Income taxation and morality

[Valmy]

The federal estate tax exemption is $5.45 million

That is just ridiculous.

It really is.

It's £325,000 here. The rate is 40%.

That sounds excellent for Marty's billable hours

But even that rate strikes me as something people could manage. Marty would talk about just taking everything over a certain amount in the past.

[Hamilcar]

What does morality have to do with it?

+1, this is really about what behaviors you want to incentivise/disincentivise in your society.

[Berkut]

I know. You'd have to pay £37,500 just to own a £400,000 property. Who the fuck would want to put up with that shit. Better off just gifting it to charity.

Or even worse, selling it for £400K to pay the £37.5K instead of getting to sell it for £80K without having to pay any of that awful tax.

What if you do not want to sell it because it hold sentimental value, or would be a property you could move your own family into to have better quality of living?

You would have a better quality of lvining with 350k in your pocket to go buy or upgrade your current house.

And if it holds sentimental value, great. How much? 350k worth?

I am sentimentally attached to my current house, but I still have to pay property taxes on it.

What does sentimental value have to do with taxes? Is there some unknown moral code that says that as long as people are emotionally attached to something, it's value for purposes of taxation must be zero?

[Valmy]

do the non-privileged rely on inheritance?

Well if the UK plan was in effect in Austin that would effectively annihilate the remaining traditionally African American neighborhoods left in the city. But property taxes was already doing a great job of that on a more slow boil level.

[Hamilcar]

I think a wealth tax, especially one increasing somewhat at higher net worths is a sensible way to approach the issue. Since it applies to net worth, it's harder to avoid it using schemes and exemptions and a progressive version means that the accumulation of wealth at the bn+ level becomes harder, at least to maintain that level for the long term.

[The Brain]

I can't say much about morality. My impression is that the state is poor at managing money, so I would guess keeping taxes as low as reasonably achievable makes sense.

My country doesn't have taxes on gifts or inheritance. AFAIK they were ended because it was felt that they weren't worth the hassle.

[The Minsky Moment]

To be clear, there can be ethical/moral considerations concerning tax - with respect to distribution of wealth and social power, or for confiscatory motives ("the power to destroy") etc.  I just don't think there are any significant moral questions (aside for purely utilitarian ones) with respect to different sources of income.  I.e. in itself there is nothing inherently virtuous or reprehensible about investment income or wage income. 

Unrelated point re estate taxation - the way the US estate tax is structured now, it's probably a waste of effort.  The yield is not worth the cost of administering plus the waste from all the efforts to avoid it.

[grumbler]

My main concern with punitive (like 60%+) inheritance tax is that it seems like it would fall super hard on a very specific part of the population. Small business owners and people who own realestate in cities. It would pretty much destroy them, while the wealthy could easily bear it and/or plan around it. But I guess that is what all those tax exemptions are for.

This is a silly argument.  If the company couldn't exist if faced with debt, it wouldn't exist, because how did it ever get started without ever incurring debt?  The idea that the heirs should be able to receive a debt-free business inheritance when the original owners (their parents) never did is absurd.  Receiving valuable property is not going to 'destroy' anyone, even if they have to pay taxes on it, unless the inheritance is worth less than the tax, which is impossible.

[Berkut]

This is going a little beyond the tax question, but to Tamas point about the moral need for parents to "make a better life for their kids" by, presumably, leaving them piles of cash...

I don't get it. I had a pretty tough childhood, and came from a very poor family. I certainly want better for my kids. But I think I've mostly achieved that not by thinking I am going to leave them a bunch of money, but by giving them a stable life where they have great opportunity for education and emotional development.

Honestly, by the time I am dead, their place in life will hopefully be largely set - not by me leaving them money, but by me giving them the tools necessary for them to create the kind of life they want through their own efforts.

I think whether I leave them $100 or $1,000,000 when I die will have very little impact on whether I think I have done right by them, or whether (I hope) they think I have done right by them. Indeed, from what I've seen from others, leaving your kids a bunch of money doesn't generally seem to have much positive impact on them as far as their personal happiness is concerned.

[The Brain]

Not all parents have kids they know will be able to work for a living.

[Malthus]

This is going a little beyond the tax question, but to Tamas point about the moral need for parents to "make a better life for their kids" by, presumably, leaving them piles of cash...

I don't get it. I had a pretty tough childhood, and came from a very poor family. I certainly want better for my kids. But I think I've mostly achieved that not by thinking I am going to leave them a bunch of money, but by giving them a stable life where they have great opportunity for education and emotional development.

Honestly, by the time I am dead, their place in life will hopefully be largely set - not by me leaving them money, but by me giving them the tools necessary for them to create the kind of life they want through their own efforts.

I think whether I leave them $100 or $1,000,000 when I die will have very little impact on whether I think I have done right by them, or whether (I hope) they think I have done right by them. Indeed, from what I've seen from others, leaving your kids a bunch of money doesn't generally seem to have much positive impact on them as far as their personal happiness is concerned.

It is also a matter of timing. In the ordinary course, given that the typical life-span in Canada at least is around 80 years, and the average age at which one has a child is around 30, the average age at which a child can expect to receive this inheritance is going to be around 50.

By age 50, most people's lives are pretty well established. The pathway of the average person will not be affected by receiving cash at that age, except insofar as it may affect their decision as to when to retire. 

[Tamas]

Well, seeing how whole properties' worth of money is not an issue to any statistically significant prortions of your societies, I will just withdraw my objection, as it is indeed null and void in this case.

[grumbler]

This is going a little beyond the tax question, but to Tamas point about the moral need for parents to "make a better life for their kids" by, presumably, leaving them piles of cash...

I don't get it. I had a pretty tough childhood, and came from a very poor family. I certainly want better for my kids. But I think I've mostly achieved that not by thinking I am going to leave them a bunch of money, but by giving them a stable life where they have great opportunity for education and emotional development.

Honestly, by the time I am dead, their place in life will hopefully be largely set - not by me leaving them money, but by me giving them the tools necessary for them to create the kind of life they want through their own efforts.

I think whether I leave them $100 or $1,000,000 when I die will have very little impact on whether I think I have done right by them, or whether (I hope) they think I have done right by them. Indeed, from what I've seen from others, leaving your kids a bunch of money doesn't generally seem to have much positive impact on them as far as their personal happiness is concerned.

This x 100.

I believe that looking forward to inheriting considerable wealth (aka "having great expectations") can be an active detriment to proper individual moral and emotional development.  I've known kids who stood to inherit tens or hundreds of millions of dollars and they didn't give a rat's ass about education or making strong friends, because they were going to be rich and "leave all these losers behind."  I've also known a near-billionaire (could be a billionaire by now) who has told his kids he'll pay tuition, books, and a stipend for as long as they want to stay in school, but that they will inherit nothing, because he will give his estate to charity.  Those billionaire (+/-) kids are pretty much ordinary kids as far as ambition and interpersonal relationships go.

I've never thought kids should be rewarded for their choice of parents.

[The Brain]

I've never thought kids should be rewarded for their choice of parents.

You don't think parents should influence the lives of their kids?

[garbon]

God that near billionaire sounds like a douche.