Estate Tax... Again! Woo!!

[Night Strike]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

Who are you to decide that it's immoral? I thought morality was relative to all of you and that it couldn't be legislated? Besides, why not give the descendents the ability to give out the money in chunks based on the groups that actually need it and use it properly, aka manage the money properly?

[Metsfanmax]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

Suppose you have 10 million dollars at the end of your life, and two children. Only a fraction of your income needs to be given to those children (an amount that would be well under the threshold being discussed) for them to have satisfactory lives for themselves (and their children, by extension). Any money given above that amount does not substantially increase their well-being, but could be used to massively increase the well-being of people in developing nations. I am of the belief that the morally obligatory thing to do is give your money away to those whose lives would be substantially improved by your donation if your quality of life would not be diminished by anywhere near the same magnitude. This is surely the case for people in the US whose salaries are in the middle class or higher, and it is the case for the children of the wealthy person who could inherit $100,000 instead of $5,000,000.

Edit, in response to NS's response to Frigidus: No, I don't think morality is relative. Furthermore, the entire purpose of holding ethical beliefs is because it is how you believe everyone should act. Ethics should be universalizable to be meaningful (see Kant's categorical imperative). Note that disagreeing with relative morality does not mean one is a deontologist/absolutist. I can disagree with your absolutist, rule-based ethics and not necessarily jump to "everything is relative." There is a healthy swath of ethics in between, and that is where I and most utilitarians land.

"At that point, saving your money is no longer useful to you because you won't be around to see the returns on your investment."

Let's assume your statement is true. If it wasn't useful, then why would anyone save any money to give away after they die? (Because it's useful to them during the time which they save so that they can give to others in the future). It doesn't matter if they die because that wouldn't negate the usefulness of that wealth to them--and to others to whom they've voluntarily transferred their wealth. You have to consider the actions and plans of individuals throughout the entire time of their lives--not just one fine point.

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

Right, but the wealth in the form of savings can be transferred to others as savings, and there's nothing wrong with that. Savings in some forms can be an investment. An investment can be a house, a car, or any productive capital from which you earn more profit--currently or in the future. E.g. your education is an investment. It is a form of savings from which you can later garner greater profits.

Yes, there is plenty wrong with that. First and foremost, there is no guarantee that the inheritors of the wealth will use the money for charitable endeavors. Second, if the investment can be used to make more money in the future, that's fine -- donate your money to a charity that can invest the money themselves, and use the interests to fund their operations. Third, people are actually suffering now, and donations now help end that suffering.

Spending, i.e. consumption, would be equivalent to not investing in your education and instead blowing all the money on consumption goods (e.g. food, video games, clothes, even a car--arguably if it is not garnering more profit than a cheaper car).

I don't support spending the money given that my best choice for the money is donation to charity. Nevertheless, I argue that spending the money would still be better than saving it, because you ignore the political and macroeconomic implications of spending the money. That translates to more jobs in the short term, and those jobs can lead to a collective shift in the economic state of a region, which can mean a possible avoidance of time spent in wasteful economic recession. Now, you are the economist, not me, so I am sure you can educate me if this conclusion is incorrect.

RE: the article, I agree. The division of labor allows for individuals to pursue opportunities from which they attain a comparative advantage, which allows for greater productivity. With greater productivity, we can create more goods with less inputs (or have a surplus), so that through voluntary exchange of these goods , people mutually benefit ex-ante, thus this positive-sum game is the basis of creating wealth. In other words, I'll do my thing with econ., Y does her thing with finance, and Z does his thing with charity. However, I disagree if anyone is coerced by the government into donating.

No one is coerced by the government into donating until such time as the wealth in question is no longer able to be spent or saved by the person. It is ludicrous to argue that people would choose poorer investment and saving strategies over their lifetime because of what will happen to their money after they are dead (unless they are oddly obsessed with passing onto their children as much money as possible, which I argued above people shouldn't do, and I don't think most people really worry about).

(Now, if we take that article seriously, then we should be upset that the government imposes a marginal tax rate of about >48% on those earning about >$130,000 per year. All of that money could've have been better spent through the market of charitable organizations. You may disagree, but if we apply the reasoning consistently, then we also level some criticism at the state. Anyway, that's a bit off-topic).

It's quite relevant, and I agree that the high level of government taxation is inconsistent with my general goal, since most government tax money does not go to foreign aid (in fact, an embarrassingly small amount does). But the estate tax, if people were properly deterred, would do exactly the job of maximizing earning potential while making sure that all of that money ends up going to do good.

[BigBallinStalin]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

How so? (Are they keep surplus financial assets and capital under their mattress?--because that would be the definition of hoarding)

If not, then where is it? And what function is it serving?

[Frigidus]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

How so? (Are they keep surplus financial assets and capital under their mattress?--because that would be the definition of hoarding)

If not, then where is it? And what function is it serving?

I imagine it is sitting in various banks. Perhaps it has been invested in some way. I'm sure this earns a certain amount of money, but ultimately the reason that the money is put there is because it needs to be put somewhere.

[BigBallinStalin]

"At that point, saving your money is no longer useful to you because you won't be around to see the returns on your investment."

Let's assume your statement is true. If it wasn't useful, then why would anyone save any money to give away after they die? (Because it's useful to them during the time which they save so that they can give to others in the future). It doesn't matter if they die because that wouldn't negate the usefulness of that wealth to them--and to others to whom they've voluntarily transferred their wealth. You have to consider the actions and plans of individuals throughout the entire time of their lives--not just one fine point.

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

Right, but the wealth in the form of savings can be transferred to others as savings, and there's nothing wrong with that. Savings in some forms can be an investment. An investment can be a house, a car, or any productive capital from which you earn more profit--currently or in the future. E.g. your education is an investment. It is a form of savings from which you can later garner greater profits.

Yes, there is plenty wrong with that. First and foremost, there is no guarantee that the inheritors of the wealth will use the money for charitable endeavors. Second, if the investment can be used to make more money in the future, that's fine -- donate your money to a charity that can invest the money themselves, and use the interests to fund their operations. Third, people are actually suffering now, and donations now help end that suffering.

What is wrong with 'that' (presumably, you're referring to profit)? The charities to which you donate also profit from that contribution. That is their profit--regardless of their de jure status as "non-profit." De facto, their contributions received are their profits. So, profit per say is not wrong. You even profit whenever you supply your labor in exchange for money. If you weren't profiting, you would be making a loss--which is wrong.

RE: 1 and 3, I've noticed in your following response your concern about providing jobs and what not. One person's savings is another person's funding, which can be spent on capital goods and labor. For example, I can save by purchasing a bond, which accrues income over time. The seller of the bond, you--for example, receive money from my purchase of the bond. In turn, you spend this money on whatever (capital goods, labor, etc.). Therefore, due to the mutually beneficial relationship between savings and spending, you still get your desired outcomes.

