Unless you fundamentally alter the way trust funds shelter wealth and income across generations, then all raising the inheritance tax does is widen the gap between the 1% (who you will tax) and the .1% (who will remain out of reach and become relatively more entrenched).
Second is the fact that we live in a global economy now and taxes that are not applied globally will encourage human and capital flight. If, for example, you gutted trust funds or raised inheritance taxes to 75% in the US, you would likely find many wealthy families relocating (and expatriating if necessary) to more favorable jurisdictions. For a few generations now the US enjoyed unrivaled status as the best/safest/most desirable place in the world to live (for most people), but this is already lessening as the world becomes smaller and more connected. It's already much easier for me to imagine raising my kids in London or Singapore (especially if I'm worth tens of millions) than it was for my parents.
Personally I would be in favor of a globally applied inheritance tax set at a high level but the devil is in the details and I don't think we'll get there in our lifetimes.
19 billion tells me nothing.
19 billion / 5200 = an mean of ~3.65 million per taxed estate. That's all I know off the top of my head.
In general I've found the trope of "the rich don't pay taxes because of their fancy lawyers and accountants" generally turns out to be false.
It's not that they don't pay taxes at all, but they definitely pay less than they should. http://money.cnn.com/2013/03/04/news/economy/buffett-secreta...
There's no way you can believe otherwise, a millionaire can afford all kinds of financial experts to work 40hrs/week to move money all over the place to avoid taxes. It's unreasonable to think they don't (ab)use that ability.
We can certainly debate whether that is good policy or not, but it has absolutely nothing to do with any sort of fancy tricks.
I'd consider that a fancy trick :)
EDIT: To answer harryh: Yes and it has been steadily decreasing [1]. And your point is? I think we can agree this mainly benefits the rich; I don't see someone in the middle class would have the discretionary income (not 401k, I'm talking about leftover income after expenses) to put his/her money in massive amounts stocks.
[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
Also, the rise of finance means a lot of Wall Street hedge fund managers who should be paying ordinary income tax are paying cap gains rates through the carried interest exception. Venture capitalists too.
http://avc.com/2010/05/why-taxing-carried-interest-as-ordina...
A similar point holds for the carried interest rule. Those taking advantage of it aren't doing so because they've hired amazing accountants to file their taxes. They're just following relatively straight forward tax law.
Adjacently, while I generally agree with you on the topic of carried interest I did find this column thought provoking. You might enjoy it.
http://www.nytimes.com/2012/03/04/business/capital-gains-vs-...
My feeling is, if you don't have actual capital at risk, you shouldn't get a break. Or put another way, if it's not possible for you to experience a capital loss, then it's not possible to experience a capital gain. Most VCs and hedge funds also invest a substantial amount of their own capital in the funds they manage, so it's not like it would be a radical change.
A few years ago I went to the Aspen Ideas Festival. One of the speakers was David Rubinstein of the Carlyle Group. Someone cheekily asked him what the tax on carried interest should be. He said "It should be zero. But politicians 'earn' so much money in donations by by threatening to repeal it, I predict it will always come up as an issue every three or four years, and will always stay about what it is now."
Incidentally, since this is HN, one might ask if startup employees are doing the same thing to which I would generally nod and agree with you.
http://www.bloomberg.com/news/articles/2014-12-15/berkshire-...
This isn't productive work on any scale except tax optimization and is only available to massive companies and their teams of lawyers.
What you're really getting at is tax incidence. Ultimately corporate taxes are still taxes on people. It's a complicated question to figure out which people. Sometimes it's shareholders like buffet, but it's also often employees or customers.
I do generally agree with you though that corporate taxes probably fall disproportionately on rich shareholders so to whatever degree there are shenanigans it's probably benefiting those rich shareholders.
Personally this makes me question the value of corporate taxes entirely. Just get rid of them and tax people directly. It would save a lot of paperwork and be easier for everyone to understand. Most people disagree with me on this point (though I would say that's because they don't think about tax incidence!).
Just think how much money goes into the economy to preserve income...if we simplified the tax code in any way, so many people would be out of work in both the private and public sectors.
This is an excellent demonstration of the broken window fallacy.
The issue isn't that the mega-wealthy pay no taxes, but that the value of the taxable income of a handful of people vastly supersedes that of most of that of the rest of the population. In essence, lower tax rates didn't fix anything about the economy unless you thought taxes were the problem and provided no overall boost to the economic security or general prosperity of the public.
So when GE Capital pays no corporate taxes and someone points that out, you're likely to hear that they pay those taxes through the number of people they employ. This is deceptive, since a legitimate small business would be paying both taxes. That entities like GE Capital exist is the trope that you need to dispel. Or did those estate taxes not come from the earnings of mom and pop shop owners and people who put in their 40 quarters with a little wise investing?
https://en.wikipedia.org/wiki/Grantor_retained_annuity_trust
So why does Buffett keep on saying that he pays low taxes compared to his secretary?
"...rigged the market, made a cool forty million, payed off the Lord Mayor, and put the lot into diesel-powered nuns."
"Which is where he went wrong, eh?"
"Exactly"
"When's the funeral?"
"Oh, he hasn't killed himself yet."
"He hasn't?"
"No, waiting 'til April the fifth. Some sort of tax dodge."
It seems reasonable to assume that some portion of it will accumulate among the wealthiest class and be inherited. Probably much more than ~0.1%.
Let's assume that all inheritance taxes are paid by the top 1%. They own about a third of total assets. So that's about 290 billion being passed on.
19 / 290 = 6.5% being paid in inheritance taxes. To high? To low? I dunno, but that's my best guess back of the envelope math.
https://en.wikipedia.org/wiki/Grantor_retained_annuity_trust
Figure your year's revenue. Find out how many times the poverty level that is, for your family size. (Twice the poverty level, 10x the poverty level, etc.) Take the log base 10. Multiply that by some constant that is the same for every tax payer in the nation (both people and businesses). Currently, that "flat" constant would be about 9. The resultant number is your tax rate.
(Hint: this would be a massive tax cut for pretty much everyone short of billionaires.)
If people can't even keep their own money earned for themselves, you are just killing the incentive to even earn it at the first place. You seem to suggesting we must periodically make the rich, poor. This kind of equality is more dangerous than inequality. Look up the failure of socialist/communist set ups in past century that will tell you why this is such a bad idea.
The whole scheme over time feels like punishing people for working hard and generating wealth, while remainder free loads on the assumption they are entitled to free money.
What follow next is exodus of smart, hard working people to better countries.
For a long time the rent-seeking was done by unions, but these days its more commonly done by corporations.