax is it is relatively easy to avoid if you take the right steps during your lifetime, through gifts or trusts or similar measures.  So you wind up not taxing the wealthy, but only those unwise enough to take proper tax-planning advice (or those who die young or unexpectedly).

Yeah, when a inheritance tax is proposed, the assumption is that all the loopholes where it could be avoided would also be closed.  Otherwise, as you point out, it would really only end up being paid by those who take advantage of the loopholes.

Which brings us back to how it should be properly designed in the first place.

[crazy canuck]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

How do they stop people from succeeding?

There is not need to do so.

Maybe this is a cultural difference between Sweden and Canada? In Sweden you wouldn't call someone who simply inherited money "successful".

Same here.  And so I find it difficult to understand your reasoning.

[The Brain]

I think the reason most are not in favour of inheritance taxes is that they personalize it to their own circumstances, without perhaps fully understanding how tax codes can be utilized by the wealthy to transfer large amounts of wealth to the next generation with no tax consequences. 

I understand why Tamas does not want to lose the family home, but a inheritance tax, properly structure, could leave that sort of asset alone, and in instead target the value of securities and cash of the truly wealth which flows freely down through the generations.

The discussion is similar to the discussion around wealth taxes.  The devil is in the detail of who actually pays.

What's the harm in transferring wealth to the next generation? I'm not aware of Sweden having any problems caused by the lack of inheritance tax.

The harm depends on the sort of society you want to have.

If you want to have one class of people forever privileged over all the others, then there is no harm at all.  However, if you want a society where there is a more level playing field in which people succeed on their own merits then the absence of an inheritance tax is very harmful.

You think Sweden is a country where people don't succeed on their own merits?

Sweden has not trust fund kids?

How do they stop people from succeeding?

There is not need to do so.

Maybe this is a cultural difference between Sweden and Canada? In Sweden you wouldn't call someone who simply inherited money "successful".

Same here.  And so I find it difficult to understand your reasoning.

So how do trust fund kids fit into the picture exactly?

[Sheilbh]

So I am a rich guy I put most of my assets into a company together with my children then on retirement I sell my share of it to the kids ona form of equity release where I get use of the properties and a stipend until I die. Should the whole company be taken away from the children on my death and if yes on what basis? That it was at some point in my life owned by me and it is now owned by blood relatives?

I admit this nationalisation would work much easier with poorer people who can't really afford fancy legal trickeries.

Yeah I don't really agree with inherited wealth and privilege in all its guises and it's no more virtuous in a business suit than it is a Ruritanian uniform. And how many generations do you go down before they are indistinguishable?

I don't have an issue with gifts - liquidate your assets and give money away. I don't mind people doing things like a sale - which would attract tax - within their life. As I say I object to trusts etc more.

[Tamas]

So I am a rich guy I put most of my assets into a company together with my children then on retirement I sell my share of it to the kids ona form of equity release where I get use of the properties and a stipend until I die. Should the whole company be taken away from the children on my death and if yes on what basis? That it was at some point in my life owned by me and it is now owned by blood relatives?

I admit this nationalisation would work much easier with poorer people who can't really afford fancy legal trickeries.

Yeah I don't really agree with inherited wealth and privilege in all its guises and it's no more virtuous in a business suit than it is a Ruritanian uniform. And how many generations do you go down before they are indistinguishable?

I don't have an issue with gifts - liquidate your assets and give money away. I don't mind people doing things like a sale - which would attract tax - within their life. As I say I object to trusts etc more.

But you want to judge something universal (if we want to be even remotely close to OvB's idea) and want to judge it by its desired outcome on the most extreme of cases (the very rich), while it would affect (near-)absolutely everyone.