Things They Say

[jpx7]

The average American has a net worth of ~$200-300K (depending on what source you want to employ) between the ages of 55-75. Not inclusive of assets like a home, cars, inheritance, etc. Exclusive of combined income/same set of spousal assets (which are generally passed on to the surviving spouse after death). You add a small business to that and $5.5 million is a low bar. Maybe my quibble here is "most Americans" seems too broad. It's a lot of money to impoverished Americans and true middle class Americans, but it's not an unachievable sum of money to "most" Americans - or, at least, not enough to be categorically labeled apart of a "super rich" stratum, by comparison (especially when the individuals making exponentially more that are the real reason the estate tax could be a beneficial thing).

First of all, average as opposed to median net worth seems pretty baldly misleading, given that we know the disproportionate amount of wealth is held by a small community of individuals, meaning mean is not especially meaningful here. Secondly, most net worth averages I've ever looked at do indeed include house equity in computing net worth (and when they don't, the figures are much lower), so either your qualifier or your numbers seem dubious—indeed, most figures I've seen put the average between $150k and $200k inclusive of home equity.

Looking at some nice median-focusing census data, helpfully charted by Business Insider, we see:



Medians by age, inclusive of home equity; not a one over $200k.



Medians by age, broken into quintiles. You can see how your mean would skewed upwards (with the article helpfully noting that "the top 10% are literally off the charts")—though, for any mean looking at "most Americans", the very low numbers for under-44 would provide some skew the other way, as well. Still, looking at just 55+ (which, as you note, seems most relevant in context of the estate tax), the net worth of the top 20% starts around $600k and goes way up, meaning a full 80% (which I'd feel comfortably calling "most Americans" in that age-group) are below $600k (again: inclusive of home equity).

Overall, independent of age, the median net worth by quintile was:

Lowest quintile – $4,825
Second quintile – $24,284
Third quintile – $58,226
Fourth quintile – $113,422
Highest quintile – $292,646

Again, this is skewed a bit for our estate tax purposes, because it includes under-44, but not necessarily for talking about "most Americans". These numbers—which, again, include home equity (a point I think worth stressing for obvious reasons)—reflect the fact that for "most Americans", $5.5 million is a substantially high bar in terms of assets, with even the upper quintile having a median net worth of just under $300k.

[Julio3000]

I don't know. "Super rich", to me, is somebody like Jeff Bezos, who makes $52 million per day.

A person with $5.5 million in total assets is ... well off.

But, yeah, small businesses should absolutely be excluded and I think there should be a cap (relative to any number of things, such as charitable giving or cumulative income taxes paid) on how much can be collected.

Whew. I'll agree with you that $5.5M is not Bezos territory, but "well off" is some stretch.

I have no problem exempting the things that get routinely demogogued as casualties of the "death tax," like small businesses and family farms, but I agree that there is a societal interest in not taking steps to yoke ourselves to a hereditary ruling class even more than we already do.

[Hawk]

For the sake of advancing this discussion I'm going to accept your numbers and your premises. Although, for the record, I disagree that the median is a more useful measure to utilize when extrapolating net worth data (it's plenty misleading in its own right), I disagree that most net worth data includes property assets (because, as a general rule of thumb, it shouldn't), and I disagree that any truly meaningful consideration of wealth structures in the United States ambles around the assertion that there's an obviously pronounced rich v. poor dichotomy that can be used to explain away every discrepancy that exists in between.

But that's really all secondary here.

Let's take the bottom of the lowest figure range you could produce: $150K. We'll say that $150K net worth belongs to John. John had a wife named Jill, and let's say she was an exceptionally low-earner. She died, unfortunately, and he was passed on $50K from her estate. So we're at $200K, partially liquid (the family home). Not including any other assets; cars, collectibles, jewelry, insurances, or any businesses owned.

This is the bottom rung of a contrived example. This is a subset of Americans that, I get, you want to highlight and properly acknowledge, but I think a more useful lens here, especially when determining who is affected by the death tax, would be looking at mid-upper middle class 'risers' who, all told, could come close to that $5.5 million threshold.

Again though, the idea that we're suddenly comfortable treating a $5.5 million asset cache as "super rich" ... even in contrast to $200K ... doesn't really jibe with me - and seems a counter-productive jumping off point to making meaningful progress on reform. There are much bigger fish to fry.

[Hawk]

Whew. I'll agree with you that $5.5M is not Bezos territory, but "well off" is some stretch.

I have no problem exempting the things that get routinely demogogued as casualties of the "death tax," like small businesses and family farms, but I agree that there is a societal interest in not taking steps to yoke ourselves to a hereditary ruling class even more than we already do.

So what's an estate with $5.5 million in assets, to you?

[jpx7]

For the sake of advancing this discussion I'm going to accept your numbers and your premises. Although, for the record, I disagree that the median is a more useful measure to utilize when extrapolating net worth data (it's plenty misleading in its own right), I disagree that most net worth data includes property assets (because, as a general rule of thumb, it shouldn't), and I disagree that any truly meaningful consideration of wealth structures in the United States ambles around the assertion that there's an obviously pronounced rich v. poor dichotomy that can be used to explain away every discrepancy that exists in between.

But that's really all secondary here.

Now, more to my point, let's take the bottom of the lowest figure range you could produce: $150K. We'll say that $150K net worth belongs to John. John had a wife named Jill, and let's say she was an exceptionally low-earner. She died, unfortunately, and he was passed on $50K from her estate. So we're at $200K, partially liquid (the family home). Not including any other assets; cars, collectibles, jewelry, insurances, or any businesses owned.

