UK - Pensioner incomes 'outstrip those of working families'

[3point14]

The importance of money to a person is a function of how much the person needs and how much the person has. Once you have enough money for your needs the benefits of having more drop off a cliff.

The same goes for any other thing a person could want of course, but money is the one thing people spend most time obtaining - about 2000 hours a year or so, give or take a few hundred. Money is by design the most versatile of all things a person could wish for, that's why we spend so much obtaining it.

I'm not saying money isn't important, that's not the case at all.

I think you grossly understated it's importance. I understand that, past a certain point, the more one have the less in incrementally increases one's happiness. however, if one has little or none it becomes just about the most important, material, thing.

However all a very steep inheritance tax can accomplish is to remove the ability of individuals from wealthy families to accomplish their objectives in life, whatever they might be. If it managed to improve the chances of those less fortunate to accomplish something in their lives, I would support it.

McHrozni

 

[McHrozni]

Sounds like you have fundamentally misunderstood the analogy, which is of course one of the problems with analogies.

Life isn't about "how well you run the race", otherwise we really would have a meritocracy, it's about "winning" or achieving the goal. Those with inherited privilege manage to "win" far easier which in turn enhances the ability for their descendants to win. There are (at least) two negative outcomes from this:

• The opportunity for those outside the elite to win is reduced - which is unfair (but then again so is life)
• Because "winners" tend to be in charge and set the rules for the future, we don't end up with the most capable people in charge, just the "winners" and they contine to "fix" the race in their favour

Looking at UK society, who is in charge and what their background and capabilities are, it's clear to me that something's broken. I know you and I disagree about whether Boris Johnson is smart but one think I think we can agree on is that he is singularly unsuited for his role - which he wouldn't have been in a position to be in were it not for him attending Slough Grammer and Thames Poly.

Okay, but money is just one aspect of all this. Money certainly helps you to obtain recognition and money is necessary to obtain education which will help you in advancing your career, but you're talking about far more than accomplishing a career. You're talking about calling the shots, doing so requires connections, friends in high places, negotiating skills, willingness to take risks and above all, a heart of stone.

While I agree money can help in doing all of the above, money is neither the beginning nor the end of the story. Since it is entirely possible for wealthy parents to pass their wealth onto children using means other than inheritance, a very steep inheritance tax would change comparatively little. There is a further price in the said tax, it blindsides you to other possibilities with a greater potential to improve things.

That's my view at any rate.

McHrozni

 

[McHrozni]

I think you grossly understated it's importance. I understand that, past a certain point, the more one have the less in incrementally increases one's happiness. however, if one has little or none it becomes just about the most important, material, thing.

Of course I agree with you, but you can say the exact same thing about anything. If you have little health, money won't matter to you if treatment for your condition doesn't exist. What makes money special is the fact that you can use money to buy, rent or hire you the many things that you are not able to provide using other means. Money should always be thought as means towards achieving a certain goal, never a goal in itself.

Money is important, certainty, but also a subject to the exact same laws as everything else. A person in a loving and stable relationship doesn't need another relationship, whereas a desperate and lonely person will give anything to even a single friend. The same goes for money.

McHrozni

 

[3point14]

Of course I agree with you, but you can say the exact same thing about anything. If you have little health, money won't matter to you if treatment for your condition doesn't exist. What makes money special is the fact that you can use money to buy, rent or hire you the many things that you are not able to provide using other means. Money should always be thought as means towards achieving a certain goal, never a goal in itself.

Money is important, certainty, but also a subject to the exact same laws as everything else. A person in a loving and stable relationship doesn't need another relationship, whereas a desperate and lonely person will give anything to even a single friend. The same goes for money.

McHrozni

Not quite. We live in a capitalistic society. Money is the most important thing. Yes, if you have an illness that can't be treated it becomes less so. For any other illness then, with money (yours or central funds) one can have it treated. Without money, one cannot.

If one does not have a home, with money, one can buy a home. One can even buy company. Without money it's not really viable to go out and look for company because there's not a lot one can do that doesn't cost money.

All of the other things you say are important are important but most of the problems that aren't fiscal can be greatly eased with a wedge of cash.

Again, I find that those that downplay the importance of money have generally not spent a great deal of time without any of it. This may not be true for you but I can tell that, without money, it's very difficult to gain pleasure from any other aspect of life because we live in a society dominated by the movement and creation of currency.

 

[The Don]

Okay, but money is just one aspect of all this. Money certainly helps you to obtain recognition and money is necessary to obtain education which will help you in advancing your career, but you're talking about far more than accomplishing a career. You're talking about calling the shots, doing so requires connections, friends in high places, negotiating skills, willingness to take risks and above all, a heart of stone.