Economic prosperity alleviates the suffering of almost everyone, and the source of economic prosperity is founded upon voluntary exchange through the savings/investment and consumption/spending. People need to recognize both sides of the "coin" of prosperity.

Spending, i.e. consumption, would be equivalent to not investing in your education and instead blowing all the money on consumption goods (e.g. food, video games, clothes, even a car--arguably if it is not garnering more profit than a cheaper car).

I don't support spending the money given that my best choice for the money is donation to charity. Nevertheless, I argue that spending the money would still be better than saving it, because you ignore the political and macroeconomic implications of spending the money. That translates to more jobs in the short term, and those jobs can lead to a collective shift in the economic state of a region, which can mean a possible avoidance of time spent in wasteful economic recession. Now, you are the economist, not me, so I am sure you can educate me if this conclusion is incorrect.

So, as mentioned before, one person's savings is another person's investments. You get both.

Economic recessions are beyond the scope of this discussion at the moment, but I'll briefly mention that there's more to avoiding recessions than the markets of saving/investment and consumption/spending.

RE: the article, I agree. The division of labor allows for individuals to pursue opportunities from which they attain a comparative advantage, which allows for greater productivity. With greater productivity, we can create more goods with less inputs (or have a surplus), so that through voluntary exchange of these goods , people mutually benefit ex-ante, thus this positive-sum game is the basis of creating wealth. In other words, I'll do my thing with econ., Y does her thing with finance, and Z does his thing with charity. However, I disagree if anyone is coerced by the government into donating.

No one is coerced by the government into donating until such time as the wealth in question is no longer able to be spent or saved by the person. It is ludicrous to argue that people would change their investment and saving strategies over their lifetime because of what will happen to their money after they are dead (unless they are oddly obsessed with passing onto their children as much money as possible, which I argued above people shouldn't do, and I don't think most people really worry about).

Well, it's a mixed bag. Some proportion goes to offspring, some to charities, some to other family members, and some to friends. Nevertheless, people do respond to incentives which influence how much they can save upon their death; therefore if we omit your conditional phrase, it's not ludicrous to maintain that "people would change their investment and saving strategies over their lifetime because of what will happen to their money after they are dead."

People perceive some value in their future contributions to others at the time of their death. If that perceived value is diminished (e.g. by a 100% estate tax), then this creates a change in their incentives; therefore, they will respond differently. Some will spend more on themselves, some will save less up to their death (because all those savings would go to unknowns determined by the government), some will perhaps save more because they like all their wealth going to the government. My point is that people respond to incentives, and a change in their future perceived value of their plans will affect the current perceived value of their present plans.

(Now, if we take that article seriously, then we should be upset that the government imposes a marginal tax rate of about >48% on those earning about >$130,000 per year. All of that money could've have been better spent through the market of charitable organizations. You may disagree, but if we apply the reasoning consistently, then we also level some criticism at the state. Anyway, that's a bit off-topic).

It's quite relevant, and I agree that the high level of government taxation is inconsistent with my general goal, since most government tax money does not go to foreign aid (in fact, an embarrassingly small amount does). But the estate tax, if people were properly deterred, would do exactly the job of maximizing earning potential while making sure that all of that money ends up going to do good.

If you're interested in learning about the unintended consequences of foreign aid, I would recommend William Easterly's The White Man's Burden. Fabulous read. The main point is that although well-intended people donate to foreign aid and governments transfer wealth to foreign aid, the outcomes can be terrible for those foreign aid was intended to help. I'd recommend reading it.

I disagree with the last sentence because the dreams and goals of individuals cannot be ignored. Hark back to Adam Smith's "human chessboard." The "man of system" picks up his pawn and moves it forward. If the pawn wishes to go that way, then there is no problem. However, in many circumstances, the pawn has desires of its own, so if the pawn wishes to go someplace else, while the government orders it to move elsewhere, then a lack of coordination is created by the "man of system."

[BigBallinStalin]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

How so? (Are they keep surplus financial assets and capital under their mattress?--because that would be the definition of hoarding)

If not, then where is it? And what function is it serving?

I imagine it is sitting in various banks. Perhaps it has been invested in some way. I'm sure this earns a certain amount of money, but ultimately the reason that the money is put there is because it needs to be put somewhere.

Ah, various banks! And it is invested! Yes, it earns a certain amount of money for the owner who lent that money to the bank, but to whom does the bank lend this money--and what are the effects?

[Metsfanmax]

What is wrong with 'that' (presumably, you're referring to profit)? The charities to which you donate also profit from that contribution. That is their profit--regardless of their de jure status as "non-profit." De facto, their contributions received are their profits. So, profit per say is not wrong. You even profit whenever you supply your labor in exchange for money. If you weren't profiting, you would be making a loss--which is wrong.

Sure, I didn't object to, or even mention the word, profit. 'That' which I was referring to, was the the general strategy of passing one's saved income on to the next generation rather than donating it in the present.

RE: 1 and 3, I've noticed in your following response your concern about providing jobs and what not. One person's savings is another person's funding, which can be spent on capital goods and labor. For example, I can save by purchasing a bond, which accrues income over time. The seller of the bond, you--for example, receive money from my purchase of the bond. In turn, you spend this money on whatever (capital goods, labor, etc.). Therefore, due to the mutually beneficial relationship between savings and spending, you still get your desired outcomes.

Economic prosperity alleviates the suffering of almost everyone, and the source of economic prosperity is founded upon voluntary exchange through the savings/investment and consumption/spending. People need to recognize both sides of the "coin" of prosperity.

Well yes, I'm not arguing that the macroeconomic implications are the only possible ones; I was just arguing that the macroeconomic implications outweigh the indirect result of the microeconomic implications (that is, the benefit of more jobs is a more important overall economic impact than you making more money on the individual level).

Well, it's a mixed bag. Some proportion goes to offspring, some to charities, some to other family members, and some to friends. Nevertheless, people due respond to incentives which influence how much they can save upon their death; therefore if we omit your conditional phrase, it's not ludicrous to maintain that "people would change their investment and saving strategies over their lifetime because of what will happen to their money after they are dead."

People perceive some value in their future contributions to others at the time of their death. If that perceived value is diminished (e.g. by a 100% estate tax), then this creates a change in their incentives; therefore, they will respond differently. Some will spend more on themselves, some will save less up to their death (because all those savings would go to unknowns determined by the government), some will perhaps save more because they like all their wealth going to the government. My point is that people respond to incentives, and a change in their future perceived value of their plans will affect the current perceived value of their present plans.

