Who died and left the US $7B?

And it exists in part because there are so many legitimate cases for doing it, even as a wealthy person: pretend you’re a relatively successful businessman whose company has appreciated to $50mm. In this world, you can’t just leave your gains unrealized and borrow against them. So you can

– Try to find somebody to sell to, which is a sketchy move. Of course, as your company continues to appreciate, you will be forced to continue reducing your ownership stake. Over time, this will make keeping a family business in the family largely impossible.

– Try to find money to pay taxes. This means less money for R&D, for expansion, for your employees.

– Just dump the whole business to private equity and move on.

These all suck, and the government generally collects money on assets as they move not assets at rest. I see no way to resolve it that isn’t suckier than the status quo and so am left with the conclusion that people who agitate for such changes are more resentful of the rich than they are worried about the justice or lack thereof of tax avoidance.

I don’t think anyone is seriously suggesting you shouldn’t be allowed to borrow against assets. That isn’t even the problem. The problem is that you can go your whole life without paying taxes on gains of those assets, then pass them on to your heirs who can sell them and also never have to pay those taxes. It’s like a big gift from the IRS: your assets that were previously encumbered by unpaid capital gains taxes instantly become more valuable upon your death.

Your heirs should have the same cost basis as you did. And so if they sell they have pay the taxes that you never did.

The issue is that it can cause you to have less than zero money, and be forced to sell (possibly illiquid) assets solely in order pay the tax. This is kind of a major deal, e.g. you have an asset worth $20M, but not if you have to sell it right now because it would take time to find the right buyer, so instead you’re forced to sell it for $8M to the only person who will buy it immediately. Some assets may not even be possible to sell in the current year, e.g. because the law requires the owner to have some specific license but the only other current licensees are rightfully prohibited from buying you out by antitrust laws. Not to say that the resulting market consolidation would be a good thing when that isn’t the case.

> Your heirs should have the same cost basis as you did. And so if they sell they have pay the taxes that you never did.

What this is really encouraging is that they never sell. Which isn’t even obviously going to increase tax revenue. If the daughter inherits the business and runs it successfully for a few years and then sells it for 25% over its value at transfer, the government gets tax on the 25%, and then going forward gets the taxes from the new, more productive investment she sold that one in order to buy. And the latter isn’t just capital gains; better investments would also be employing more people (payroll taxes, fewer unemployment claims), paying more property taxes, etc.

If you make it so the tax basis stays low so a sale would have to pay tax on 95% of the value instead of 25%, she doesn’t sell, you don’t even get the tax on the 25% and the tax base stays lower because she doesn’t switch to the more productive investment.

Eventually, someone will sell it. And, at that point, if the tax basis stays with it, all taxes that weren’t payed before are payed then. Having the tax basis transfer with the property doesn’t prevent the taxes from being payed, it just (might) defer them. Having the tax basis _not_ transfer gets rid of the taxes (on the currently accrued profit) completely.

Yes their heirs could hold the assets forever and never sell, correct.

If your great grandfather invested in something a hundred years ago and now 99% of its value is appreciation (or inflation), you may or may not want to continue investing in it. If you do, the step up in basis doesn’t really matter because you’re not going to sell it anyway.

But if you now think it’s a mediocre investment, you may be inclined to sell it and invest in something else. Except that you won’t if you’d lose a significant proportion of its value to taxes. This is a problem with capital gains taxes in general, but it’s especially a problem for anything held intergenerationally (i.e. for a very long time) because not only will the appreciation be large, the inflation by itself would represent most of the value of the “gain”. So the step-up in basis is a stupid hack to avoid this and let children make different choices than their parents and grandparents without being punished by the tax code.

There are probably better ways to handle this, but “delete it and replace it with nothing” is not one of them.

Why not? Why do I care about someone being deprived of a portion of some investment his great-grandfather made?

If I get money from some relative who invested in stuff and then you get money from working really hard in a way that someone thought valuable so they gave you money for your work, why should you pay taxes on that money while I don’t pay taxes on the money I got from my dead relative?

Are we trying to incentivize people to be born to families that already have money or something? Like are we afraid that if we don’t do this, we’ll be creating incentives for people to get born into poor families instead?

Because they only get deprived of it if they sell it, so that gives them more incentive not to sell it, but selling it may be more economically productive, and then you lose the positive externalities of the more productive investment and the tax revenue it would have generated, which could by itself plausibly be more than the loss from the step up in basis.

In general the problem is that capital gains taxes when implemented simplistically create a lot of perverse incentives (tax on productive investment is economically undesirable in general and some of the edge cases are especially ugly), and then the tax code gets full of warts that try to reduce the bad incentives/consequences instead of rethinking the structure of the tax.

> If I get money from some relative who invested in stuff and then you get money from working really hard in a way that someone thought valuable so they gave you money for your work, why should you pay taxes on that money while I don’t pay taxes on the money I got from my dead relative?

Your dead relative already paid the taxes on any money earned in the equivalent way. Capital gains are on asset appreciation, which is an industrial-sized can of worms.

The estate tax already means that the estate of a person who dies may need to sell / divide / split stuff to pay the government. There already is no fundamental protection for an asset passing unscathed from a parent to a child. I don’t see how not stepping up basis qualitatively changes this.

And your argument of “you want a child to be able to inherit a family business / house and keep the family business protected” is incredibly axiomatic and the antithesis of a tax. While it’s inherently consistent, you’re making the same general argument as “all taxes are theft”.

Yes taxes may be theft in one view, but under our current society, raising revenue for the common welfare is also a virtue, so we can’t have have it both ways.

Sorry for not tearing up.

Being able to accumulate capital, at least without having to resort to extreme violence is also about as “unnatural” as it gets..

No taxes = No government = No excess (above subsistence level) accumulation of assets

(This is a genuine clarifying question, because I’m struggling here) are you suggesting that saving is somehow unnatural?

Depends on how you define saving. Hoarding perishable goods is of course a pretty natural behaviour but that only scales so much. Investment (i.e. owning more land or other productive assets than you can utilize directly yourself) seems pretty as opposed to communal ownership seems pretty “unnatural”.

Not that I’m somehow implying that “natural” (whatever that really means, since using violence and coercion certainly seems like natural human behaviour) is somehow always superior to the opposite.

That’s a great point.

But note that you also cannot arbitrarily jump so far back in an implied chain of premises as if to suggest that you’ve somehow build your own (suspiciously libertarian-leaning) argument from first principles. For example:

> The state of nature is no tax

Well, the state of nature is also tribalistic. But imagine someone making an argument that collectivizing the farm in question is right because the state of nature is humans living in a collective.

You’d rightly reject such an appeal to nature in that case. Therefore, you should reject your own appeal above.

The state of nature is no property. Billionaires can’t exist without a government enforcing their property rights. Why shouldn’t they pay the entity that made it possible for them to accumulate their vast wealth?

The Constitution addresses this confusion in its’ preamble. The role of the government includes law and maintaining order, but it extends further –

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

But the preamble to the constitution isn’t legally binding anyway.

> But the preamble to the constitution isn’t legally binding anyway.

No one said it was, but the intent of the framers, at least, is very clear – the government should do things that promote the general welfare, not merely establishing rule of law and enforcing civil order.

We use taxes because nature doesn’t scale to towns of 1000, much less nations of millions. But that is not the state of nature.

i.e. you can’t really “own” more land than you and your family can personally farm and extract rent on it without a state to protect your claim.

Notably, the biggest thefts seem to happen when they can convince people that the gov’t is doing it for ‘the good of the people’, and they’re ‘going after the rich people’, and then they can pocket it when no one is looking.

