I came across an Associated Press article entitled Brooke Astor’s Son Indicted. Apparently there is some scandal associated with Brooke Astor’s $198 million estate. Brooke was the wife of Vincent Astor (he was her third husband). Vincent Astor was the great-great-grandson of John Jacob Astor who made a fortune in fur trading and New York real estate. Fur trading. In the 18th century.
I don’t know anything about subsequent Astors, so maybe they were just as shrewd, lucky, and able as great grandpa John Jacob. But, assuming they weren’t, in America – supposedly the land of the meritocracy – it seems fundamentally wrong to me that a single individual’s fortune should insulate his family for 200 years from rising and falling on their own merits.
That’s a lot of work and shrewd investing to overcome 200 years of inflation.
“it seems fundamentally wrong to me that a single individual’s fortune should insulate his family for 200 years from rising and falling on their own merits.”
Soooo, what’s your alternative? Take away their inheritance because YOU know that’s what’s best for them?
Really, Doug. You plan to leave your children set up with something, don’t you? If I could endow several generations of Koles into the future with the ability to not begin from poverty, with the means to live better, and know that I was doing so, it would leave me a very happy man at the end of the trail. Wouldn’t it do the same for you to know that you had provided for so many Massons?
I’m not terribly worried about it, as long as they are paying their fair share in taxes like the rest of us, and aren’t using the money to do “evil things.”
Besides, it will all balance out in the end. Growing up wealthy shapes a person, and eventually the way a lot of those folks grow up puts them at odds with the rest of society. All you have to do is look at Paris Hilton or George W. Bush to see that.
Those that are wealthy but still go out there and work for it, may still end up being ruthless bastards, but at least they understand, in a way, what “work” and the “real world” is.
That said, I’d much rather that we as a society decided to go back to valuing traits that weren’t related to money. Then maybe honesty, humility and morality would become more valuable and we’d be a better Nation for it.
But I’m not holding my breath…
But, assuming they weren’t . . .
That’s a very weak assumption. It is under-appreciated that besides money, the offspring of the wealthy also inherit human capital: education, values and habits — in other words, merit — that are essential ingredients for continued prosperity. One could make a much stronger claim that successful progeny of the super-wealthy maintain their wealth through this inherited merit rather than through parasitism. The major argument for this is that most of the wealthy in this country did not inherit their fortunes (much more academic argument here); most dynastic wealth dissipates as it is spread among more and more recipients over the generations, not all of whom will make wise investments. The Astors appear to be an exception.
it seems fundamentally wrong to me . . .
Wrong that someone would insulate his family, or wrong that the untalented among them will not suffer? Neither of those makes any sense.
I’m all for handing down wealth, as long as the recipients pay income tax on it. It is income to them, after all (and all the better for them, they didn’t have to do anything to earn it other than be lucky enough to have a wealthy relative). If they aren’t willing to pay taxes on their windfall, then they are parasites, receiving the blessings of our country without paying their share.
He’s not even a child of the Astor in question. He’s just plain lucky that his mom married into wealth. I have no problem with him inheriting that money if he pays the proper taxes.
Just a general gripe on my part. No real plan for dealing with it, other than to say we don’t need to eliminate the estate tax for estates of this size.
As for me wanting to hand down wealth to future Massons, sure I do. But, I can’t say that I’d work harder to pass down wealth to my great grand kids than I would to pass down wealth to my kids and grand kids. So, I don’t think society gets a lot of utility out of structuring taxes and allowing wealth transfer to 3 and 4 generations.
Society probably doesn’t get a lot of utility out of me going on vacation more often than the average person. Should I be stopped from doing so?
If it were the utility of society that we based policy on, rather than individual liberty and the pursuit of happiness (as we increasingly do), you and I might not be doing the work that we do, have the number of children we have, go on the vacations we take, and a host of other things. Not saying that the common good and individual liberty and the pursuit of happiness are mutually exclusive, but there are important places that they part company, or at least contradict each other on the micro level.
Careful Mike, writing “Society probably doesn’t get a lot of utility out of me going on vacation more often than the average person . . .” leaves you wide open!
That’s just the problem, Paul. If my struggles have resulted in a better-than-average life, I shouldn’t become a villain. Whom have I harmed?
As a CPA I’m all for wealth building and have no problem with entrepreneurs who build successful businesses through hard work. A pervasive problem though is the fact that (at least in my practice) a common denominator in many family owned closely held businesses is the first generation founding the business, the second generation building on the first generation’s success, and the third generation treating the business as a personal checkbook. There seems to be a sense of entitlement with the third generation without the work ethic.
America is not the “land of meritocracy”, or the land of any other social result arbitrarily deemed desirable.
America is the land of LIBERTY, which in part means that I and I alone get to decide what to do with what’s mine, including who it goes to after I die.
Obviously government has some role to play in this decision, otherwise good luck enforcing your ownership claims after you’re dead.
Like anything else, liberty is not absolute.
And, I’m baffled by your declaration that meritocracy is a social result. It’s nothing more than equality of opportunity; not equality of results.
There is a mindset that if a person goes to an ‘affirmative action’ physician he is stupidly putting his life in danger( one example).So it’s always important to keep pointing out that government programs of equal access are meant only to give equal chance at the entry level.My conservative days do give me perspective on how easy it is to believe anything if constantly taught by those we respect.But be wary of liberals too;there are all the same pitfalls. Example: all the ‘illegal’ immigrants aren’t ‘browned-skinned’Mexicans( assuming that’s why ‘illegal’ is bad) .Immigrant Poles in Chicago are illegal as well as legal,same as Mexicans,and they can be equally exploited because of their status.