True, and yet in the UK it seems that the single greatest factor regarding wealth later in life is whether you're born into wealth. There was a period during the third quarter of the century when social and economic mobility increased and there was a brief (and small) change to the makeup of the ruling elite. This coincided with high marginal tax levels and high levels (and low zero rated bands) of inheritance tax combined with other efforts to proactively affect the solution.

While I agree money can help in doing all of the above, money is neither the beginning nor the end of the story. Since it is entirely possible for wealthy parents to pass their wealth onto children using means other than inheritance, a very steep inheritance tax would change comparatively little. There is a further price in the said tax, it blindsides you to other possibilities with a greater potential to improve things.

That's my view at any rate.

McHrozni

A steep inheritance tax allows for a gradual erosion of privilege over generations. Right now if you're fortunate enough to be born into the top n% then unless you're unlucky you're going to remain there (almost) regardless of your personal abilities and work.

Even a steep inheritance tax wouldn't prevent successful people giving their children a great start in life (unless they are unusually short-lived), nor does it prevent successful people becoming successful (indeed it would likely enhance that process) but what it does address is the process by which wealth (and as a consequence privilege) is concentrated over generations and by which progress for the rest of the population is stifled as a result.

 

[McHrozni]

Not quite. We live in a capitalistic society. Money is the most important thing. Yes, if you have an illness that can't be treated it becomes less so. For any other illness then, with money (yours or central funds) one can have it treated. Without money, one cannot.

Money is of vital importance if you have too little, of marginal importance if you have enough and of little importance if you have more than you need.

All of the other things you say are important are important but most of the problems that aren't fiscal can be greatly eased with a wedge of cash.

I believe I said as much.

Again, I find that those that downplay the importance of money have generally not spent a great deal of time without any of it. This may not be true for you but I can tell that, without money, it's very difficult to gain pleasure from any other aspect of life because we live in a society dominated by the movement and creation of currency.

For the third time, I agree with you. Money is important because the only avenue to obtain many things you either desire or just plain need in life goes through money. I think having enough money ranks about as important as everything else in life combined - if you have zero money but everything you might want that can't be bought you're just as poor as a person who has all the money in the world, but nothing else. Neither scenario represents anything remotely realistic, it's just a thought experiment.

However that doesn't exclude money as a good means towards achieving happiness. Without question it is necessary, but only up to a point. The precise point varies from person to person, but the a general rule goes something like this: you don't need a net worth of seven or eight figures to be happy, six figures will satisfy most of your needs. I'm not saying more wealth can't make you happier, it most certainly could, I'm saying further increases in wealth will lead to small proportional increases in happiness, at least in a large majority of people.

The only thing a steep inheritance can do is modify the amount of money a person has available in a lifetime. If you want to improve the well-being of an average person, modifying the amount of money makes for a good first start, but nothing more. I strongly disagree with Don when he says a steep inheritance tax will lead to all sort of improvements in society. At best you can hope for marginal improvements here and there, the elite uses money to remain elite, but money is far from being their sole tool, or indeed even the best tool.

McHrozni

 

[Darat]

The mistake you're making is that life is not a race. In a 100 m sprint you want to come first, because any other place is a lesser achievement, with fewer goodies down the line. It does matter a lot whether you finish first, second or last as to what happens after.

In life, it doesn't matter. After it ends you're dead by definition. Unless you're a practice of ancient Egyptian religion (or something similar to that) you can't take your wealth to the afterlife. After you die it doesn't matter if you were rich or poor when you were about to die.

...snip...

When is the big question - if you are poor and live in a poorly resourced area - that when will be a lot sooner than the when of the wealthy. Never mind taking into account the difference of quality of life in your later years.

https://fullfact.org/health/life-expectancy-and-poverty/

 

[3point14]

However that doesn't exclude money as a good means towards achieving happiness. Without question it is necessary, but only up to a point. The precise point varies from person to person, but the a general rule goes something like this: you don't need a net worth of seven or eight figures to be happy, six figures will satisfy most of your needs. I'm not saying more wealth can't make you happier, it most certainly could, I'm saying further increases in wealth will lead to small proportional increases in happiness, at least in a large majority of people.

This would seem to be an argument for not allowing an inheritance of more than a sum of around six or seven figures?

 

[Darat]

...snip...

I find, and I may be mistaken in this, that those that posit that money isn't that important have never suffered a serious lack of it.

Many years ago when I would attend political events I remember talking to av prospective parliamentary candidate for the Tories and got into an argument with him about how much difference £5 a week could make to someone (he wanted state unemployment benefits to be cut by a fiver). I really couldn't get through to him that could be difference for someone to have something to eat or have electricity that day. His attitude really was "it's only £5" and something else has always stuck with me was when I mentioned about being able to phone companies to arrange an interview, tried to explain to him how expensive that was to someone on benefits and his answer was that you can get deals from BT which would include local calls!