Yes, I realized that my statement was too broad after making it, and edited my post accordingly. I did not mean to say that people would not respond at all differently to this estate tax; I meant to say that they would not respond in such a way as to negatively change their lifetime investment and savings strategies. In fact, I would hope that they, seeing the good they can do by maximizing their lifetime earnings and then donating to charity, would be inspired to make more effective choices. But no one is going to choose to make less money because of this estate tax. Even if they hate the government, and hate charity, they will just find some other way to pass their income onto their children by spending the money on things for them, or what have you; but these people would not have donated their wealth to charity either way, so I don't count this in the 'loss' column for my strategy.

If you're interested in learning about the unintended consequences of foreign aid, I would recommend William Easterly's The White Man's Burden. Fabulous read. The main point is that although well-intended people donate to foreign aid and governments transfer wealth to foreign aid, the outcomes can be terrible for those foreign aid was intended to help. I'd recommend reading it.

I am well aware of Bill Easterly's arguments, and for every one of his you'll find an equally passionate rebuttal by Jeff Sachs. The reason Easterly's arguments don't really apply in my utopian vision of the world is that you're thinking in the status quo, where foreign aid is often used the wrong way; this is because politicians are not interested in doing the hard work of finding out what aid strategies are actually effective in solving targeted problems. In a world where we used foreign aid on the local level to solve specific problems (malaria, malnutrition, etc.), foreign aid would undoubtedly be a good thing, as opposed to the blunt tool it is now. I recommend reading Poor Economics by Esther Duflo and Ahbijit Banerjee (of MIT's Poverty Action Lab) for a look into what targeted aid strategies are clearly effective.

I disagree with the last sentence because the dreams and goals of individuals cannot be ignored. Hark back to Adam Smith's "human chessboard." The "man of system" picks up his pawn and moves it forward. If the pawn wishes to go that way, then there is no problem. However, in many circumstances, the pawn has desires of its own, so if the pawn wishes to go someplace else, while the government orders it to move elsewhere, then a lack of coordination is created by the "man of system."

Again, it is precisely the dreams and goals of individuals that make my plan viable. As I said, I do not count in the 'loss' column anyone who, seeing this estate tax, decided to dispose of all their money in some way that meant that the government or charity got very little of it; these people are the type of people who would not have donated anyway. The only way for my strategy to result in net losses is if people intentionally make less money as a result, but their dreams and goals resist that, because they use that money to improve their own lives. It would be hyper-irrational for any well-off individual to intentionally diminish the quality of their own lives so as to intentionally diminish the quality of others' lives (and isn't an assumption of individual rationality the core tenet of you capitalists?). Is it impossible? I don't think anything is impossible. But I would bet that the effect is so small as to be negligible.

[Metsfanmax]

BBS, as an aside, too often your arguments devolve into stagnation. Assume that we agree that, in general, giving targeted aid to people in developing nations (e.g. through organizations like Oxfam and Against Malaria Foundation, just to name my two favorites) is a really good thing. There's two possible ways I can read your arguments here. The first is that you want to point out that I cannot possibly know the full economic ramifications of such a plan. That point is well taken. As it is, I don't really think that many people fully understand an economy as complex as ours, and I don't claim to be certain of the magnitude of any the impacts I'm hoping for. But obviously that's not a reason not to put the estate tax into action. The second is that, because I cannot possibly know the full economic ramifications, I should just not even bother, because I might end up doing more harm than good. This is clearly false, and I reject it. I do not think that there is any real likelihood that I will result in less money being given to charity as a result of this estate tax being instituted. The fact that two scenarios are both possible does not mean they are equally plausible. When dealing with anything on the scale of governmental policy, you have got to accept some amount of uncertainty in the results.

[hmsps]

For example, the estate tax today is avoided through the use of trusts and gifts. If the legislators write out of the law the exemptions for trusts and gifts, we've eliminated the ability to avoid the tax.

whatever laws you put in usually there are ways around them other than avoidance.

Say u have a wealthy individual. Once he gets to where he wants to be financially he can gift the vast majority of his income so long as he keeps enough for general expenses. That's not breaking any laws and never will be. It would be ludicrous and impossible to legislate that any other gifts fell into someone's estate for IHT. Say this wealthy guy has been given monies to friends and family for 40 years. The estate has little left to pay any IHT so how does it get paid.

[BigBallinStalin]

What is wrong with 'that' (presumably, you're referring to profit)? The charities to which you donate also profit from that contribution. That is their profit--regardless of their de jure status as "non-profit." De facto, their contributions received are their profits. So, profit per say is not wrong. You even profit whenever you supply your labor in exchange for money. If you weren't profiting, you would be making a loss--which is wrong.

Sure, I didn't object to, or even mention the word, profit. 'That' which I was referring to, was the the general strategy of passing one's saved income on to the next generation rather than donating it in the present.

Ah, okay. You're making an implicit judgement that the interest rate for the economy should be lower than what it would be. Why should spending and investment be geared toward the shorter term, rather than the longer term?

RE: 1 and 3, I've noticed in your following response your concern about providing jobs and what not. One person's savings is another person's funding, which can be spent on capital goods and labor. For example, I can save by purchasing a bond, which accrues income over time. The seller of the bond, you--for example, receive money from my purchase of the bond. In turn, you spend this money on whatever (capital goods, labor, etc.). Therefore, due to the mutually beneficial relationship between savings and spending, you still get your desired outcomes.

Economic prosperity alleviates the suffering of almost everyone, and the source of economic prosperity is founded upon voluntary exchange through the savings/investment and consumption/spending. People need to recognize both sides of the "coin" of prosperity.

Well yes, I'm not arguing that the macroeconomic implications are the only possible ones; I was just arguing that the macroeconomic implications outweigh the indirect result of the microeconomic implications (that is, the benefit of more jobs is a more important overall economic impact than you making more money on the individual level).

Both of those kind of implications are two sides of the same coin--in the context of our conversation.

Well, it's a mixed bag. Some proportion goes to offspring, some to charities, some to other family members, and some to friends. Nevertheless, people due respond to incentives which influence how much they can save upon their death; therefore if we omit your conditional phrase, it's not ludicrous to maintain that "people would change their investment and saving strategies over their lifetime because of what will happen to their money after they are dead."

People perceive some value in their future contributions to others at the time of their death. If that perceived value is diminished (e.g. by a 100% estate tax), then this creates a change in their incentives; therefore, they will respond differently. Some will spend more on themselves, some will save less up to their death (because all those savings would go to unknowns determined by the government), some will perhaps save more because they like all their wealth going to the government. My point is that people respond to incentives, and a change in their future perceived value of their plans will affect the current perceived value of their present plans.

Yes, I realized that my statement was too broad after making it, and edited my post accordingly. I did not mean to say that people would not respond at all differently to this estate tax; I meant to say that they would not respond in such a way as to negatively change their lifetime investment and savings strategies. In fact, I would hope that they, seeing the good they can do by maximizing their lifetime earnings and then donating to charity, would be inspired to make more effective choices. But no one is going to choose to make less money because of this estate tax. Even if they hate the government, and hate charity, they will just find some other way to pass their income onto their children by spending the money on things for them, or what have you; but these people would not have donated their wealth to charity either way, so I don't count this in the 'loss' column for my strategy.