Kurt– But despite that liberty, there are still bills to pay. When you earn money, you pay taxes on it for your share of the benefits of citizenship. At death, leave as much money to whoever you wish. All we ask is that they then pay taxes on it for their share of the benefits they receive as a citizen.
One’s share, ‘T’? As decided by whom?
And why is it just to pay more just because you worked longer, or otherwise earned more? Are you really using government more just because you earned more?
I find the ‘your fair share’ position extremely arrogant. If there are bills to be paid, let those who accrue to cost of those bills pay them- especially if there is to be something like social justice.
OK–let’s say Astor paid some taxes which helped fund the Revolutionary War. If there were no inheritance tax, his descendents wouldn’t pay a dime more. They would ride free. Defend that.
There was no arrogance in my statement. Our system of laws keeps my $140k house safe, and Bill Gates’ $20 million house safe. He pays more. Our system of roads allows my patients to get to my office within town, and allows his products to be shipped to tens of thousands of locations throughout the country. He pays more. Our regulation of weights and measure, of banking regulation, etc., create an environment where I can do well, and he can make tens of billions of dollars. He pays more. You see, he is using the infrastructure, the security, and the positive business climate that our stable government and country allow, and he is using them to a greater extent than I am. So he pays more. As I pay more than most of my fellow citizens. I don’t have a problem with it, and wouldn’t have it any other way.
I also don’t think we’re talking about working hard and being penalized with higher taxes. The discussion was whether someone should get inheritances tax-free because great-granddaddy worked hard. I say no. Great-granddaddy paid taxes and that money funded the government in his lifetime. That money’s been spent. His taxes weren’t a subscription for all his descendants throughout time to receive the blessings of this country for free simply because he was taxed once long ago. I could just as easily claim I don’t owe any income tax because everyone who paid me this year already paid taxes on that money when they earned it.
T-
A technical point, but there is no federal “inheritance tax”, it is an estate (and gift) tax system. With an estate tax it makes no difference how many people take under a will (or trust), the tax on the estate remains the same and is paid by the estate. While I understand your feelings on the point, technically, an estate tax is a sort of double taxation (excluding the treatment of unrealized capital gains) since the person who built or accumulated the estate likely paid income tax as it grew. Personally I think if we are to have this sort of system it should be converted to an inheritance tax, or substantial gifts and bequests treated as income to the recipient. But I suppose that when the estate tax was introduced it was intended to hit people like the Astors who built their fortunes before there was an income tax and couldn’t make the “double taxation” argument.
“When you earn money, you pay taxes on it for your share of the benefits of citizenship.”
All taxation is illegitimate.
The only proper role of government is enforcing contracts, punishing violent criminals, and defending against foreign aggression. Thus, those whose actions necessitate government in the first place (contract-breakers, violent criminals, and foreign invaders) are the ones who should pay for it.
There is no positive benefit to be had from a legitimate government–only a potential (but not guaranteed) absence of harm. And it is despicable to say that I should have to pay in order to make sure people don’t commit acts against me they have no place committing in the first place.
“Like anything else, liberty is not absolute. ”
Sure it is, like everything else.
What about drainage? Does government have a legitimate role to play in maintaining public drains?
No, of course not.
My insight into what freedom is from 35 years in the public school classroom. It’s the understanding of how things work and the degree we can manipulate ‘the system’ for our own benefit.That held for 16-yr olds ,but I think it holds for adults too,but we wouldn’t maybe admit to it.to Not being able to manipulate for our needs and wants means we don’t feel free.So in my experience as a teacher, everything is indeed relative,because that’s the only way a human being is able to evaluate( it’s not a question of existence of a Supreme Being;that’s an entirely separate issue).Moral values therefore are a relative, personal choice and we can follow any personal code we want in our pursuit of our freedom.
Also people tend to mix the terms liberty and freedom and choice and use them politically .
Well, Kurt… maybe it’s been found that violent criminals, antisocial as they are, don’t usually pitch in to pay for their apprehension, trial, or incarceration. If they were the type to pay for things and carry their own weight, they probably wouldn’t be criminals, would they? If we had to rely on the criminals to fund the whole enterprise, then the only cost-effective thing to do would be to execute those who can’t pay, and maybe give decent due process, lodging in the jail, etc., to those who can. That’s a discussion we can have. But I think that goes against a lot of our beliefs in what this country should be.
Next time you want to drive somewhere, build your own road. Obviously that’s not something the government should be doing.
Also, that whole “defending against aggression” thing kind of runs counter to your assertion that all taxation is illegitimate. In the absence of taxation, how do you propose to PAY for defense against aggression? Just print some money?
The “defense against aggression” in Iraq is probably going to be costing in the $2 trillion range. Divided by 300 million people, that’s something like $7,000 per person. There are a couple of different ways that reasonable people might argue as means of paying for that.
The current method is to put it on the national credit card.
I would propose a bill be sent to every family in the country. My bill as head of a household of three would be $21,000, and I am more than happy to write a check today for that–for the same reason I pay my credit card balances in full. If you have eight kids, sorry about your luck. But that aggression was aimed at all of them, so pay up.
But if all taxation is illegitimate, then we are in a bit of a bind trying to balance our national checkbook. But I have an idea… Seems I’ve seen a bumpersticker on a VW microbus saying something about having the Pentagon hold a bake sale. In the absence of taxation, I think that’s what we’re down to.
They don’t *have* to pitch in–their wealth can be seized, and held in escrow until they die (in case their conviction is later overturned).
“Next time you want to drive somewhere, build your own road.”
Why? If others want to build it and let me use it, that’s perfectly fine.
“Obviously that’s not something the government should be doing.”
Correct.
“In the absence of taxation, how do you propose to PAY for defense against aggression? Just print some money?”
Have you already forgotten my earlier post?