Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Inherited wealth and complacency
Published on May 13, 2005 By Draginol In Politics

My wife and I are looking for lake front property up near Higgins Lake Michigan. There's not much lake front property now.  Not surprising given the law of supply and demand.  But the realtor told me something telling -- the reason there's not much land available is due to multi-generational inheritence.  That is, 150 years ago people bought land up there and simply hand it down from generation to generation.  Family land. How can that be bad?

At first glance, such generational property ownership might sound like a good thing.  And I think it is good -- to a point.  But on the other hand, as a society, how fair is this? When talking about limited resources, such as water front property, how "fair" is it that one family gets to live on the beech simply because their great great grandfather bought the property a century or more ago?

Or more often, ancestors who squatted on the land.  I am a strong believer in things being kept in the family. But I am also an opponent to concentrated unearned wealth.  Sometimes the contradiction becomes an issue.  At some point, a society has to make some tough decisions.  If we want an upwardly mobile system, then there has to be a mechanism in which generations can't simply inherit wealth and sit back and do nothing generation after generation. 

The lake front example is just that -- an example of such stagnation.  Without inheritence taxes, the natural resources of society really comes back to being a "whose ancestors got there first"?  I tend to think that our society should give everyone an equal shot. 

I don't think the government should be confiscating land from people.  However, I do think that inherited wealth should be treated as any other type of income.  Like most people, the money that puts food on the table comes from my labor.  The income from that labor is then taxed.

When someone inherits money from a friend or relative, it's still income. In fact, it's more than income, it's unearned income.  I don't see why it shouldn't be taxed at the same levels as regular income.  This has all kinds of benefits for society and if we're going to tax people's hard work, why not tax income that came from simply being born?  The benefits include ensuring that we don't stagnate society.

In an egalitarian society such as the United States, much of the American dream is premised on the concept of hard work leading to great reward. Anyone can make it.  But if the children of successful people can simply inherit immense wealth wholesale without having earned it that strikes me as not being good for society.  This is especially true when it is property -- land holdings -- that are being inherited.

That said, I am not in favor of massive taxation of inherited income.  I don't agree with the whole "that money has already been taxed" argument at all, however.  After all, money gets taxed as it passes hands all the time.  Why would inherited income be treated differently?  It's still income.  What I would like to see is a healthy balance between what is good for society as a whole and what is good for individual families in particular. 

I'm all for people at Higgins Lake being able to have cottages that pass on to their next generation. But that next generation should have to put something up too to get it so that there is at least the hope that other citizens may have a shot at buying that property to pass on to their children too.

Post Notes:
Some people are reading this article as "Oh greedy Brad just wants cheap land."  Sigh. I was using thiis example to illustrate a general point.  I have no problem with inheritence, I am simply saying that inheritence should be taxed as any other income at the same rates as other income.  So technically speaking, I'm in favor of LOWERING the inheritence tax but I still support there being an inheritence tax.


Comments (Page 3)
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on May 13, 2005
So you've decided not to comment on my blogs for awhile. Very well. (plonk) (if you can't discuss the issue civilly don't discuss it at all -- I don't care of people comment on my blogs so I have a low tolerance for having my arguments name-called)


"Plonk" me all you want, it's your blog. However, if you make a stupid statement, I'm not afraid to point it out to you. At least with the rest of your post you made some decent points (even if I don't agree with them). I'm just calling it how I see it, the same as you.
on May 13, 2005

I don't mind someone not agreeing with me.  But I expect people to not state that my arguments are "stupid".  If you can't be civil enough to disagree without being insulting, then I'll remove you from my blog.

My intelligence is not based on what degree I agree with your opinions.

on May 13, 2005

Terpfan - All I am saying is that thhose who want to do away with the "death tax" may not be considering the repricussions.

If we're going to tax EARNED income, then we should tax UNearned income as well. I don't see why this is so controversal.

on May 13, 2005
Draginol

For ever person that calls you greedy in their eyes, I believe they are just as greedy to want to receive free income without taxation.

Think about it people, do you really want the Hinze-Kerry fammily to contunue as they are with someone elses hard earned money?
on May 13, 2005
For ever person that calls you greedy in their eyes, I believe they are just as greedy to want to receive free income without taxation.


So why not tax the inhereted income (if we are to tax income in the first place), but at the current rate for that income? The way it is right now, the "inheritance tax" is based on the value of the whole estate. That means, if my parents have a home in Northern Utah, a winter home in Southern Utah, a couple of cars, and so on... The inheritance tax is taken from the value of both homes and cars.. etc... We (the beneficiaries) will only get 1/6 of the estate each. If we were each taxed based on our "income" from the inheritance, then we could decide what we would do to cover the added taxes.

So, it really is a "death tax", instead of an "income tax" because the tax is assessed on the assets of the deceased, not the "income" of each beneficiary.

Think about it people, do you really want the Hinze-Kerry fammily to contunue as they are with someone elses hard earned money?


Nice shot! ;~D Why should the Hinze-Kerry family have any less right to decide what they want to do with their assets than anyone else? On the other hand, why should anyone have to hire lawyers and CPAs to make it so their money goes to their family, instead of Senators like Kerry? ;~D
on May 14, 2005
Nice shot! ;~D Why should the Hinze-Kerry family have any less right to decide what they want to do with their assets than anyone else?


But the origanial man who made the money, that family loves to support ultra liberal causes with, is most likely screaming from the grave "FOR GODS SAKE STOP!!!!!!!!!"

