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points by gmac 5 days ago | 0 comments

TBH, I'm intensely relaxed about the destruction of long-term wealth build-up: it's a route to inequality and undeserved riches.

[–] EvanAnderson 5 days ago

I worry about dismantling working, productive smaller businesses (and they employment they provide) in service of preventing wealth concentration. In the US, at least, Big Wealth is really unaffected by estate taxes. Smaller businesses with less sophisticated ownership structure end up with a tax burden or being forced to liquidate.

[–] lotsofpulp 5 days ago

In the US, federal estate taxes aren't a thing if you pay a few thousand to an estate lawyer to setup irrevocable trusts and whatnot. And these tactics usually work for state estate taxes too.

Plus the federal estate tax only starts at $15M for an individual and $30M for a married couple, so it has no effect on what most would consider a "small" business.

Most people on this forum would be served well (or at least their heirs) by spending a few thousand on an estate lawyer to prevent their heirs from having to waste time in probate court.

[–] EvanAnderson 5 days ago

I agree that there are legal strategies to avoid estate tax. I also strenuously agree that avoiding probate with estate planing should be in the plan for anybody who has any assets.

My concern with estate taxes is, like I said, the potential destruction of functioning businesses-- just what was discussed in the article.

I know the tax code has provisions to permit an extension of up to fourteen years for payment. There's a non-tax-deductible interest expense, though. A business with low margins might not be able to absorb that expense even over a 14 year time window.

In the end I'm probably thinking too theoretically. Perhaps there are no real businesses large enough to exceed the estate tax exemption that haven't otherwise planned for succession.

I may just be getting "the feels" about theoretical jobs being destroyed in service of taxation.

re: small business

In my mind, at least, a business w/ a $30 million capitalization is a small business. Where I am (rural Ohio) a decently-sized family farming operation could hit that $30M cap (with land prices being what they are now). That's between 1,500 and 2,000 acres of farmland at market price. That doesn't take into account potentially inflated valuations as a result of datacenter speculators. In my county we've seen a Meta datacenter project pay 10x market value for farmland (resulting in skewed property tax valuations across the entire county).

[–] mae3x 5 days ago

I would posit that there is likely far more value killed through inheritance of these businesses than through forced sale due to inheritance tax. I can certainly personally point to many local businesses that were inherited and run extremely poorly by the heirs due to a lack of drive. These heirs are mostly milking the value built by the prior generation until it runs dry. A forced sale due to an inheritance tax would have put these businesses into the hands of individuals who had the drive and the financial motivation to build the business rather than milk it dry. I suspect - though certainly can't validate - this is the far more common outcome than the hypothetical value destruction you suggest would come from the forced sale.

[–] bragr 5 days ago

Does this even happen with that much regularity? The company would have to be valued at over $15 million to trigger federal estate taxes. I feel like if you have that big of a going concern and never got together with a lawyer to figure out inheritance, that's a bit on you.

[–] settsu 5 days ago

I admittedly know very little about running a large "small" business, but my impression after decades of scare tactics (which happen to sound a lot like this comment), is that the threats (if they were legitimate to begin with) were actually some well-known, well-understood problem that no one actually wants to fix, like healthcare costs, or that some small businesses are simply very poorly run and their struggles were entirely predictable.

[–] gmac 5 days ago

Yeah, that's a different problem, and not ideal -- seems like value actually gets destroyed there.

[–] MrBuddyCasino 4 days ago

You are being paid by the state for doing worthless “research” (actually being a commissar toeing the party line) and cheer the expropriation of your superior countrymen.

There is a simple word for what you are.

[–] viklove 5 days ago

Destruction of long-term wealth would be a feature. The inevitable consolidation of wealth in our current economic system is the root of much of the pain we're feeling in the west today.

[–] fearmerchant 4 days ago

It creates a stable society but maybe that's not important to you either.