This is a reason why we need better anti-corruption legislation, an end of the “super PAC”, much higher inheritance taxes with fewer loopholes, and structural reforms to fix a profoundly corrupt Supreme Court.

The government may indeed enforce property rights in a meaningful way, but it doesn’t seem like it’s doing this for billionaires.

> Why shouldn’t they pay the entity that made it possible for them to accumulate their vast wealth?

If this were indeed a true description of how that process occurs, why are you so comfortable with letting the government “make that possible”? Where in the Constitution (or even common law) does it grant the government this power?

No, but assuming you are on Facebook’s board / in upper management you can conspire with the rest of the board to get rid of Zuckerberg (possibly permanently) and share the company amongst yourself.

ARM China seems like somewhat close example of what can happen when there is no government willing to protect property rights. e.g. as long as he has enough local support a CEO of your subsidiary could just take over the entity and there would be nothing you can do about it.

IMHO we’d end up with some dystopian form of Cyberpunk style techno feudalism without strong governments regulating everything. Which in theory might be a good thing for the corporations themselves, just not for most of the people who are currently running them.

Yes, if you want to oust him and take over as CEO, then boards of directors have that power. But that’s more about his job security. When he leaves, he leaves with just as much stock as he ever had, and in the case of some termination clauses in contracts for that stuff, he walks away with more than he walked in with.

With the government out of the picture, this doesn’t much change. If the board of directors tries to confiscate shares or some equivalent (I dunno, withholding dividends? Does Facebook even pay dividends?), then their stock price tanks immediately. Somewhere down near $0. Their financing falls apart shortly after that, and pretty soon the company goes under. The punishment for some group stealing Facebook isn’t government goons stepping in and bashing skulls, it’s in the complicated structures that make it worthless just about as soon as it’s stolen.

I think your Chinese example is quite the opposite of this. The government of China basically has to step in and allow ARM China to pull such a stunt, or it’s impossible.

> complicated structures

I guess. But I just don’t see how could the stock market (in its current form) or most of those complicated structures exist without governments. Of course it’s a silly discussion since Facebook in its current form (including corporate and ownership structure) wouldn’t be a thing without all of that.

> in the complicated structures that make it worthless just about as soon as it’s stolen.

Facebook is still highly profitable, arguably without any government regulation it could be even more profitable. Why share any of that value with the shareholders who can’t really sue you or do anything else? Sure if you did that nobody would trust you if you started a new company and were looking for investors (which is why Facebook wouldn’t exist in the first place in a system that allows that) but that doesn’t really matter if the government suddenly disappeared.

Not saying that Facebook’s upper management would immediately try pulling off something like that it’s just seems like the natural long-term outcome. Political/social instability is usually already priced in, so FBs valuation would collapse just because something like that became an option regardless of Meta’s/FB’s intentions. At that point the cost of “confiscating” shares or similar shenanigans wouldn’t really be that high since being in direct control of the company would be worth a whole lot more than owning some theoretical share of it.

> allow ARM China to pull such a stunt, or it’s impossible.

Why? What could ARM/Softbank do if their Chinese subsidiary decided to just ignore them while continuing to use their IP. Of course their whole business model couldn’t exist in the first without any way to enforce contracts since the companies actually manufacturing the chips would just steal that IP themselves.

You have it backwards. “imaginary ownership of gigantic corporations” doesn’t exist without government. The government doesn’t “protect” Zuckerbergs shares, the government is the vehicle that gives Zuckerbergs shares value. Without the government Zuckerberg’s billions is worthless.

In this fairytale world where Zuckerberg is somehow made a persona non grata, then all his shares would become worthless as he wouldn’t be able to sell them, nor would he be able to enforce Facebook (the entity) to do anything on his behalf.

Billionaires absolutely depend on a very robust system of laws to maintain control of the giant corporations that they own. Zuckerberg couldn’t even enter a Facebook building if his employees rebelled against him and the law wasn’t protecting him.

Note, I’m not trying to single out Zuck in any way, just wanted to pick some billionaire tied to a well known corporation to make the examples simpler.

Exactly. The entire notion of their wealth is predicated on an elaborate system of law and governance! Otherwise, it’s all just freaking numbers on a computer.

There’s a ton of nuance there, sometimes intended to avoid certain negative consequences that feel like double taxation or that provide peverse incentives. But that’s the general premise.

If you pay taxes on your income and then use it to buy something from me, I have to pay taxes on it too. That’s my income now.

If my father paid taxes on something he earned that’s his tax bill. When I get it, I have to pay too. That’s my income now.

This is very clear and consistent. Outside of all the people with an interest in pretending otherwise.

Also worth noting that there’s no state interest whatsoever in preserving generational wealth. Just none. The fact that kids have to earn their own money instead of a family coasting for generations is a good thing for the most part.

There are some plausible arguments for preserving continuity in certain cases, like community based family owned businesses, farms, that kind of thing. But everybody already agrees with that which is why those kinds of things have been generally exempt from estate taxes for generations. The people telling you otherwise are trying to trick you into caring about their agenda, which is how to not pay taxes on their substantial wealth.

I appreciate HN is USA-centric, but over on this side of the pond it’s nowhere near as simple as that.

> If you pay taxes on your income and then use it to buy something from me, I have to pay taxes on it too. That’s my income now.

Except that companies – even one person companies(!) – generally pay taxes on their profits, not their total income or revenue.

We’re commenting on a specific article written about the US tax system. The term “US” is in the title of the post I am commenting on.

There is a problem with high taxes on earned income, but anyone complaining about the 15% capital gains tax has problems. The estate tax only applies to this who are very, very fortunate. These are not even earned. Again, if one hates his country, he can move to Dubai, Bermuda or the Glorious Sultanate of Brunei and enjoy their lifestyle.

I do understand that people in California get angry because the state is so poorly run, but most of the US has easily avoided the self-created problems of California and New York city.

Two places which produce an outsized share of the country’s businesses and wealth? Seems like they are doing something right.

Once the hunter demands water for meat it becomes an exchange, and is the basis of our capitalist society.

Taxes in that system would be more like 10 men who did not hunt or gather demanded you give them food and water or they would beat your face in.

This seems a little dramatic. Are the 10 men demanding food and water also building roads, cleaning the water, removing waste, educating children, protecting collective assets, or any of the other things that Governments do with collective taxes? If not, the analogy falls apart.

> therefore we should set constraints on what the majority can do.

The constraints are supposed to be a constitution and time. In time, as people die and new people are born, the world changes. New people are in charge. They can even rewrite the constitution.

What other alternative is there?

> I’d describe your system as closer to mob rule.

“Mob rule” is just the pejorative anti-democrats use for democracy not going their way.

What’s a rule-by-rich-people pejorative? Pig-rule? Just a pejorative. Just as meaningless.

Anti-democrats don’t have rational arguments on their side. Therefore they have to invent specters of the pitch-forked mob who is killing babies in the streets, the desperate, unwashed…

But all of that begs the question: if the “mob” rules, why are they in the streets? With pitch forks? Desperate? Of course it is completely irrational. If the “mob” already ruled there would be be no mob because the average person would enjoy dignity and respect. Safety and security.

They would have enough means to appear upstanding. Like you know, those rich people who rule now or ruled in the past. Those who never had to excuse themselves for being part of a mob or being unclean.

But it’s clear that if you want people to be desperate and in the dirt then you also don’t want them to rule. That’s how you get a mob.

Which inevitably leads to the question: who should get the power to do that and why they, specifically?

The answer is, some form of government protects them. And that form of government is going to want it’s tribute.

This doesn’t answer my question at all.