Individual preferences vary in response to marketing strategies by charities and public policies by governments. A priori, you do not know what the proportions will be. You're making predictions about future prices--i.e. how people perceive the future value of their savings at time of death, and simply assuming away unintended consequences (e.g. tax avoidance and decreased current savings for increased future consumption. Hell you may even encourage people to spend on whatever they want in the last 10 years of their lives--more so than what their beneficiaries would have spent after 10 years, so a question think about: how do the spending and saving patterns of older people differ from their younger beneficiaries and organizations?)

If you're interested in learning about the unintended consequences of foreign aid, I would recommend William Easterly's The White Man's Burden. Fabulous read. The main point is that although well-intended people donate to foreign aid and governments transfer wealth to foreign aid, the outcomes can be terrible for those foreign aid was intended to help. I'd recommend reading it.

I am well aware of Bill Easterly's arguments, and for every one of his you'll find an equally passionate rebuttal by Jeff Sachs. The reason Easterly's arguments don't really apply in my utopian vision of the world is that you're thinking in the status quo, where foreign aid is often used the wrong way; this is because politicians are not interested in doing the hard work of finding out what aid strategies are actually effective in solving targeted problems. In a world where we used foreign aid on the local level to solve specific problems (malaria, malnutrition, etc.), foreign aid would undoubtedly be a good thing, as opposed to the blunt tool it is now. I recommend reading Poor Economics by Esther Duflo and Ahbijit Banerjee (of MIT's Poverty Action Lab) for a look into what targeted aid strategies are clearly effective.

I'm sure some foreign aid strategies are great, but when politics is involved, your intended goals become kind of pointless if your interests do not sync with their interests and their donors' interests (or however else politicians perceive profits).

Assuming away the status quo isn't useful. You want a particular policy through a process which usually does not achieve your intended goals... yet you still advocate for that policy. Seems weird.

I disagree with the last sentence because the dreams and goals of individuals cannot be ignored. Hark back to Adam Smith's "human chessboard." The "man of system" picks up his pawn and moves it forward. If the pawn wishes to go that way, then there is no problem. However, in many circumstances, the pawn has desires of its own, so if the pawn wishes to go someplace else, while the government orders it to move elsewhere, then a lack of coordination is created by the "man of system."

Again, it is precisely the dreams and goals of individuals that make my plan viable. As I said, I do not count in the 'loss' column anyone who, seeing this estate tax, decided to dispose of all their money in some way that meant that the government or charity got very little of it; these people are the type of people who would not have donated anyway. The only way for my strategy to result in net losses is if people intentionally make less money as a result, but their dreams and goals resist that, because they use that money to improve their own lives. It would be hyper-irrational for any well-off individual to intentionally diminish the quality of their own lives so as to intentionally diminish the quality of others' lives (and isn't an assumption of individual rationality the core tenet of you capitalists?). Is it impossible? I don't think anything is impossible. But I would bet that the effect is so small as to be negligible.

RE: underlined. Well, if that's the case, then you won't achieve your goal of creating more wealth and jobs.

It is definitely possible that people may diminish their future savings since they cannot pass them onto people who they care more passionately about. People value their friends and family differently from community and definitely differently from strangers. Since this is so, then expect losses because you're overlooking how they value different people and the different plans in accordance with different kinds of people.

That's not "hyper-irrational" at all. If one's money is going to people who one values less, therefore one diminishes his future savings, then this is rational. Many people do not see why their friends and family (and their income) should be sacrificed to complete strangers. This is means to ends reasoning. That's what rational choice theory from the Misesian perspective is about: means to ends, and whether or not those means attain the desired ends.

[Frigidus]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

How so? (Are they keep surplus financial assets and capital under their mattress?--because that would be the definition of hoarding)

If not, then where is it? And what function is it serving?

I imagine it is sitting in various banks. Perhaps it has been invested in some way. I'm sure this earns a certain amount of money, but ultimately the reason that the money is put there is because it needs to be put somewhere.

Ah, various banks! And it is invested! Yes, it earns a certain amount of money for the owner who lent that money to the bank, but to whom does the bank lend this money--and what are the effects?

The money is going to be in banks regardless of what is done with it. If it goes to a charity, then the charity well temporarily put it in some sort of bank account. They will then give this money to someone in exchange for some sort of service, and it will be in some other bank account.

Banks definitely are a nice thing to have around, but individual people with bank accounts should not get partial credit for the services the bank provides.

[BigBallinStalin]

BBS, as an aside, too often your arguments devolve into stagnation. Assume that we agree that, in general, giving targeted aid to people in developing nations (e.g. through organizations like Oxfam and Against Malaria Foundation, just to name my two favorites) is a really good thing. There's two possible ways I can read your arguments here. The first is that you want to point out that I cannot possibly know the full economic ramifications of such a plan. That point is well taken. As it is, I don't really think that many people fully understand an economy as complex as ours, and I don't claim to be certain of the magnitude of any the impacts I'm hoping for. But obviously that's not a reason not to put the estate tax into action. The second is that, because I cannot possibly know the full economic ramifications, I should just not even bother, because I might end up doing more harm than good. This is clearly false, and I reject it. I do not think that there is any real likelihood that I will result in less money being given to charity as a result of this estate tax being instituted. The fact that two scenarios are both possible does not mean they are equally plausible. When dealing with anything on the scale of governmental policy, you have got to accept some amount of uncertainty in the results.

Yes, there's uncertainty.

2. People value different people at different values; therefore, they'll change their plans on future savings accordingly (as explained in my last paragraph of my previous post).

3. You're assuming away individual preferences and substituting them for your own. In other words, you're assuming that people will think just like you (or enough like you); therefore, they will give enough of their money upon death to charities--just as you would. It's an erroneous assumption because value is subjectively perceived.

4. Without focusing on the unintended consequences of a particular policy, people tend to discount the loss heavily, so the benefits seem great. Then, they enact the policy, the unintended consequences occur (greater than expected), and due to various reasons, which for the sake of brevity I won't get into, the losses are seen as another opportunity for 'public policy to save the day'. But they forget that the initial policies created those problems. It's a never-ending cycle of sadness. It's a problem of feedback which is hardly resolved through the political process.

5. For various reasons, public policy significantly fails to appreciate uncertainty. They may accept some uncertainty, but they really don't care. For many areas of public policy, this problem is embedded within their particular methodologies, which I won't go into for the sake of brevity. In short, they don't properly account for uncertainty, nor can they properly perceive of uncertainty. It can be a double-whammy. (The attention to uncertainty varies from policy analysts' level to politicians' and chief bureacrats' levels, which is another problem).