 

[McHrozni]

A steep inheritance tax allows for a gradual erosion of privilege over generations. Right now if you're fortunate enough to be born into the top n% then unless you're unlucky you're going to remain there (almost) regardless of your personal abilities and work.

Maybe, but elite is more intelligent and more determined than what you give them credit. You can be sure about one thing, elite will always find a way to remain elite. Rather than seeking ways to weaken their hold on power you should look for ways to lift those less fortunate up towards the level of the elite. This will eventually dilute their power and give a strong incentive to the rank and file to improve themselves, improving the society.

Eventually this dilution could also degrade the elite somewhat.

Even a steep inheritance tax wouldn't prevent successful people giving their children a great start in life (unless they are unusually short-lived), nor does it prevent successful people becoming successful (indeed it would likely enhance that process) but what it does address is the process by which wealth (and as a consequence privilege) is concentrated over generations and by which progress for the rest of the population is stifled as a result.

Maybe, but I contend there are better way of accomplishing the same goals.

McHrozni

 

[McHrozni]

This would seem to be an argument for not allowing an inheritance of more than a sum of around six or seven figures?

It is an argument for such a tax not to be destructive at any rate. This is not an argument in favor of such a tax, only arguments of how this would improve society are.

The Don is of the opinion that steep inheritance tax would eventually crumble the elite. While I agree it would damage the elite in the long run, I contend they would find ways around it and remain in place. They would suffer some damage perhaps, but their position would ultimately be barely touched. Even if the plan worked perfectly it's very nature would still require generations for the plan to work. In the meantime there are more constructive ways of accomplishing, or at least approaching the same goal much faster.

McHrozni

 

[3point14]

Maybe, but elite is more intelligent and more determined than what you give them credit. You can be sure about one thing, elite will always find a way to remain elite. Rather than seeking ways to weaken their hold on power you should look for ways to lift those less fortunate up towards the level of the elite. This will eventually dilute their power and give a strong incentive to the rank and file to improve themselves, improving the society.

There are only so many places at Oxbridge, wenre most of the upper echelons of society seem to be educated.

In order for the non-elite to be represented at such establishments, fewer of the elite need to be represented.

This same calculation can be made for every other institution.

In order for some to rise, others must fall, surely?

 

[3point14]

It is an argument for such a tax not to be destructive at any rate. This is not an argument in favor of such a tax, only arguments of how this would improve society are.

On the one hand you seem to be arguing that it would be destructive to take away large fortunes from the very rich while on the other hand arguing that having a lot of money doesn't actually make a difference.

 

[McHrozni]

In order for some to rise, others must fall, surely?

Maybe, maybe not, it depends on the exact mechanics of the issue at play. Economics in general is a field where zero sum games are rare. Any plan that depends solely or even primarily on such mechanics is, in my humble opinion, bad from the onset.

McHrozni

 

[The Don]

Maybe, but elite is more intelligent and more determined than what you give them credit. You can be sure about one thing, elite will always find a way to remain elite. Rather than seeking ways to weaken their hold on power you should look for ways to lift those less fortunate up towards the level of the elite. This will eventually dilute their power and give a strong incentive to the rank and file to improve themselves, improving the society.

Eventually this dilution could also degrade the elite somewhat.

Well it's certainly what happened after the introduction of "death duties". The "great families" found it harder to retain their positions and in particular the extended great families.

Economic and social mobility were also markedly higher. Of course there were many other factors in play so the introduction of inheritance tax was a factor, perhaps even a major factor, but not the sole factor.

Maybe, but I contend there are better way of accomplishing the same goals.

McHrozni

I'm all ears. Whatever is happening in the UK and US (low marginal rates of taxation, low inheritance taxes, a "light touch" on the free market) is making the situation worse.

 

[McHrozni]

On the one hand you seem to be arguing that it would be destructive to take away large fortunes from the very rich while on the other hand arguing that having a lot of money doesn't actually make a difference.

The tax doesn't make much difference in their happiness levels, true.
However it does make a lot of difference in how they use their existing elite status.

I'm not against a steep inheritance tax because such a tax would destroy the lives of rich kids, that's nonsense. I'm against the tax because it wouldn't do much to improve the lives of everyone else, even though the tax would take loads and loads of political effort to put through and maintain and thus also inhibit other, more useful reforms that could otherwise accomplish the same goal much better.

The tax is a bit like growing tomatoes on the Moon, because the Moon has a lot of unused real estate. Presumably we could do it, but we could also spend a small fraction of the sum to find suitable real estate on Earth and grow tomatoes here, and use the rest of resources in another way.