Who should decide those limits, and why they? Who pics them?

Think of a thought experiment: A new city/town/state/country is getting started (let’s assume peacefully somehow, this is a thought experiment).

Who gets to set those limits on democratic action?

One choice that comes to mind is everyone gets together and pics the wisest person in the crowd = representative democracy.

Another choice is the strongest bully in the group beats everyone up and sets the laws however he likes = dictatorship.

What other choices? And which one should be best?

I wasn’t trying to answer your question. I was pointing out that your question presupposes that the majority has the power to enforce its will on the minority. It doesn’t even consider the possibility that the majority having that power is not a law of physics, it’s a social construct, and a society does not have to adopt it.

> A new city/town/state/country is getting started (let’s assume peacefully somehow, this is a thought experiment).

Who gets to set those limits on democratic action?

Again, you’re assuming that what gets started is a city/town/state/country as a political entity, with the ability to enforce its will on its residents, and then asking how that power gets regulated.

You’re not even considering the possibility of a community getting started without anyone having the power to enforce their will on others, with everyone having to deal with everyone else as an equal, and nobody having any “governmental” powers.

Historically, such things have happened. For example, saga period Iceland went for several centuries without anyone having governmental powers. Some of the American colonies in the late 1600s and early 1700s–Pennsylvania is a good example–had effectively no one having governmental powers, since while there was nominally a “goverment”, it had no ability to enforce its will on residents. These are “other choices” that your question doesn’t even comprehend.

What happened in those cases? Historically, those societies did fine as long as they were left alone. What eventually ended them was outside interference. Saga period Iceland ended up conquered by Norway. Pennsylvania ended up having its regime tightened up by the British after the French and Indian War (as part of a general tightening up on all the American colonies).

You think a profit transfer has been made, because you think in terms of atomized individuals with no family.

They owe taxes? They can pay them. They can afford to pay them because they have inherited assets. “Oh no, they’re gonna get a diminished inheritance. What a disaster.” I’m not getting one, and neither are most of the people in the country. They’ll still have their inheritance, they just won’t have the land. And they aren’t entitled to it if they don’t have the money to pay their taxes.

And that’s how it’s done in many parts of the world, works perfectly fine. There’s really no reason to step up basis except to provide that loophole, which is probably exactly the reason it’s done.

We do have the odd exemptions like Clarkson’s Farm which was bought partly for inheritance tax avoidance, but you don’t have to do that.

A family is not a single entity under any law in any country I know of. Certainly not in the USA or anywhere in Europe.

When grandma’s Fidelity manager takes 2% every year to buy overpriced mutual funds that themselves eventually just buy SPY, how many dollars do you think goes to capital raises of any kind? The top of the S&P, which essentially determine its returns, are doing stock buybacks with their cash.

You would have been more persuasive if you had said, “Taking cash out of the stock market and into real assets results in inflation, which is bad for everyone, because nobody needs Apple stock to live, but they would like houses.”

Just like now your stock value would not be taxed while it is invested. But now it would be taxed if you use it as collateral for anything. If you don’t want to pay capital gains by selling the underlying stock then you can just get a bigger loan and pay the taxes out of that.

There, now you don’t have to liquidate but the taxpayers benefit too when the wealth is “used” by the owner.

I think the sensible option is making death a taxable event, rather than borrowing (with perhaps exceptions for the family farm, but not for the family billion dollar business).

And the second best solution is eliminating the step-up basis, which without deemed disposition at death is just a free gift of capital gains tax rebates to heirs of the most wealthy.

1. No one really borrows against the value of their (paid off) car.
2. Property taxes already, generally, are against the assessed value of the home, so it’s already happening for that case. There are some minimal exceptions, like CA Prop 13, of course, but generally speaking, if I want to take out a second mortgage or something, my home’s value is already appropriately “stepped up.”

This is a bad argument. Taxes are also money invested, in schooling, infrastructure, etc.

It’s a very common fallacy of people criticizing public spending to point to the stock market and say “Look! Imagine how rich we would be if we had just invested the public spending instead.” Completely falling into the trap of discarding the value growth of public investments just because they are not measured and advertised the same way.

Saying “this person’s money most benefits me if I let them keep it” vs “this person’s money most benefits me if it’s redistributed to me” are just two frames that reveal your belief in your entitlement to others property and labor based on your belief of it’s benefit to you.

Not presently. Most tax dollars are spent elsewhere and infrastructure/education get less than 7%: https://fiscaldata.treasury.gov/americas-finance-guide/feder…

Even that spending is not effective. Drive California roads and you’ll often see fixes that aren’t much better than the damaged roads they replaced. And let’s not talk about our wonderful train projects…

In theory, this money would make a lot of difference. In practice, it’s heartbreaking.

So on the one hand, very little of that is infrastructure. Mostly it seems to go on “keeping people alive”.

Now sure, the govt could invest the money instead, and let a bunch of (mostly old) people die.

In our “money” equation, old people have little practical value (and there’s no line in our fiscal analysis for measuring our humanity).

Which perhaps is why it’s best not to evaluate returns on govt spending the way you would measure returns on personal investments.

(As a PS I’d add that all those taxes, flowing back to the old people, is flowing back into the economy, which is what keeps businesses in business, and keeps those share prices going up.)

Social security and medicare are not means-tested in any way whatsoever. In fact, they are massive welfare programs that make our budget structurally unsustainable to give money to the demographic that has had the most time to build up wealth and assets. Around one-third of all US wealth is held by Americans over seventy years old. Perhaps instead of an estate tax, we should explore having those well-off seniors use their savings and home equity instead of demanding government funds. Not to mention decades of subsidizing housing demand has drastically inflated housing prices, and younger Americans are now paying many of these retirees several times what those properties went for decades ago, an increase well in excess of inflation. In other words, through multiple channels, the young are being sucked dry by the old, despite the fact that the old hold a huge chunk of wealth.

I’d also point out old people are a terrible way to feed money back into the economy. They are generally the last people to adopt any innovation outside medicine, so increasing their share of spending draws dollars away from new innovation and towards constructing bingo halls. That has a caustic effect on our long-term economic outlook.

There will of course be the poor grandmother whom we don’t want eating dog food. I doubt anyone disagrees with you on that. Let’s just not pretend all of them need the checks they presently receive.

You are free to leave. There are plenty of low-tax countries. If you want to live in the US, Europe, Japan,…, then you must pay to be part of our reindeer games.

That said, PLEASE get involved and try to direct public funding and attention towards core activities (roads, schools, infrastructure) instead of ever more ridiculous programs to employ Berkeley graduates in virtuous-looking jobs. Utah does a great job at this sort of thing. Instead of learning from them, our political elite degrade them and insult them for their religious beliefs. I once repeated a colleague’s obscene jokes, only I stated that he said them about Muslims instead of Mormons. He lost his mind trying to correct me. It was amusing.

It drives me a bit crazy..

EDIT: Since it’s not obvious, this would apply to the very rich, not to someone running a family farm. There would be a threshold and exemptions, which is how most taxes work.

Now, as one of the founder, maybe you own ~40% of that business, so now your paper net worth is $8M, and just made $8M of unrealized gains in that year, how are you going to pay that?
There is no way you will ever find someone to buy $1M of your share at the price of that round, you probably wouldn’t find anyone willing to buy your entire paper $8M for $1M, because again, the company isn’t worth $20M yet.

This is true until pretty late in a VC backed company, most round aren’t priced based on how a realistic buyer would value the company, they are priced based on complex dynamics. Even a large number of unicorn startups founders in the Series C/D stages would have paper wealth of potentially 500M range, but absolutely no way to find 50M.