6. Because public choice, your intended goals will likely not be attained through the political process, which is another major problem that encompasses pages and pages of posts, so I'll leave it at that. Talk to lower- and mid-level bureaucrats about their jobs. I do; it's really fun hearing their stories. You'll get a better idea of how politics works, and why your ideal goals stand significant obstacles to becoming actualized. (Furthermore, those obstacles, as mentioned by public choice theory, are sometimes overlooked, thereby diminishing the chances of having your attaining your ideal goal).


In short, people in general need an appreciation of economics and public choice. With more informed citizens, you can get smarter regulation, greater economic prosperity, lesser poverty, and yada yada. But the world isn't like that. Classical liberals are trying to change it, while (in general) state socialists and progressives (and even many uninformed Republican and Democrat voters) inadvertently work against that goal--or their means do not attain their ends, but they have good intentions.

[BigBallinStalin]

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

There's nothing wrong with leaving a certain amount of money to your children, but at a certain point it becomes excessive. Let's say someone has one billion dollars. It is such a great amount of money that you would have to be going out of your way to get rid of it in order to lose it. It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing. There is simply no reason to give the entirety of this to your family. The sheer amount of good you are choosing not to do with that money is borderline immoral.

How so? (Are they keep surplus financial assets and capital under their mattress?--because that would be the definition of hoarding)

If not, then where is it? And what function is it serving?

I imagine it is sitting in various banks. Perhaps it has been invested in some way. I'm sure this earns a certain amount of money, but ultimately the reason that the money is put there is because it needs to be put somewhere.

Ah, various banks! And it is invested! Yes, it earns a certain amount of money for the owner who lent that money to the bank, but to whom does the bank lend this money--and what are the effects?

The money is going to be in banks regardless of what is done with it. If it goes to a charity, then the charity well temporarily put it in some sort of bank account. They will then give this money to someone in exchange for some sort of service, and it will be in some other bank account.

Banks definitely are a nice thing to have around, but individual people with bank accounts should not get partial credit for the services the bank provides.

Why? If someone is the fundamental cause of enabling the bank to provide that service, then surely that someone deserves some credit.

So clearly, they deserve some moral approbation for saving their "excessive" surplus; therefore, the following is false: "The sheer amount of good you are choosing not to do with that money is borderline immoral." Nothing is immoral about saving one's money in a bank or non-financial institution. Good need not be donating to charity alone--once we have recognized that one's savings can become another's investment, which spurs expenditures of capital and labor.

And, "It ceases to become potential things you could have and instead becomes a hoard, existing only for the sake of existing" has been shown to be false since hoarding is not occurring.

And nothing so far indicates what exactly is "excessive." This seems to be some emotionally driven charge against others who have more money than you, which to me is a repugnant position. That kind of ugly reasoning has been used to justify stealing other people's money, which is not at all morally good.

And, this isn't true: "The sheer amount of good you are choosing not to do with that money is borderline immoral" because good is done either through charitable donations or contributing to later, voluntary exchanges.

[Metsfanmax]

Sure, I didn't object to, or even mention the word, profit. 'That' which I was referring to, was the the general strategy of passing one's saved income on to the next generation rather than donating it in the present.

Ah, okay. You're making an implicit judgement that the interest rate for the economy should be lower than what it would be. Why should spending and investment be geared toward the shorter term, rather than the longer term?

This is wrapped up in my argument immediately below, where I argue that in a non-surplus situation, spending now that stimulates economic growth is more valuable than spending in the future, when a stimulus may no longer be needed.

Well yes, I'm not arguing that the macroeconomic implications are the only possible ones; I was just arguing that the macroeconomic implications outweigh the indirect result of the microeconomic implications (that is, the benefit of more jobs is a more important overall economic impact than you making more money on the individual level).

Both of those kind of implications are two sides of the same coin--in the context of our conversation.

Perhaps, but I would argue that money put into local markets directly is more valuable than money given to a large bank, or the government (which is ultimately where the money is going to go if you purchase bonds). This is because it can stimulate job creation in the short term, and these jobs are for people who actually need jobs, as opposed to high-paying jobs on Wall Street. In other words, I don't think that all spending decisions impact the economy equally. I don't think it's a controversial point. If our hypothetical wealthy person divests his savings by buying a bunch of yachts from another wealthy person, it's unlikely that we'll see any significant economic growth from that, because the other wealthy person didn't particularly need more money in order to continue his or her business operations. Even if that money is used for hiring, it's not going to make the same impact as if that money were dropped more directly into the lower or middle class.

Yes, I realized that my statement was too broad after making it, and edited my post accordingly. I did not mean to say that people would not respond at all differently to this estate tax; I meant to say that they would not respond in such a way as to negatively change their lifetime investment and savings strategies. In fact, I would hope that they, seeing the good they can do by maximizing their lifetime earnings and then donating to charity, would be inspired to make more effective choices. But no one is going to choose to make less money because of this estate tax. Even if they hate the government, and hate charity, they will just find some other way to pass their income onto their children by spending the money on things for them, or what have you; but these people would not have donated their wealth to charity either way, so I don't count this in the 'loss' column for my strategy.

Individual preferences vary in response to marketing strategies by charities and public policies by governments. A priori, you do not know what the proportions will be. You're making predictions about future prices--i.e. how people perceive the future value of their savings at time of death, and simply assuming away unintended consequences (e.g. tax avoidance and decreased current savings for increased future consumption. Hell you may even encourage people to spend on whatever they want in the last 10 years of their lives--more so than what their beneficiaries would have spent after 10 years, so a question think about: how do the spending and saving patterns of older people differ from their younger beneficiaries and organizations?)

There is a difference between 'assuming away' those consequences, and assuming that they do not significantly affect the main thrust of my argument, which is that significantly more money will be diverted towards charitable causes, or local markets, as a result of the estate tax. As I mentioned also in the bit below this, and in the add-on post (and I'll condense this all here to make it less complicated), the relative uncertainty in this effect will never be large enough to wash out the net positive impact. How do I know this? Because of the psychology of giving. Most people in our extremely wealthy nation (or basically any developed nation) are very stingy when it comes to actively giving away their wealth to those who need it the most. But it has been shown that if you give people a nudge in the right direction, they generally do the right thing. Here are a few examples (taken from a book which touches this subject). First, as I'm sure you would know, when a retirement plan is opt-in for a given business, many people decide not to participate even though it is clearly beneficial to them in the long term. But when you make a retirement plan opt-out, you find that many more people participate. Second, people are thinking a lot right now about ways to make organ donation rights higher. In Germany, 12% of the population is registered to become an organ-donor on death. Yet in neighboring Austria, 99.98% of people are registered organ donors. The difference, of course, is not that Germany and Austria are very different (they're not) but that in Austria, organ donation is opt-out. This trend holds in general for countries with opt-in versus opt-out organ donation policies; the lowest participation rate in the countries with opt-out policies is "merely" 85%. Third, and most directly relevant, business that have mandated charitable giving have found that people actually find the charitable donations rewarding. Bear Sterns had mandated its senior officials to donate 4% of their income to non-profits, and it created a culture of giving among their directors that resulted in effective donation strategies. Other companies like Goldman Sachs soon followed suit, (presumably) not wanting to be seen as the people who didn't give to charity.