McHrozni

 

[McHrozni]

Well it's certainly what happened after the introduction of "death duties". The "great families" found it harder to retain their positions and in particular the extended great families.

Economic and social mobility were also markedly higher. Of course there were many other factors in play so the introduction of inheritance tax was a factor, perhaps even a major factor, but not the sole factor.

Almost no policy is inherently bad, just as no policy is inherently good. Each policy has it's own merits. The only question should be whether a policy is suitable for the given situation. Inheritance taxes in 15th century are significantly different in scope of what they do from inheritance taxes in 21st century, because the 15th century society was profoundly different than what it is in 21st century.

I'm all ears. Whatever is happening in the UK and US (low marginal rates of taxation, low inheritance taxes, a "light touch" on the free market) is making the situation worse.

This question greatly depends on a particular jurisdiction. In the US I'd start with what UK already has to a considerable extent - health care and education. I'm not familiar enough with UK to say with adequate certainty. Do whatever is keeping the common people who don't stand to inherit valuable assets from achieving greatness, but the point in the modern era should always be to make it easier for the common people to improve their status, not to beat the elite down. The common people can already succeed in Britain today and they can reach for the elite in one lifetime. Emasculating the elite won't help that in a meaningful way - and that is significantly more than what your tax is supposed to do to begin with. If Oxbridge elite is profoundly overrepresented because Oxbridge is (are?) so much better than any other educational institution then work on improving other educational institutions in the country to the point where they will be competitive if not simply better than Oxbridge. It will take decades, but your plan takes generations. Such a policy will also improve the country overall in a very profound and meaningful way, irrespective of the success or failure of the policy.

McHrozni

 

[3point14]

Almost no policy is inherently bad, just as no policy is inherently good. Each policy has it's own merits. The only question should be whether a policy is suitable for the given situation. Inheritance taxes in 15th century are significantly different in scope of what they do from inheritance taxes in 21st century, because the 15th century society was profoundly different than what it is in 21st century.



This question greatly depends on a particular jurisdiction. In the US I'd start with what UK already has to a considerable extent - health care and education. I'm not familiar enough with UK to say with adequate certainty. Do whatever is keeping the common people who don't stand to inherit valuable assets from achieving greatness, but the point in the modern era should always be to make it easier for the common people to improve their status, not to beat the elite down. The common people can already succeed in Britain today and they can reach for the elite in one lifetime. Emasculating the elite won't help that in a meaningful way - and that is significantly more than what your tax is supposed to do to begin with. If Oxbridge elite is profoundly overrepresented because Oxbridge is (are?) so much better than any other educational institution then work on improving other educational institutions in the country to the point where they will be competitive if not simply better than Oxbridge. It will take decades, but your plan takes generations. Such a policy will also improve the country overall in a very profound and meaningful way, irrespective of the success or failure of the policy.

McHrozni

Oxford university seems ot have an income of around £1.5 billion/year

We're going to need to find a lot of money from somewhere.


Alternatively, only the very, very academic need attend such an institution, in which case places should be assigned on merit, not surname.

 

[McHrozni]

Oxford university seems ot have an income of around £1.5 billion/year

We're going to need to find a lot of money from somewhere.

True, and the funny thing I'll say now that an inheritance tax is not a fundamentally bad way of securing that money. Just like any other policy, reasonable taxes invested in a society are good, but unreasonable high taxes or taxes wasted on a society are bad.

The question is whether inheritance taxes are the best possible taxes to pay for such an endeavor. This is not a question I'm able to answer with my present knowledge.

Alternatively, only the very, very academic need attend such an institution, in which case places should be assigned on merit, not surname.

That should always be the case. If that is a major issue (and not tuition costs) then directing political energy towards achieving that will do far more good for the society an inheritance tax ever could.

McHrozni

 

[Archie Gemmill Goal]

There are only so many places at Oxbridge, wenre most of the upper echelons of society seem to be educated.

In order for the non-elite to be represented at such establishments, fewer of the elite need to be represented.

This same calculation can be made for every other institution.

In order for some to rise, others must fall, surely?

This is the interesting thing. In theory it is possible to provide an education as good as an oxbridge education at say Newcastle Uni or Swansea Uni so you could bring the level of the non elites up. But it still wouldn't be Oxbridge.

There are plenty of smart kids studying at good unis around the uk but it matters not a jot because they don't have the brand and the old boys network. Equally there are probably kids at oxbridge who have fought tooth and nail to get there and still don't get opportunities because they aren't of the right class didn't go to Eton and daddy isn't a high court judge.

It's incredibly difficult to overcome this inertia and it takes more radical change than a mere inheritance tax. It would also need turkeys to vote for xmas for change to be achieved within the current system.

Rigged. Completely. Then people wonder why swathes of the country don't feel engaged with the system