So, you effectively have no way to pay that tax.

This system actually already pseudo-exist in Canada in specific conditions: If you stop being a tax resident of the country, all your assets are considered realized the year you leave and you must pay taxes on them. Which is effectively impossible for most startup founders, because again, your stock isn’t actually liquid. This means you can’t stop being a tax resident of Canada until your companies either dies or you exit somehow. To be clear you can’t easily just choose to remain tax resident of Canada while living abroad, Canada gets to decide, to maximize your chance you must prove that you still have ties, so e.g. you have to keep a home, you have to keep your bank accounts opened there, you must visit often enough etc.

Canada revenue agency offers one alternative: You leave the country but leave your stock in their keep, on the day you actually realize the gains, they will take what they were owed, which sounds great, except if the company fails, or you realize gains at a lower valuation, they still consider you owe them what was computed the year you left, not the day you exit, so there is a real risk of being in debt for the rest of your life.

The same way we have exceptions like CA Prop 13 for increasing property taxes.

These problems aren’t impossible to solve. It’s wild how people will find any tiny excuse to give up on making a change to try and make tax code more fair. If there are edge cases that a blanked change to the code makes worse, that’s NOT a reason to just throw our hands up and say “whelp, can’t make changes” – it just means we need to add a bit more nuance.

Accurately valuing the painting every year is definitely very difficult.

The same argument doesn’t necessarily go for a farmer’s farmland. The zoning could of course be calculated into the land value. But I’m unsure if farming economics allow for paying the taxes on those unrealized gains

Yes, if you’re rich, you might have other ways to cover the liability, but that’s not what the parent said.

And for what it’s worth, these “billionaire” thresholds in political discourse are fairly meaningless. The last time the Biden admin “cracked down on billionaires”, they instituted IRS reporting requirements for Paypal and eBay when you receive in excess of $600 a year. There just isn’t enough billionaires for policies that truly target only them to make a difference, unless you flat out start taxing / confiscating wealth.

Additionally, in the minority of cases where it is plausible to force realization, doing so would destroy the notional value of the asset in many cases. The government will have to issue a tax credit, undoing any tax revenue they hoped to gain, but the business is now destroyed so there is no future tax revenue either.

Trying to prematurely force realization of asset value is either impossible or destructive in the vast majority of cases.

I don’t think your argument is as strong as you think it is. The value of an asset in a market economy is supposed to be what someone would pay for it. If you can’t sell your Tesla stock for it’s value, then it doesn’t actually have that value.

In Canada, assets are deemed to have been disposed of upon death (or gifting) so the estate pays capital gains taxes on the accrued profit. There are a few exemptions for political reasons, e.g. to allow farmers to pass appreciated farm property to their children tax free, but they’re sufficiently limited that they don’t cost very much.

Seems like an obvious fix to me — when the cost basis is stepped up, taxes are due — and in practice it seems to work pretty well.

If the concern is how much the policy costs the nation, then I don’t think that’s a sufficient reason to change things either. The top 1% in America hold about 31% of a total $140 trillion, or $43 trillion. This is, in a very optimistic case, around twenty years worth of the current federal deficit. Given the trajectory it’s taken over my entire lifetime I find it unlikely it would last more than a decade. If the concern is cost, we have a “money out” problem in the US, not a “money in” one, largely driven by our ballooning mandatory spending (much of which goes to a radically outsized group of old people, whose entitlements neither party will touch despite their outsized ownership of wealth) and the high interest expense that’s caused. Even if we outright confiscated every dollar of the 1%’s net worth, that wouldn’t represent a remotely sustainable solution. Hence my comment about most of these policies looking more like schadenfreude than a sincere desire to fix things.

In the “family farm” (and “family business”) scenario, we’re talking about private companies — whether incorporated or not, all the owners are related. If part of such a company needs to be sold off to pay taxes, it would presumably be sold to a someone at arm’s length, which would fundamentally change the business structure — just like running a startup with VC investors is different from running a bootstrapped startup.

There’s not many plausible routes to “paying the millions-dollar death tax so that developers don’t turn the cornfield into a suburb” in such scenarios. Mostly moot though, this all played out and was over before most of us were born. I suppose there are gigantic 20,000 operations that “won’t stay in the family”… but those farmers:

1. Aren’t really living on the same piece of land that they farm

2. Having to sell off 1500 acres to pay the tax bill doesn’t much affect their operation except that it’s slightly smaller

3. Have someone custom combine it anyway… they’re basically a management company that hires a bunch of contractors

4. Generally are incorporated in such a way that sole ownership hasn’t been an issue since great-great-granpa died back in 1961

Family farms are, at this point, largely mythological.

1. Continue operations of the family farm, assuming you can come up with the money to cover taxes.

2. Sell the farm to Big Farm, Inc., get a $5M check and forget about it, regardless of the consequences that means to your customers.

I would say that society is served well by the ability of widows to inherit and not be left destitute. Similarly for minor children.

If you’re talking specifically about inheritance by adult children, I agree the arguments in favour are weaker.

– The first year it has 10k€ ARR.

– So it is worth 100k€. You must my pay 30k€ in capital gains taxes.

Like this, every year? Every time it has more revenue, it multiplies its future worth, therefore multiplies it FMV, therefore you must pay the CG on the multiple of your income?

Yes, people get angry about this, but no one has provided any statistics showing this is actually a common loophole.

The basic idea in the reddit post is that there were lenders giving multi-decade loans at a tiny interest rate (only payable upon death with also sharing a % share of the gains).

Maybe there are lenders who have lots of capital and also don’t understand the time value of money, but no one has actually provided the names of these lenders, etc.

According to this: https://finance.yahoo.com/news/jeff-bezos-sell-5-billion-185…. Bezos has sold around $13.4 billion in stock in 2024. If he could easily avoid millions (maybe billions) of dollars of capital gains tax by this one simple trick, why didn’t he?

He wanted $13B liquid to start Blue Origin, a pretty speculative venture that might end up with nothing. And wanted to still outright own Blue Origin unlike Musk’s Twitter buy that was highly leveraged by the Saudis.

I’m not Bezos or part of his family office so I can’t say for sure. My guess would be a mixture of capital demands elsewhere (Blue Origin?) and a desire to diversify. Start-up founders necessarily keep all their eggs in one basket; people building a multi-generational fortune don’t.

It is very common to make loans based on using stocks, etc. as collateral. But that isn’t what people claim happens with the “buy, borrow, die” loophole. The claim is that these loans have incredibly low interest rates (much lower somehow than the IRS Applicable Federal Rate) and the interest is only payable upon death – which might be decades away. That is how the borrower can supposedly avoid capital gains taxes.

Maybe there are rich lenders who don’t understand the time value of money, but doing a quick search, I have not found one stat on how many lifetime loans like this are actually being done.

And that the lender is offering the loan to capture an ultra high net worth investor; so even if you lose money on the interest, you gain on advisory services and fees; plus first bite at holding the accounts of the heirs. Requiring good collateral and high account minimums make the risk for the lender low — if broad market value drops significantly, the account should still have more collateral to pledge to get back to 1:1. Also, if market value drops significantly, selling shares becomes easier for the investor, as there may be some shares with capital losses, and paying down the loan becomes more attractive.

I know someone who got a mortgage rate way, WAY below prevailing rates (like around 1%, gotten back when normies like us got rates around ~3%), because 1. he is a very high net worth individual and 2. he owns a business that does a lot of business with the bank. So, he gets extra special treatment because he’s rich and the bank appreciates his business and expects the relationship to lead to even more business.