I say all this because an estate tax is precisely the kind of opt-out system one needs to nudge people in the right direction. If it were really true that people despised giving their money to charity, then I wouldn't push for this plan (and I probably wouldn't want to live on this planet anymore, either). However, people really do want to help those other than them, but we cannot generally count on them to actively do the right thing. By taking the choice away, we get people to do what they wanted anyway.

I am well aware of Bill Easterly's arguments, and for every one of his you'll find an equally passionate rebuttal by Jeff Sachs. The reason Easterly's arguments don't really apply in my utopian vision of the world is that you're thinking in the status quo, where foreign aid is often used the wrong way; this is because politicians are not interested in doing the hard work of finding out what aid strategies are actually effective in solving targeted problems. In a world where we used foreign aid on the local level to solve specific problems (malaria, malnutrition, etc.), foreign aid would undoubtedly be a good thing, as opposed to the blunt tool it is now. I recommend reading Poor Economics by Esther Duflo and Ahbijit Banerjee (of MIT's Poverty Action Lab) for a look into what targeted aid strategies are clearly effective.

I'm sure some foreign aid strategies are great, but when politics is involved, your intended goals become kind of pointless if your interests do not sync with their interests and their donors' interests (or however else politicians perceive profits).

Assuming away the status quo isn't useful. You want a particular policy through a process which usually does not achieve your intended goals... yet you still advocate for that policy. Seems weird.

I did not advocate for more foreign aid through taxation in the status quo. I said it was embarrassing that we give such a small fraction of our revenues to foreign aid. The reason it is embarrassing is that 1) people generally think we spend a lot more on foreign aid than we actually do (even in the 'enlightened' western world, 1% of GDP going to foreign aid is aiming high) and 2) the reason they think that is because the US is supposed to be that great bastion of liberalism and charity; yet most of our charitable giving stays in America and a good fraction of that just goes to churches.

That being said, I strongly support a dual pronged approach of donating privately to charity, since that is presently the most effective route for making your dollars count, and appealing to your representatives in Congress to make more effective decisions with the tax money they levy for foreign aid. I have no interest in paying tax money so that we can give 20 F-16s to Egypt, but that doesn't mean I won't fight for a day in which that money goes to help the poor in Africa. I do agree, though, that if you want to make a positive impact in the short term, you cannot just assume that your government is handling your moral responsibility for you. Our government fails at that, and we need to take it into our own hands while we make them do it right.

[Night Strike]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

Suppose you have 10 million dollars at the end of your life, and two children. Only a fraction of your income needs to be given to those children (an amount that would be well under the threshold being discussed) for them to have satisfactory lives for themselves (and their children, by extension). Any money given above that amount does not substantially increase their well-being, but could be used to massively increase the well-being of people in developing nations. I am of the belief that the morally obligatory thing to do is give your money away to those whose lives would be substantially improved by your donation if your quality of life would not be diminished by anywhere near the same magnitude. This is surely the case for people in the US whose salaries are in the middle class or higher, and it is the case for the children of the wealthy person who could inherit $100,000 instead of $5,000,000.

Why do you get the power and authority to decide what other people do with their money? Am I allowed to dictate to you what you do with yours? Who are you to decide what other people need or deserve? That's perfectly fine if you believe that millions of dollars would be more beneficial in developing nations. You may even be correct in that believe. But that doesn't mean you have the power to force that belief on other people. If you want to donate your own money to any cause you believe in, then you are free to do so. You are not free to force someone else to donate to that same cause.

[Metsfanmax]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

Suppose you have 10 million dollars at the end of your life, and two children. Only a fraction of your income needs to be given to those children (an amount that would be well under the threshold being discussed) for them to have satisfactory lives for themselves (and their children, by extension). Any money given above that amount does not substantially increase their well-being, but could be used to massively increase the well-being of people in developing nations. I am of the belief that the morally obligatory thing to do is give your money away to those whose lives would be substantially improved by your donation if your quality of life would not be diminished by anywhere near the same magnitude. This is surely the case for people in the US whose salaries are in the middle class or higher, and it is the case for the children of the wealthy person who could inherit $100,000 instead of $5,000,000.

Why do you get the power and authority to decide what other people do with their money? Am I allowed to dictate to you what you do with yours? Who are you to decide what other people need or deserve? That's perfectly fine if you believe that millions of dollars would be more beneficial in developing nations. You may even be correct in that believe. But that doesn't mean you have the power to force that belief on other people. If you want to donate your own money to any cause you believe in, then you are free to do so. You are not free to force someone else to donate to that same cause.

Once a person has died, it is no longer their money. The idea that this money should be naturally passed on to the children is not particularly well warranted or even justified to begin with; nothing obviously suggests that a person's children should be the ones who rescue money from this black hole any more than the rest of society. The children did nothing to warrant earning that money, so I don't see why it makes sense to give it to them. We as a society can decide what happens to a person's remaining assets when they die, because they obviously can no longer make that choice themselves.

A 100% estate tax is nothing more than saying: instead of hoarding your assets until you die, figure out a way to use them before you go. Either actively give them to your children, or put your money back into the market, or donate to charity. But if you wait until you die to decide, you no longer have any claim to those assets since you are not alive, so we will figure out what to do with them for you.

[PLAYER57832]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

In truth, one of the WORST things you can do is give your kids mega amounts of money.

However, that old "optimism bias" tends to convince people that their kids will do better... no matter the evidence, and no matter that no one truly "needs" mega millions. (with the exceptions of a highly disabled individual).

[PLAYER57832]

Which is my point. Why treat an estate windfall as different from anything else?

Why should the government tax income which is inherited at a far higher rate than income that was worked for? Does the US government tax people who won the lottery at a different rate?

I don't see why it shouldn't be treated as any other income and taxed as such.

I agree here, but my stance is that ANY windfall not earned through labor should be taxed more highly than work gains. The reason is that it benefits society much more when people earn through labor than other means.

[Night Strike]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

In truth, one of the WORST things you can do is give your kids mega amounts of money.

However, that old "optimism bias" tends to convince people that their kids will do better... no matter the evidence, and no matter that no one truly "needs" mega millions. (with the exceptions of a highly disabled individual).

