“Moreover, incapacity is a near certainty for all people: there will be a period however brief, in which a person can no longer manage their own affairs, requiring help.”
I’d never thought of it this way, but it’s a thought provoking reality.
Insane! On the one hand this mistake is a rare case of the rich paying a lot of tax. But very odd not to have tried to avoid this by (whatever rich people do)
They don't actually own the resources, that'd be untenable for any individual or even large family. They own a token that represents a claim to resources, and realistically they can only use so much for themselves.
The difference in actual material wealth between the rich and the poor isn't that excessive today. Beyond a certain threshold you're only buying novelty. And the gap is shrinking every year.
Crucially, when they spend the money, it goes to someone else. Either they do nothing with it and the money is effectively scrap, or they spend the money for $1B in resource and give others the money which they can claim for $1B in resources.
Edit: money kind of represents a debt society owes to the individual. By owning the most money, it actually means that society is most indebted to them, or that they have loaned that many resources/value to society which has not yet been paid back, ironically enough.
Further, resources decay. Land is taxed, bananas rot, cars rust. If you purchase $1B of actual hard assets with $0 left, you will not be able to maintain the upkeep. They will be spoiled or sold by the next year.
You buy $1bn of commercial real estate you get $100m/y to maintain the upkeep in rent. You will be able to get line of credit to cover you for unexpected expense.
Running a business requires continual effort, it's a different question than simply "owning resources."
You could do that of course. But then you probably don't actually own the resource directly. You probably own the company in the form of shares, similar to money, another tradable token.
You're certainly not using the real estate for yourself like the comment we were replying to was saying. Indeed, if it's being leased then it's probably being used entirely by others!
The difference is huge. In practice you get a different set of laws if you have more money. They are more favorable to you. You get to have your life saved. You get to influence politics, through lobbying and political campaign contributions. You get to avoid tax to a greater extent. You get to set up your kids to be rich too - they are default set up, no "American Dream" gauntlet for them to run. Etc. etc.
I find it interesting to think about the mechanics.
1. Things have value.
2. People can own things, fractionally or entirely.
3. Owning a thing entails control of that thing.
So what does a world in which billionaires aren't allowed to exist look like? If the wealth is from creating a company, do we tax companies so progressively that it simply isn't possible for a billion-dollar company to exist in the first place? Do we take some fraction of the founder's company, and therefore their control over that company, away, e.g. with a wealth tax?
In principle I'm happy to ban billionaires, but I also don't love the idea of someone losing control of the company they created because other people decided it was too valuable. Asymptotically capping the growth of companies is appealing, but who knows what the second-order market effects might be (imagine if Apple had no incentive to scale to serve everyone who wants their products), and anyway one person can own multiple companies, so per-company limits by themselves won't put an end to billionaires.
The folks in mechanism design have to have done research in this area, but I'm not familiar with it.
Thousands of times, surely? At least if we're talking Americans, very few people have total lifetime expenditure less than hundreds of thousands I'd think. 100k is 2k a year for 50 years, even a million is only 20k.
Forty percent of federal income receipts come from the first income percentile. We could try to get more from the first 1/10th or 1/100th percentile, but 'income' becomes a nebulous concept. Did Bill or Sam really ever really have any income?
It depends. If you donate enough of your unrealized capital gains, you can cancel out all of your tax owing on what you do cashout and get your name behind whatever causes you want (as long as it counts as charity or politics).
The donations to charitable foundations route is ripe with loopholes that make it attractive ... the charitable foundation can be one that yourself (and a few others who share a tax lawyer) control, an astonishing low proportion of "donated money" can actually flow to the claimed charitable end, and a remarkable percentage of that money can indirectly benefit the people who donate.
Estate tax only kicks in > $12M. But probate kicks in if your assets are > $170k! I don't support extensive tax trickery to get out of estate tax (unless you count giving it all to charity as tax hacking, which I definitely don't), but I have been converted to advise everyone with heirs and meaningful assets to set up a trust and work with an estate lawyer to make sure they can bypass probate when needed. Otherwise funds can be tied up for a lengthy period of time (and incur a lot of lawyer fees) even in simple cases.
In 2009, Hsieh sold Zappos to Amazon for $1.2 billion. Amazon inherited Hsieh's policy but put its own spin on it — the company offered full-time Amazon fulfillment center workers up to $5,000 to leave, per CNBC.
The policy, dubbed Pay to Quit, is designed to weed out the employees who decide they aren't happy at the company, subsequently improving workforce morale and productivity and ensuring that those who are employed are committed to their work.
I know, but there's probably some "thinker" out there that believes it's a good idea to select for the misfits that think they don't belong and pay the really gung-ho ones to leave.
> Instead of subjecting his gross estate to the federal estate tax, Hsieh could have set up a trust in which he has no control over, transfer his assets into it, then have a trustee continue to carry out his goals
Your estate is taxed before it goes into a normal trust. To avoid taxes with a trust you have to set it up a long time in advance and slowly shift money in. And at $1B, it's not gonna happen. Even if you use various tricks to put lower priced assets into the trust early and let them appreciate (or e.g. buy permanent life insurance with the trust assets), none of those strategies scale to O($billion)
GSTs used to be able to get around that, but not so much anymore.
A "real" way to avoid it is to put massive amounts into a charity (or occasionally a "charity"), and then have that charity hire your kids for cushy jobs. There are other ways around it too, hiding assets overseas or whatever.
But the article gives a very inaccurate description of using trusts to get around estate taxes. Which is ... weird, right? It's an estate planning attorney? I dunno.
yep, and the charity’s underlying entity can be a corporation or a trust, which does confuse the general understanding of these things as the terms are often conflated
Tony was wealthy but had substantial mental health challenges. It is not entirely unexpected his estate would be in limbo or exposed to suboptimal tax treatment due to no estate planning.
Wealth and ability to seek help are mutually exclusive. For sure, you have access. But you have to want it, even if some are desperate to help you and others are desperate to extract from you while you remain in poor health. Maybe someone could’ve advocated for a conservatorship, but we’ll never know why someone didn’t.
(have had friends and loved ones addicted to alcohol, cocaine, heroin, etc)
I don't think these things are exclusive to each other. Someone who is struggling mentally can be very successful in their career and can have a sea of people ready to reap the rewards of their success. That kind of behavior can absolutely manifest in the person spiraling or spiraling further.
While the exact means of his death was in a fire on someone else's property, it was during this time the billionaire was indeed living in a shit-covered hovel:
> There was feces on the ground. Plants in his toilets. Broken glass, broken plates all over the ground. Rotten food under the bed. Rotten food on the walls... it was disgusting.
Arguing about this is nipping at the margins. Capture is monotone increasing. The donor class needs their teeth kicked in from time to time (Magna Carta, tennis court, countless).
Trying to unfuck estate law is a tourniquet.
We don’t need to curb-stomp the donor class to make them “pay their fair share”, we need to wreck their shit to make the incumbents powerless.
Human nature has a bad memory leak. You have to restart the process sometimes.
If we don’t find a peaceful way to do it, nature will find a violent way to do it.
I’d never thought of it this way, but it’s a thought provoking reality.