It’s not a huge stretch to imagine that Jeff Bezos’s bank would happily loan him money at some token 0.01% interest rate or some similar sweet deal.

And the loan terms aren’t payable at death on any of the loans, they just let you refi every year when you want another $100M for that year’s incidentals.

The business is irrelevant. We are talking about the tax on the person who is getting income because our government functions from taxes on income. Just like how we charge sales tax on a non-sale when state government functions on taxes on sales. Tax business owners when they extract value from their business.

Rage about. Off to a good start. I wonder what the conclusion will be?

> (look at all of these reasonable-looking arguments for the existing tax laws)

Sure. Most people are fine with rich people not getting taxed into the middle class or having to work for a living.

What does this prove about anything?

> These all suck, and the government generally collects money on assets as they move not assets at rest. I see no way to resolve it that isn’t suckier than the status quo and so am left with the conclusion that people who agitate for such changes are more resentful of the rich than they are worried about the justice or lack thereof of tax avoidance.

Hmm. I knew there was something off about attributing “rage” straight off the bat.

I don’t know how you disentangle “justice” from “resentment” so easily. Resentment IS EXACTLY injustice over a sufficiently long enough time.

But I tend to see this idea that people who are upset about something real need to have… pure emotions. They must be upset because someone else (the poor maybe) are getting shafted. They certainly can’t be resentful (jealous) or something selfish like that.

(I don’t know what dimension you live in in the real world, confronted with these kinds of people, where this would be a compelling argument to anyone. Seems like a Let Them Eat Cake position.)

So people who are rightfully upset—you don’t even argue against that part—get dismissed because they have allowed impurity into their hearts. While the rich get to do their tax schemes. But, he shrugs his shoulder, better that the rich fleece the government than that the commoners have impure thoughts.

Removing the step-up in basis seems like an obvious fix. Record the basis at the time of transfer, then charge taxes when or if it is sold. Adjust for inflation if that seems reasonable.

Is there anything wrong with this? It doesn’t require selling on receipt.

Here’s a hypothetical:

– I own $100 of stock in Company A.

– The First International Bank of efsavage decides to accept that $100 in stock as collateral on a loan. So I pay taxes assuming a value of $100.

– When I dispose of the stock, it is only worth $80.

Will that be a retroactive credit, meaning that I will have to amend my tax return in the year that I collateralized those assets? Would it be a forward tax credit, meaning that I could apply that credit to future years?

I worry about this both from a bookkeeping point of view (since this is potentially a lot of credits) but also worry the ways it could be manipulated.

And.. the bookkeeping thing is really solvable. That’s kind of what banks are for

You created a tax event and paid taxes on it and you got a loan for x% of $100.

If you sell the stock at $80 you’d pay no taxes on the appreciation (-$20). No credits, investing is risky.

The government can also collect money on assets at rest (or at least, on cash at rest). They do so by creating money. It could be an interesting tax regime where the only forms of taxation are taxes to discourage action (e.g. tax on tobacco) and money creation.

Why?
In an hypothetical world where getting a loan on an asset is impossible (or taxed the same as realizing the gains), you still don’t get taxed on unrealized gains.
You can leave your stock alone and you aren’t forced to sell anything.

Of course if you decide that now that you are worth a billion you must live like a billionaire, then yes, you will have to sell stock, reduce your influence in the company and pay tax on the gains.

I don’t see any problem with this? It offers a way for the stock owner to choose if they want to use the stock as power (don’t touch it) or as cash (sell it), only taxing you when you opt for the later.

edit: I realised I might have misread your post as defending the system allowing one to use unrealized gains to back a loan, hence enabling the buy/borrow/die loophole, when you are in fact defending against taxing unrealized gains. To me the obvious fix is to prevent those loans as discussed above: force people to choose how they want to use their assets, if they choose to use them to live like kings then they must pay tax.

Firstly, do you want to prevent corporations from taking loans against their assets? Preventing that seems like it would be quite detrimental.

Secondly, how do you differentiate legitimate corporate expenses from personal expenses? Is a billionaire having one of their corporations rent a yacht from another of their corporations for a business meeting with another CEO who just happens to also be their friend a legitimate business expense or a personal expense? What if the yacht rental company rented it to the CEO’s company instead?

But staying at rest has been used as a way to sidestep taxes for so long.

I’d rather have all investments be taxed every K years as they were sold and bought back. Ideally with selling dates spread throughout the K days to avoid huge spikes.

You get a 1099 or W-2 for income, why can there not be an equivalent for spending?

This plus power law formula land value tax rates would fix multitude of societal problems. Land values are also already in electronic databases.

And get rid of income taxes altogether. This would disincentivize hoarding and wasting, and incentivize working and being efficient.

The only other aspect of rent seeking I can think of that would need to be nerfed is copyright terms being reduced to 10 years.

Most stock wealth isn’t doing anything for the company. If the stock price of Apple went down by 90% tomorrow for no reason, the main effect on Apple would be… almost nothing.

The employees who get equity compensation would be mad but they don’t use their stock value to fund R&D or expansion or salaries.

Also, instead of Apple try imagining NVIDIA: their stock went up like 1000% in two years, they are now a trillion dollar company. If they had to pay tax on that it would bankrupt them. Or, they could use all their cash + borrow some money against the stocks to pay tax. But then the stock can suddenly crash 90% and the lenders, seeing how their collateral is now 90% down might start demanding repayment of the loans, again, bankrupting the company.

“Unrealized gains” tax simply does not make sense. It’s just greedy government attempt to squeeze more money from businesses.

If the step-up basis occurs first, the fix here seems very obvious, but I assume ultra-wealth people have lobbied to keep that from changing?

(0) ignoring the “alternative valuation” option

(1) at least per my “decoupled” year 1999 understanding. And no, that doesn’t mean my experience is from 1999.

In your scenario, the Estate Tax would be calculated on $9B. The executor/per.rep of your estate would then have $10B shares with a $1B loan against them. The basis of the shares would be their current value, so if they (or your heir(s)) sold $1B shares to pay off the loan there would be no capital gains tax. There would also be no capital gains tax if they sold the other $9B shares (but Estate Tax was paid on them instead). Of course, they might have to sell some of the $9B shares to pay the estate tax bill.

Where things get really interesting is the charitable contribution deduction. If you sell $1B in shares and donate $9B to a nonprofit (likely set up and controlled by you, and subsequently your heirs), then you get a $9B deduction on your taxes (wiping out the capital gains on the $1B). Then no estate tax, since they’re not yours when you die. From what I understand it’s also a great asset protection strategy against random creditors.

When we’re talking billions and minimizing estate tax, the latter dodge is more applicable since it’s going to awfully hard to actually spend down billions. The loan plus stepped up basis dynamic is more about dodging capital gains taxes while actually realizing and spending the gains while you’re alive, which isn’t really captured by your scenario.

>It’s kind of cool? Like you could imagine a hierarchy, in roughly ascending order of wealth:

>Too poor to pay taxes.

>Rich enough to pay taxes.

>Rich enough to not pay taxes.

>Rich enough to not even bother with not paying taxes.

How much wealth do they have compared to other population?

Further does this include all taxes or just income taxes which are only a portion of revenues used to make less well off people look like moochers.

For instance, in the US, there’s social security and Medicare taxes — and payroll tax, the social security and Medicare tax contributed on behalf of employees by employers. Renters also pay their landlords property taxes. Sales taxes, tariffs, etc are all born by end users.

The reality is more nuanced. Introducing a sales tax on restaurant meals affects both diners and restaurant owners: restaurant owners can’t pass on the whole increase to diners, and diners cannot afford to go out as much.