Most of the people that would have amassed that much money and died would be well beyond retirement age....probably in their 70s, 80s, or 90s. That means their kids would probably be 50 or older. This isn't like we're just handing buckets of money over to people in their teens or twenties. Heck, it could even be enough money for someone in their 50s to start retirement early and allow a younger person to take over that job, which provides other benefits to society.

Once a person has died, it is no longer their money. The idea that this money should be naturally passed on to the children is not particularly well warranted or even justified to begin with; nothing obviously suggests that a person's children should be the ones who rescue money from this black hole any more than the rest of society. The children did nothing to warrant earning that money, so I don't see why it makes sense to give it to them. We as a society can decide what happens to a person's remaining assets when they die, because they obviously can no longer make that choice themselves.

A 100% estate tax is nothing more than saying: instead of hoarding your assets until you die, figure out a way to use them before you go. Either actively give them to your children, or put your money back into the market, or donate to charity. But if you wait until you die to decide, you no longer have any claim to those assets since you are not alive, so we will figure out what to do with them for you.

Again, you're fundamentally incorrect. When a person dies, their assets are controlled by their will or their estate trust. In the absence of those, the next living descendent is the person who is in charge. That means that the property DOES belong to someone else.....and that someone is not the government. And the government did nothing to warrant earning that money either, so it makes no more sense to mandate that it all goes to the government. And we as a society know much less about a particular person who dies than their family knew about him or her.

[BigBallinStalin]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

Suppose you have 10 million dollars at the end of your life, and two children. Only a fraction of your income needs to be given to those children (an amount that would be well under the threshold being discussed) for them to have satisfactory lives for themselves (and their children, by extension). Any money given above that amount does not substantially increase their well-being, but could be used to massively increase the well-being of people in developing nations. I am of the belief that the morally obligatory thing to do is give your money away to those whose lives would be substantially improved by your donation if your quality of life would not be diminished by anywhere near the same magnitude. This is surely the case for people in the US whose salaries are in the middle class or higher, and it is the case for the children of the wealthy person who could inherit $100,000 instead of $5,000,000.

Why do you get the power and authority to decide what other people do with their money? Am I allowed to dictate to you what you do with yours? Who are you to decide what other people need or deserve? That's perfectly fine if you believe that millions of dollars would be more beneficial in developing nations. You may even be correct in that believe. But that doesn't mean you have the power to force that belief on other people. If you want to donate your own money to any cause you believe in, then you are free to do so. You are not free to force someone else to donate to that same cause.

Once a person has died, it is no longer their money. The idea that this money should be naturally passed on to the children is not particularly well warranted or even justified to begin with; nothing obviously suggests that a person's children should be the ones who rescue money from this black hole any more than the rest of society. The children did nothing to warrant earning that money, so I don't see why it makes sense to give it to them. We as a society can decide what happens to a person's remaining assets when they die, because they obviously can no longer make that choice themselves.

A 100% estate tax is nothing more than saying: instead of hoarding your assets until you die, figure out a way to use them before you go. Either actively give them to your children, or put your money back into the market, or donate to charity. But if you wait until you die to decide, you no longer have any claim to those assets since you are not alive, so we will figure out what to do with them for you.

Quick question: do you support the voluntary contract which distributes dead guy's wealth to particular beneficiaries upon the his death?

If so, then you don't have a say in the matter. Not even social contract theory grants you the right to violate that contract. Of course, if no beneficiaries are stated in the contract, then (depending on government's law), the money falls into their jurisdiction (not society's though).

[Metsfanmax]

Once a person has died, it is no longer their money. The idea that this money should be naturally passed on to the children is not particularly well warranted or even justified to begin with; nothing obviously suggests that a person's children should be the ones who rescue money from this black hole any more than the rest of society. The children did nothing to warrant earning that money, so I don't see why it makes sense to give it to them. We as a society can decide what happens to a person's remaining assets when they die, because they obviously can no longer make that choice themselves.

A 100% estate tax is nothing more than saying: instead of hoarding your assets until you die, figure out a way to use them before you go. Either actively give them to your children, or put your money back into the market, or donate to charity. But if you wait until you die to decide, you no longer have any claim to those assets since you are not alive, so we will figure out what to do with them for you.

Again, you're fundamentally incorrect. When a person dies, their assets are controlled by their will or their estate trust. In the absence of those, the next living descendent is the person who is in charge.

In no way am I "fundamentally" incorrect. It is is simply the case now that, under the law, a person's descendant retains control of a person's assets in lieu of a will. Why is that the case? Is there any obvious reason why this should be so? Why not give it to someone else? That someone else could be a neutral third party that could decide the best use for the money, or it could be a homeless guy. Nothing suggests that it is obvious that the next living descendant is the one who ought to retain control of those assets. We can change that legal tradition if we so decide. I think that we ought to.

That means that the property DOES belong to someone else.....and that someone is not the government. And the government did nothing to warrant earning that money either, so it makes no more sense to mandate that it all goes to the government.

The government did actually do something to warrant retaining that money. It is the entity that, by providing a stable structure in which a person could safely make and save their money, is the one that should be the default receiver of any funds that society does not know what to do with. If we don't give it to the government, we are left in the parlous situation above, where the only justification for our current law is that "it's always been this way." Giving the money to the government is one way to avoid making an arbitrary decision. Barring that (and this is actually the solution I would like to see the most), it could simply be the law that the remaining assets are donated directly to a non-profit charity of the next of kin's choice. This way we avoid any concerns about the government mismanaging the money, but we still get the positive intended benefit of making sure that money is returned to the society that made it possible to obtain.

And we as a society know much less about a particular person who dies than their family knew about him or her.

This is not a reason that they should get to keep the assets, although it's a good reason for why they should be the ones who get to pick where the money goes in my ideal situation.

Quick question: do you support the voluntary contract which distributes dead guy's wealth to particular beneficiaries upon the his death?

Of course not. A dead person cannot engage in a contract.

[BigBallinStalin]

Quick question: do you support the voluntary contract which distributes dead guy's wealth to particular beneficiaries upon the his death?

Of course not. A dead person cannot engage in a contract.

Recall our conversation about broadening your concept of time in this circumstance. Simply because someone dies, it does not follow that all of their contracts made during their life are null and void.

Therefore, the following still stands:

If you support the voluntary contract which distributes dead guy's wealth to particular beneficiaries upon the his death, then you don't have a say in the matter. Not even social contract theory grants you the right to violate that contract. Of course, if no beneficiaries are stated in the contract, then (depending on government's law), the money falls into their jurisdiction (not society's though).

[BigBallinStalin]

The government did actually do something to warrant retaining that money. It is the entity that, by providing a stable structure in which a person could safely make and save their money, is the one that should be the default receiver of any funds that society does not know what to do with. If we don't give it to the government, we are left in the parlous situation above, where the only justification for our current law is that "it's always been this way." Giving the money to the government is one way to avoid making an arbitrary decision. Barring that (and this is actually the solution I would like to see the most), it could simply be the law that the remaining assets are donated directly to a non-profit charity of the next of kin's choice. This way we avoid any concerns about the government mismanaging the money, but we still get the positive intended benefit of making sure that money is returned to the society that made it possible to obtain.