Also, wouldn't you like to see any of the Kennedy family have to accualy work? The only one that I know of that works is married to a Republican.
on May 14, 2005
"We currently have an inheritence tax. Get rid of it and I suspect you would see "hereditary lands" in the hands of the very rich much more often."


The "very rich" have no problem with inheritance taxes, because, well, they're rich. Its people who have struggled to build an inheritance and who don't have a ton of liquid assets that are weeded out. And, as I said, even the ultra wealthy very rarely hold these properties for more than a generation or two.

So, it seems more like you are weeding out most of the middle class to me. Hmmm... could this be zoning by taxation?

on May 14, 2005
I disagree with this article on a basic fundamental level.

Reading it I get the feeling of socialist land barons of the 21st century.

Inheritance tax needs to go, specifically for the reasons stated in this article.
on May 14, 2005

Making a bunch of money simply because you were born is not my idea of merit.

And if the kids worked for their parent unpaid until the age of majority and the parents wish to reward them with an inheritance it should be the parents right to decide the "merit" of this income. Once you start handing the Government the reigns in determining what constitutes quality of work for pay you have a whole new system of government.

Ok there are probably a tiny percentage of folks who inherit significant assets "just beacause they were born" but do you really want the Federal Government making the determination on income "merit"? I know there are plently of ideological Luddites in the Senate who would certainly classify software income as meritless.

on May 14, 2005


All of the justifications in the world won't change the basic message. People should be taxed off of their land so that someone with money can buy it out from under them. It's just wrong.


TRUE! I can see now that land that was once used for food and fiber production and raising families on is now used for rich people to play on. So sad...
on May 14, 2005
TRUE! I can see now that land that was once used for food and fiber production and raising families on is now used for rich people to play on. So sad...


...and other land that was once used to produce food is not.. why? Because the government is paying the farmer not to grow food on that land. The farmer then takes that government money and sells the option to investors, who give the farmer a lump some now in exchange for the government subsidies for X number of years. So, the money going to the farmer, to not grow food is now used by the rich to play on. Oh, before I forget... and whose kids will probably not get to work the land when their parents die, because, while they make $30-50k a year working the farm, the estate will be taxed based on the millions the farm is worth....

So, in reality, all they are working towards is the joy in paying Draginol's much celebrated "inheritance" tax. Ask a person who grew up on a family farm why they're subdividing it now... Answer? Because it makes a whole lot more sense to sell the farm now, and pay capital gains tax now (especially since that is based on what each family member gets from the sell of the land) than inheritance tax later (which is based on the total value of the farm).

But, Draginol, at least it would give you a better chance to get your mits on other people's property.
on May 14, 2005
I see your point here, but at the same time doesn't that mean that those families of hard working people lose the land because the next generation can't afford to pay the new income tax?

Do they still get to own the land and at least sell it to pay for the new income they inheritted from someone in their family? Do they have to pay the new income before they get the land?

I don't know... this seems to hurt not only who earned the land through hard work (as well as oppertunity, because after all you can work as hard as you want, it is oppertunity that gets you to a statis of 'making it'), but it hurts poor members of a family who gin such a inheritance. I think this is a two fold folly that hurts the rich and poor alike. Both end up loosing out or getting taxed again for getting something from a family member such as land. The land can be sold, the land can be a place to live, an OPPERTUNITY to not be poor anymore (thank you rich uncle), a place for good ole grand mama, my disabled sister and her nurse.

I am not sure his would work.
on May 14, 2005

So why not tax the inhereted income (if we are to tax income in the first place), but at the current rate for that income?

This is what I advocate.  But some people want to do away with the inheritence tax completely.

on May 14, 2005
Personally I don't know what Farm you guys are working on, but my uncle turned his farm into a Corporation. He has already given his shares to both of his sons and he is labeled as an employee. This type of Corp. manipulation is taught in almost every Midwestern collage of Agriculture.

Of my four uncles two are now incorporated, one died but gave his land to his sons first and the last has refused to incorporate. Every body feels the last uncle that refuses to incorporate will get screwed, but he refuses to give quote: "My bastard sons anything".

The only reason I'm not a farmer now is because my Grandfather believed my mother (only girl in family) should marry a farmer and don't need any land. I worked four summers moving cattle, fixing fences, repairing irrigation system and other jobs. I was paid through a Corporate check, but my two cousins were paid by check and Corporate shares. We all paid federal income taxes and they ultimately got the share of the farm they worked for, without paying inheritance tax.

In the Beatrice Nebraska area I don't know to many old fashion Family farms left, most have converted to the more profitable/secure Corporate farm I described above.
on May 14, 2005
Wealth is finite....pure and simple. As is real estate.

Our Capitalistic system as many flaws such as huge wealth disperity that is unrelated to hard work or 'merit'....but most accept it in the hopes that they will end up in that 10% that owns 90% of the wealth.

As for taxes, I find it un-American to speak of taxes as 'theft' . The government is US. You really need to get over this sophomoric way of seeing the government as some nefarious group of shadow-men out go get you.

We pay less taxes here in the US than in any other modernized nation, and we have a higher standard of living.

Ever notice that the ones who whine about taxes the most are the ones with 3 cars, a swimming pool, and the new plasma tv?

Yeah, thank God Paris Hilton got that much needed tax break by doing away with the inheritance tax.

She'll prolly buy lake Higgins with the tax savings and turn it into a porno set for her next dvd.
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