Similarly, property tax levels influence landlords’ decisions to enter or exit the rental market, impacting housing supply and, consequently, tenant rents.
‘Paying’ a tax has two distinct meanings:

– Who bears the economic burden after the tax is introduced

– Who is legally responsible for paying the tax

These two concepts are not always aligned.

Property tax in the US is a liability of the owner. This is in contrast to other systems like the UK where it is a liability of the occupant.

You dismiss its application as a ‘silly distinction’ and repeat the fallacy that the incidence of taxation falls on the party who is legally liable.

If you don’t believe me, and don’t want to read up on ‘tax incidence’, consider what would happen if sales tax were paid by retailers instead of customers. Would the flow of money change at all? Would any party be worse off or better off?

Why this matters is because in some cases, owners can end up ‘under water’ with even rent not covering property taxes in the US.

In other places, that may not be possible.

And what about a retail store in England where the VAT isn’t itemized? Did I pay or did the store?

And it varies between much lower than you would expect, to much higher – and doesn’t generally change the amount they can charge in rent between the two scenarios. Though of course, landlords will go broke eventually if on average rent doesn’t exceed property taxes, finance costs, and other costs they pay on average.

Competitiveness/survival between landlords over
time will often hinge on their ability to pick the best options and structure/time this well to minimize their costs while maximizing their returns. A much harder problem than I think anyone who isn’t in that game realizes.

Which is why successful property management and investment strategies vary quite a bit depending on these specific details, like who pays what, when, and under what circumstances.

So all I’m getting from what you’re saying is you don’t actually understand what you’re talking about concretely, and you’re going off a first year economics textbook instead of actual experience.

Am I correct, or not?

In a way that means the details matter and you’ll get different end prices, even for the same nominal tax rate, depending on how it is applied.

For instance, when sales taxes are not shown at point of choice (on the shelves) they tend to not impact consumer behavior (US), where when they are (most of Europe), they do.

Which is also why in the US, retailers tend to fight efforts to include sales taxes into on-the-shelf prices. Because they know it will impact sales.

Just like in jurisdictions where renters pay/see property taxes, that impacts their choices, where in places they don’t, it doesn’t. At least in any specific, individual way.

That is my point.

So, before property taxes went up, the landlord could have raised rents by $200/month, but hadn’t because..?

Because you don’t pre-date inflation.

It is the same as asking why the supermarket doesn’t raise the price of milk to what inflation estimates say it’ll probably be next year.

What if moving costs $1000, which is another $83 per month over a year.

Some landlords are bad at guessing the correct numbers. Others are savants. In aggregate, renters end up paying almost all of it over time if not immediately, and those that don’t end up suffering in other ways (when the landlord just stops paying the tax entirely, but taking your rent, the building gets sold, and you don’t get to renew the lease because they’re going to knock it down and build luxury condos).

Seriously though. Renters pay the property tax, even if they don’t get to see the bill.

That comes out to around 4.1% of the total wealth. However, the number from Wikipedia is from 2022, so this figure isn’t going to be entirely accurate.

There is an element of competitiveness there. Some rich want to be known as rich and so they can brag about paying the most taxes that in turns implies they have the most money. Others want to be quieter about their wealth and so don’t want you to know they have it and wouldn’t tell you how much taxes they pay.

And it’s a good thing that government is strong enough to be able to collect large taxes. Contrary to popular opinion, rich people are mostly OK paying large taxes, but only as long as all other rich pay their share as well. The grudges they hold are only about unfairness, not about amounts.

In fact we should probably celebrate gifts to the US government more than we do.

I had the idea that we should put a donation box on tax forms. The 100 top donators get on the “US 100” list (like Forbes) but it’s based ONLY on how much you donate, not how much you claim to be worth.

It’s one thing to claim to be rich to a Forbes reporter, it’s another to have the (tax) receipts to back it up.

> 57th place means nothing.

It means you’re on the board and got one higher than 56th place. I’m a top 50 rails contributor, that means something to me and to others.

It’s kinda like F1. Some teams are racing for the constructors championship. Some teams are racing for the midfield. All of them are racing for even a single point and to stay in the game.

Society is about the compromise. However that compromise makes nobody happy.

Jeez the pedantry around here.

Let me spell it out: Upper class people don’t have to work to maintain their existing lifestyle. Steve Jobs could have continued wearing black turtlenecks and paying fines for parking his Mercedes in handicapped spots for the rest of his life, without doing a lick of work. That he didn’t is a credit to his work ethic and passion for the work.

I wouldn’t want to live like that and I wouldn’t wish it on even the most undeserable (life without parole prisoneers). you could do it. Some do it for a month or two in college as they see the world – but they go back to a more normal life and just fondly tell stories.

One can of beans is ~400kcal and costs ~$1.30+tax in my closest QFC, so you need around $4 per day just for beans (3 cans). 5lb bag of rice (50 servings, 160kcal per serving) is $5.50, & you need 5 servings per day to reach 2000kcal, so +55¢. That’s $135/mo just for rice and beans, and I have not checked if that satisfies daily protein intake needs.

Where will you set up your tent without getting arrested? Needs to be walkable from a Goodwill, otherwise you need transport once a year. How are you cooking the rice? Where are you getting the potable water from?

Decent sleeping bag is another $100.

Even your unserious response is underestimating the amount of money required.

Generally speaking, the sad truth of a complex economy is that coordination is hard, and there’s usually a short-term privatized gain to be had by someone willing to poison the future and the commons. No amount of benefit to humanity overall or even the specific society such a person lives in will convince a person who simply doesn’t care about anyone else. Fortunately for humanity, a very small minority of people actually operate like that. Unfortunately for humanity, some of them have managed to accumulate a lot of power

What puts a lid on how much money the Fed creates is the desire to keep inflation to reasonable levels, preferably 2% per year. Your burning your cash allows the Fed to create more while adhering to their inflation target. Someone please correct me if I am wrong, but my understanding is that although the Fed decides how much money is created, the Fed is not allowed to keep or to spend newly-created money, but rather must give it to the Treasury (perhaps through some complicated or non-obvious mechanism) which makes it available for the government to spend.

MMT emphasizes that taxation (P-G) is not necessary to “fund” government spending. Instead, taxation primarily serves to control inflation and create a demand for the currency. Taxation creates a value for the currency since taxes are payable only in the government’s currency.

When we hold the P-G-P view of government spending, we assume it operates like a household – that a government has to collect taxes before spending and this is viewed by MMTheorists as an antiquated perspective. The misconceptions of “The government as a household” were based on the gold standard or fixed exchange rate systems, which since 1971 no longer apply.

An additional point to add is the mechanism by which taxation controls inflation. Tax serves to suppress demand in the private sector, freeing up resources that can then be bought at non-inflated prices. This is why super wealthy people are irrelevant to a sovereign government’s ability to spend; their marginal propensity to consume is too low to be seriously impacted by normal levels of taxation. It’s also why tax has to be broad base to be useful.

MMT alone may not provide sufficient guidance on how to adjust outlays and receipts to manage employment and inflation.

MMT may not be politically feasible. Politicians may not be navigate politically unpopular but economical necessary.

MMT may be domestically sound, but challenging to implement regarding international trade. It may result in devaluing compared to other currencies.

MMT may suggest that interest rates can be kept low indefinitely. It’s unclear if this would result in excessive risk taking.

MMT may not be applicable to developing economies.

MMT may work in the short term to manage employment and demand but fail to cultivate long term economic development.

MMT’s implication as having a larger governmental impact on investment may crowd out private sector investment.

MMT if implemented could be constrained by international investors. If international investors dislike a policy, it may have domestic implications.