The problem with your argument is that it can be used to justify a dictator's claim over other people's lives and property.

Therefore, either you respect voluntary contracts between consenting adults, or you reject them in favor of your vision of what is best for society (which lumps you into such 'great' visionaries like Lenin, Stalin, Mao, FDR, etc.). Have some humility.

If you discard this argument--even without a good argument (e.g. "well, this only applies to democracies), then the social contract is bullshit because there's no contract. Then insert the problems of voter behavior and the political process in general, and we can significantly doubt that an adherence to the social contract argument actually leads to good outcomes--until such skepticism is addressed.

But for the sake of argument, let's accept it, thereby keeping your argument intact:
Then your above position only justifies extracting the exact amount which directly contributed to another's production and exchange. The problem is that you can expand that proportion into a justification of 100% of government policies by stipulating that all of them directly contributed to another's production and exchange (which is nonsense; it's more like 5%-15% direct influence).

But if I allow the 100% argument, then the basis of your reasoning would have rest on shaky grounds because you'd have to argue that x-amount of spending in x-amount of program contributed to x-amount in one's business. Good luck with that, and don't forget to include the opportunity cost (because without government spending, how much of it was even necessary? What could have been gained through the voluntary exchange of free individuals?).

For example, "military spending keeps America safe; therefore, one must dedicate x-amount of income to the government so that it can keep us safe." (Nevermind that the government creates many problems which is later seeks to correct while then creating more problems, which it seeks to correct, etc.) We can justify extacting some percent of one's income because allegedly all the programs of the US military keep you, an individual, safe--which is nonsensical.

When we take the time to analyze your position, we can safely conclude that it's bunk--until:
1. you provide a great formula of government spending which directly contributed to individual A's wealth
2. subtract from that sum the opportunity cost (which relies on the counterfactual)--whoops this makes the economic calculation here impossible,
3. then, deduct unnecessary government expenditures by crediting them to one's wealth
4. then, deduct government extra costs (because you can't include benefits alone--e.g. police unfairly beat you and the courts do not sufficiently compensate you), and then credit that to one's wealth.
5. And don't forget to explain how your ideal goal would be achieved through the political process; otherwise, if your means do not attain your goal, then you're wasting everyone's time while contributing to poor outcomes.

Good luck. Until then, your position is insufficient to use as a means for justifying the involuntary extraction of one's wealth.

Ultimately, the basis of a free society hinges upon voluntary (and real--not imaginary) contracts and upon not violating one's negative rights. If you reject this (which so far has only been on normative grounds), then your position is still insufficient because you lack the justifications from positive science/economics that may supply the soundness of your argument.

[PLAYER57832]

If they feel this way, that is precisely what I would like. It is a good thing if the extremely wealthy earn a lot of money with the intent of saving it until shortly before they die, and then sharing it with others. I strongly encourage such behavior; it is the highest of morally honorable behavior. See the article I linked.

So it's morally honorable to share that money with "others" or hand it over to the government, but it's not morally honorable to share that money with one's progeny? Why are those individuals excluded from what's honorable? Shouldn't one's children and grandchildren be one's greatest honor and pride?

In truth, one of the WORST things you can do is give your kids mega amounts of money.

However, that old "optimism bias" tends to convince people that their kids will do better... no matter the evidence, and no matter that no one truly "needs" mega millions. (with the exceptions of a highly disabled individual).

Most of the people that would have amassed that much money and died would be well beyond retirement age....probably in their 70s, 80s, or 90s. That means their kids would probably be 50 or older. This isn't like we're just handing buckets of money over to people in their teens or twenties. Heck, it could even be enough money for someone in their 50s to start retirement early and allow a younger person to take over that job, which provides other benefits to society.

Nope, too much real experience in that... I did grow up among some VERY wealthy individuals.

Also, I don't call 1-2 million, even greekdog's 5 million to be "buckets" and htat is more than enough to cover anyone in retirement. I figure having a million is almost a minimum for safe retirement today, in fact.

Once a person has died, it is no longer their money. The idea that this money should be naturally passed on to the children is not particularly well warranted or even justified to begin with; nothing obviously suggests that a person's children should be the ones who rescue money from this black hole any more than the rest of society. The children did nothing to warrant earning that money, so I don't see why it makes sense to give it to them. We as a society can decide what happens to a person's remaining assets when they die, because they obviously can no longer make that choice themselves.

A 100% estate tax is nothing more than saying: instead of hoarding your assets until you die, figure out a way to use them before you go. Either actively give them to your children, or put your money back into the market, or donate to charity. But if you wait until you die to decide, you no longer have any claim to those assets since you are not alive, so we will figure out what to do with them for you.

Again, you're fundamentally incorrect. When a person dies, their assets are controlled by their will or their estate trust. In the absence of those, the next living descendent is the person who is in charge. That means that the property DOES belong to someone else.....and that someone is not the government. And the government did nothing to warrant earning that money either, so it makes no more sense to mandate that it all goes to the government. And we as a society know much less about a particular person who dies than their family knew about him or her.

Nightstrike, those are not universal definitions, it is simply what our law says. I believe Mega. is talking more philosophically, about what ought to be . There is no fundamental right for anyone to inheret, ultimately.

[Metsfanmax]

Recall our conversation about broadening your concept of time in this circumstance. Simply because someone dies, it does not follow that all of their contracts made during their life are null and void.

Therefore, the following still stands:

If you support the voluntary contract which distributes dead guy's wealth to particular beneficiaries upon the his death, then you don't have a say in the matter. Not even social contract theory grants you the right to violate that contract. Of course, if no beneficiaries are stated in the contract, then (depending on government's law), the money falls into their jurisdiction (not society's though).

I don't support the voluntary contract which distributes his wealth after his death. I don't think that a person ought to be able to enter into a personal contract that is fulfilled after the individual dies -- in general. A non-entity cannot participate in a contract. A nonexistent person cannot participate in a contract. It seems absurd to me that present law allows for this.

The problem with your argument is that it can be used to justify a dictator's claim over other people's lives and property.

Therefore, either you respect voluntary contracts between consenting adults, or you reject them in favor of your vision of what is best for society (which lumps you into such 'great' visionaries like Lenin, Stalin, Mao, FDR, etc.). Have some humility.

In no way does it justify anyone's claim over any person's property. It justifies a government's claim over a non-person's property. Your slippery slope arguments are irrelevant; and since the government is the only entity which has a rightful claim on that property that does not belong to any individual, it therefore must claim all of that property. Although again, I'd prefer a law that requires the assets to be donated to a non-profit rather than given to the government.