MMT depends on having a government effective enough to implement it. If a government is too dysfunctional, MMT may fail in practice.

If the taxed dollars ended up with say hurricane victims or other struggling Americans, those dollars would chase goods and services domestically driving up the price of those goods.

Now consider if instead you helped fund Israels socialized medicine program or paid off some of Ukraines debt or paid interest to Chinese creditors. Those dollars wouldn’t have much effect when it comes to increasing the price of eggs in the US as they are being spent far away in another economy.

A similar effect could occur if the money ended with the wealthy folks, say wealthy owners of private defence contracting firms, as those dollars might chase building a super yacht (inadvertently employing some people but also consuming foreign made materials and labor) instead of trying to rent an apartment in Iowa. Less dollars chasing Iowa apartments, considering supply and demand, lower prices, lower CPI.

Take dollars from the middle class who will drive up the cost of the American dream and instead give them to people who will drive up the price of luxury goods.

It’s never explained this clearly beacuse people would riot, but with this framework the choices of government in the last few decades or so suddenly makes more sense.

(I don’t endorse MMT)

For detailed counter arguments, see Branko Milanović Global inequality: A New Approach for the Age of Globalization, James Kwak Economism: Bad Economics and the Rise of Inequality, Walt Bogdanich & Michael Forsythe When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm, and many other books.

It’s a classic logical fallacy; appeal to authority. There is no reason to believe any of these writers have a better understanding of how the world works than any other “authority” of the past like Karl Marx.

Just because someone says something in a book doesn’t make it true.

Given the way everything is being made into its crappier form, it’s arguable that even tech isn’t “adding value” anymore.

Doing something positive-sum is a way to become a billionaire, but many people are very handsomely paid to ensure that their clients are on the good side of zero-sum transactions.

Where “well-managed” means “good at delivering money to its shareholders”, which is at best obliquely related to a positive impact on the world. (Also, I’m skeptical that the stock price in itself makes that much of a difference to what the company is able to do.)

> Another net positive of stock trading is making buyers and sellers available all day, for anything on the market. Yet another benefit of stock trading is to make it more difficult to manipulate the market – there’s a reason why pump and dump scams only occur with assets that see very little attention (i.e. are low-volume).

In other words, the benefit-to-the-world of stock trading is that it makes it easier to trade stocks? And both of these are the result of unprofitable trading as much as profitable trading, so they can’t be the proof that the money comes from the value delivered!

But stock trading also penalizes well-managed companies in slow-growing or more mature industries by giving them a higher cost-of-capital, just as it would if they were poorly managed. It seems a haphazardly blunt instrument for allocating liquidity to value generation. It piles on where rewards seem ready to be reaped, and makes it harder for mature sectors to renew or reinvent themselves.

That money management service includes, amongst other things, picking stocks. But that’s the tactical “what”. The value-added element is that he preserved and grew that wealth instead. It turns out that is hard to do, and is indeed a positive sum service to customers. They get to relax _and_ make money. Great outcome.

Only if the shares are newly-issued, though.

Usually your counterparty is just someone with different cash flow needs, or who disagrees with you about the future. No benefit accrues to the company.

Or they are a rent-seeker, or a straight-up thief that sucked a lot of value out of the world. (Or one of their ancestors did, etc, etc.)

Or they robbed Peter to create value for Paul, and took a share of the difference.

These are all tried and true mechanisms for wealth generation. Without any information, you shouldn’t assume that their contributions were net-positive.

> Why this free worker confronts him in the sphere of circulation is a question which does not interest the owner of money, for he finds the labour-market in existence as a particular branch of the commodity-market. And for the present it interests us just as little. We confine ourselves to the fact theoretically, as he does practically. One thing, however, is clear: nature does not produce on the one hand owners of money or commodities, and on the other hand men possessing nothing but their own labour-power. This relation has no basis in natural history, nor does it have a social basis common to all periods of human history, It is clearly the result of a past historical development, the product of many economic revolutions, of the extinction of a whole series of older formations of social production.

You may think it’s no biggy since the limit will be so high.

1. First of all, when party A contracts with party B, party C (that’s you) does not have a moral right to dictate an upper limit on how many times they can do that or what the terms can be as long as the transaction is legal and A and B are willing participants.

Thus, either A or B can build up an arbitrary amount of wealth and you have exactly zero to say about it. Would you have similar concerns for people who have a disproportionate number of friends, or sex partners, or hit songs, or hell, even votes?

2. If there were to be an upper limit, what is the limit? Today it’s a billion dollars. What if it’s 100m next, then 10m, then 1m, then 100k? What happens after a couple of decades or centuries of inflation? I suspect you don’t care about this because the limit seems far out of reach to you. And so it might be – for now.

3. If there was a limit, who will decide what it should be? What are their incentives? Do you really want a jury of your peers reviewing your financials and drawing lines through it?

4. If there was a limit, who will enforce it? And how? Hand over a check or you go to prison?

There’s no way to implement this without an authoritarian regime that has unlimited power over its citizens.

The feudal systems arose as a way to organize military defense locally in the absence of a strong central power like the Roman Empire.

There are castle strongholds, control of choke points, a lower strata that are required to work the land and pay tithe upwards to the military heirarchy.

Feudal systems have existed in times and locations where there was little need for military defense against external forces, they persist in form as a polite, polished, chivalrous bikie club on horses, mafia with great houses.

Warrior nobility systems farm farmers.

A farm is a system with many living beings, but most of the benefits accrue to those we call the farmers.

A farmer farm is a called a fief (feudum in latin), so it’s no surprise that under feudalism most of the benefits accrue to those who have control over heaps of feuda.

Would it be true that under capitalism most of the benefits accrue to those who have control over heaps of capital?

(to the original point: capitalism works very well when it allows people to trade and specialise in their comparative advantages; under what conditions might it work less well?)

EDIT:

> little need for military defense against external forces

I think they were also successful even where there was need, as long as those external forces were also based on a warrior class.

What Napoleon managed was to “scale” the nature of warfare; two poorly remembered quotes from a book one of his cavalry generals wrote:

— 10 mamluks could beat 30 french, but 100 to 100 was even, and 300 french could beat 1000 mamluks

— our troopers’ horsemanship was pitiful, and their officers’ not much better, yet with this cavalry we made the tour of Europe

I’d say both point to innovation in the use of mass over class.

I recommend this question as an interesting conversation starter at parties: Is it in the self-interest of the most successful capitalists to have a well-functioning capitalism?

Morally you should probably be spending more time figuring out how to get everyone their first car instead of worrying about your legal rights in owning your second.

And if your focus is on providing that first car, then the system currently doing that en masse for billions of previously-poor people is called “capitalism” and your moral imperative is to speed it up, not slow it down.

To be charitable I’ll point out that in general that’s not what you’re arguing for. There is a real sense in which personal freedom is essential to people making it out of poverty. Protecting one person’s and not another’s would defeat the point.

Here is the compromise. It should be easy for people to do things that billionaires would have no point doing (i.e. take out a business loan of $10K) and difficult for billionaires to do things that people would have difficulty doing (hoard the global supply of some good). That’s if your goal is to have an equitable society where everyone is on the same difficulty level, more or less.

Approached this way there would not be a slippery slope because the delineation is quite clear. Moreover there’s no squashing of personal freedom, a billionaire is always free to do things a regular person is able to do. In fact the system we have now basically squashes the freedom of the average person because they are not free to do things (buy a house, have a chance in court) by virtue of not having money while other people have a ton.

In the face of calling out someone else’s ignorance by saying we are all ignorant then going on to assume the thing you like is wonderful while assuming the thing you hate is terrible.

Classic. PG would be proud.

Gives off malcador holding the golden throne for a short time energy

That could buy a ton of arms and equipment and likely enough funds to be successful depending upon what the ultimate goal was.

It forces companies to distribute gains to shareholders, not amass it.

It already exists, we just don’t enforce it enough.

…

> Behn’s clients typically want to maximize the money they leave for their children or establish a philanthropic legacy; some seek to do both.

I’m sure that the numbers on these schemes work out favorably on paper, but if you lived through WW2 I wonder if you might be willing to pay a premium to give your immediate heirs maximum flexibility, knowing that the future is unpredictable.

“The data wasn’t erroneous|who are legally forbidden to discuss tax filings.”

The best correction would be something like:

“Treasury officials, who are legally forbidden to discuss tax filings, found the data wasn’t erroneous.”

readers and space for ads on the magazine pages are both called inventory in the biz.

Where can one find this daily balance sheet?

Billionaire heirs use the inheritance to buy a yacht, big tax bill, mostly use the inheritance to continue funding things that are generally good for society, smaller tax bill.

There’s already exemptions for both income and estate tax for donations to charities or governments to benefit society. It’s possible to set up a private foundation, with some additional guardrails to prevent abuse, if you want to give the money directly to people that need it.

Less work, less risk, the ability to corruptly influence multiple people in congress by proxy rather than scrounging around for funds from corrupt private individuals out to influence policy in their favour.

Arnold Schwarzenegger famously explained that he remains committed to a demanding bodybuilding regimen even long after becoming fabulously wealthy precisely because his physique is a form of wealth that cannot be bought at any price, and is available to almost anyone who wants it badly enough. A billionaire facing an acute and aggressive terminal cancer diagnosis has all the options anyone could want, but one.

Most people aren’t public figures, wealthy or not

He had a job, a bunch of kids, multiple wives, and a 250 M divorce, among other things.

Obviously some people knew this. It just wasn’t in the public interest, like 99.99999% of things that have ever happened 🙂

So my choice is to live my life and enjoy it as much as I can.

>Billionaires are like black holes. We deduce their existence from the fundamental laws of capitalism, see their gravity pull politics into their orbit, even detect signals of their existence in the public markets.

I dont know about others. This is very beautifully put. But I am wondering if anyone has an counter argument. Because this basically means money > power;

> “As gravity pulls politics into their orbit.”

It may be true in US or other democratic nations. It certainly isn’t true in Russia or China. If what was described was fundamental laws of capitalism, Could we argue those nations where power is greater than money are not capitalism?

If so, what is the opposing force against the laws of capitalism? And are there anything in physics such as opposing force of the laws of gravity? Without going into Space Time?

It may have been true at some point. But, Putin put an end to it. He killed oligarchs when they fell out of line. There are some ex-oligarchs living outside of Russia, no longer super rich, after Putin took away their wealth.

Confiscating all the US billionaires’ wealth wouldn’t even lower the US’s debt by 20%.

France’s public spending is 60% of the GDP, the situation in France is totally catastrophic (6% deficit atm) and… We should listen to Piketty because he’s only ever worked public jobs and… He’s french? And came up with an ultra-simplistic formula using bogus data?

I mean… If Piketty says it, obviously government spending representing 60% of the GDP ain’t enough. Let’s make it 100% and called it a planned economy. Because we saw a lot of fully functioning communist societies on earth?

Ponder this.

so in other word confiscating the wealth of < 1000 people would reduce the US (a nation of ~300 M people) debt by nearly 20%. In other words we could significantly reduce the budget (much less interest payments) by taking away the wealth of ~0.0003% of the population. That seems like a no-brainer in terms of policies (the government makes decisions that takes peoples wealth away every day).

Why would it damage that ability? The assets those billionaires own aren’t going away. The skills of the people working at those businesses aren’t going away.

The Forbes list only include people who Forbes want it to be listed and / or are public record. For example Michael Bloomberg is included but he is not even on the Bloomberg billionaires list, simply because Forbes want to expose him. And there were plenty of Billionaires in China who wasn’t listed before lots of information becomes public. And I would imagine the same for Brazil, India or lots of other countries.

These list can only include people by their stock market cap or worth. It doesn’t include people who are in the property market and basically own or operate via private equity. And there are plenty of billionaires in the property market. Along with many other asset that we dont even know or aware.

Another thing, if a person with $10B net worth of stock for 25 years, and the stock has been paying 3% dividends per year. You will still see him listed as $10B net worth. In reality he has $10B of dividends already. ( Although in US I think dividends are taxed ). And that is excluding any investment he made with those dividends and operate completely in the dark.

Basically because the ultra wealth are so opaque I argue that inequality is actually much wider than we thought or what we could calculate.

On the other hand how much is sent to external firms where most of their expenditure is in the US and thus comes back rather swiftly in taxes, and how much is siphoned off to overseas stores of wealth.

Although there is the aspect of the immigrant being grateful for American opportunities, its far more likely that Fayez Sarofim didn’t expect to die and had these naked assets outside of the trusts and nonprofits. Since he also had trusts and nonprofits.

The latter is to be expected. Forbes only covers certain type of wealthy people for logistical if not also political reasons.

It does not cover powerful people who control enormous wealth but ownership maybe murky what is personal wealth and what is state owned, royal families or dictators like Putin or Kim Jong Un or their extended family will never make the list.

Beyond those kind of people, the murky and opaque ways that money can hidden also means it is hard to track estates that did not come from publicly made fortunes (ex: from listed company etc) that can be somewhat easily tracked.

Even when public like Bitcoin and crypto, Nakomoto ‘s estimated ~1.1M bitcoins is worth $70B today, nobody knows who he is. There haven’t been any transfers from those addresses, however that doesn’t mean a part of that enormous fortune is outside the bitcoin ecosystem as real money, the owner of the wallet could be using them as security for large loans like Elon (or other rich people typically do ) does with their stock without actually selling it to minimize tax.

I wasnt talking state actors and unlinked crypto fortunes

Just wealth from opaque sources and opaque vehicles

All limited partners in Venture/Hedge/PE funds are opaque for example

For public stocks we can at least calculate value with computers, but for some that is a minority of value. In 1960 the DOW was used because it is only 30 stocks so you can add the values up every few minutes – the S&P 500 could only be calculated at the end of the day as by the time you got the value of the last stock the value of the first had changed.

the regulatory capture on display in the USA is absolutely pathetic hahaha

Not everyone is a greedy narcissist only out for themselves!

That seems like a sizable contribution for a single person in a country of 330 million.

So if you’re so gung-ho positive we can make a dent in the debt, then why not make sensible comments about making changes so the tax is not so easily avoidable instead of nonsensical fat people comments

Imagine a world where you had 15 billionaires and 5 people working. How much are are. Those billions worth when they are fighting each other to have one of the 5 useful people wipe their ass in their care home?

So to me, it would be very hard to make an argument that it trickles up. It has to come from investment. And investment in the private sector is usually done by rich people, because you need money in the first place to invest and also because investing well makes you rich.

Also considering that the super-rich in developing nations are not that far behind the super-rich in developed nations, why hasn’t their wealth trickled down and uplifted those developing nations? The reality is that developing nations have even higher wealth inequality, so refuting your argument.

I am from a developing country. There aren’t a lot of super rich here. In fact there isn’t much wealth at all. Having some greater gini coefficient doesn’t mean you have more wealth, inequality really isn’t a relevant measure.

If raising wages was the only component to development, Somalia could simply set their minimum wage to $50 an hour and watch the country soar. Wages follow development, not the other around.