This is the bottom rung of a contrived example. This is a subset of Americans that, I get, you want to highlight and properly acknowledge, but I think a more useful lens here, especially when determining who is affected by the death tax, would be looking at mid-upper middle class 'risers' who, all told, could come close to that $5.5 million threshold.

Again though, the idea that we're suddenly comfortable treating a $5.5 million asset cache as "super rich" ... even in contrast to $200K ... doesn't really jibe with me - and seems a counter-productive jumping off point to making meaningful progress on reform. There are much bigger fish to fry.

Treating only what you're considering primary, I'm just not seeing this set of "mid-upper middle class 'risers'" as anything more than part of the upper quintile. Even if you want to drop the "super-", total assets near or in excess of $5.5 million qualifies as rich, even in 2017 dollars, and especially in contrast to $200 (or less) in total assets. And I don't think our tax-policies in the US should be skewed towards helping out, even more, the rich or the highest quintile.

In point of fact—treating, for a moment, the "secondary here"—I think our tax-policies should be geared towards avoiding further consolidation of wealth and power in the hands of that upper quintile, and should instead seek to redistribute economic efficacy and resources of livelihood to those other four quintiles. Again, I am willing to make estate-tax exemptions for societal goods—I think promoting family homes staying in families is a social, community good; I think promoting small family businesses staying in the family is a social, anti-corporatist economic good—but I am also interested in going even farther than Julio ("taking steps to [not] yoke ourselves to a hereditary ruling class even more than we already do") and indeed taking steps to puncture or dismantle the hereditary ruling class we certainly do already largely labor under.

And overall, I think the estate-tax is one of the more morally just and easily justifiable forms of taxation we have in our distributive tool-belt. I think a progressive income tax is fair, even with rates as high as 50% on top earners; I think a much higher corporate tax than this new tax regime will have is fair, given how easily corporations dodge much of their taxes anyways—but in each case I understand, and to a small degree even sympathize with, arguments against them. But the estate tax is a ****ing slam-dunk as far as I'm concerned.

[jpx7]

So what's an estate with $5.5 million in assets, to you?

Rich, bro. That's richness right there.

[Hawk]

Rich, bro. That's richness right there.

Rich is right. Super rich, not so much.

[jpx7]

Rich is right. Super rich, not so much.

Really boils down to the semantics of super- as above versus top-most.

I think someone with a million dollars in total assets is rich; I think someone with more than five-times that level is "above" rich. I would call Bezos money "stupid, unconscionable, essentially (and often actually) criminal" rich.

[Julio3000]

$5.5M in total assets is not merely "well-off". It's rich AF. If you don't think so, I think you ought do you some studious self-reflection. The fact that it isn't unreserved oligarchic ****-you money is, well, not compelling. It's a level of wealth and privelege that the vast majority of Americans, to say nothing of humans, can scarcely dream of.

[jpx7]

I don't care if their super rich or. Super poor. Why should we let the government double tax people after they die?

Because it's fairer to the bulk of the people living in the country.

And they're dead. The all-important earner is dead. Why should we assist the posthumous enabling of this taker-class of beneficiaries who should be squeezing earnings out of their own bootstraps?

[sturg33]

Because it's not constitutional and why the **** do we always support the government confiscating money from people

[jpx7]

why the **** do we always support the government confiscating money from people

To correct for the trend of capital always confiscating value from labor without fairly or appropriately compensating labor for said value?

[Julio3000]

Because it's not constitutional and why the **** do we always support the government confiscating money from people

But it is.

It's in income tax on the windfall of the inheritor, not a tax on the deceased, as JPX points out. And you might be interested to learn what some of the founders and early observers of the American experiment thought about the prospect of the concentration of extreme hereditary wealth.

[Hawk]

$5.5M in total assets is not merely "well-off". It's rich AF. If you don't think so, I think you ought do you some studious self-reflection. The fact that it isn't unreserved oligarchic ****-you money is, well, not compelling. It's a level of wealth and privelege that the vast majority of Americans, to say nothing of humans, can scarcely dream of.

Well, context. $5.5 million - in gross assets - accrued over the course of a lifetime is far from a trifling sum, but it should represent middling ground for a specific category of earners. And these individuals don’t necessarily deserve to be categorized or lumped together with the “super rich” wealthy elite. I’m all for smart wealth redistribution, but penalizing a family/estate that has pieced together (ostensibly via smart investment and frugality) $5.5MM in assets is precisely why redistribution will never gain meaningful traction here.

[jpx7]

Well, context. $5.5 million - in gross assets - accrued over the course of a lifetime is far from a trifling sum, but it should represent middling ground for a specific category of earners. And these individuals don’t necessarily deserve to be categorized or lumped together with the “super rich” wealthy elite. I’m all for smart wealth redistribution, but penalizing a family/estate that has pieced together (ostensibly via smart investment and frugality) $5.5MM in assets is precisely why redistribution will never gain meaningful traction here.

I'm more than willing to discuss protecting/exempting said individuals/families if we can build the institutuonal will to take a much more rigorous approach with the "'super rich' wealthy elite". But until such time I'll be wringing my hands and shedding my tears for the truly disadvantaged, not the inconvenienced minorly rich who did it the right way.

[Julio3000]

I guess this might be a good time to ask whether a household that has amassed a net worth of $5.5M also has access to estate-planning tools and tax expertise that will keep them well under the threshold. So $5.5M taxable probably means substantially more gross, right?

[Hawk]

Treating only what you're considering primary, I'm just not seeing this set of "mid-upper middle class 'risers'" as anything more than part of the upper quintile. Even if you want to drop the "super-", total assets near or in excess of $5.5 million qualifies as rich, even in 2017 dollars, and especially in contrast to $200 (or less) in total assets. And I don't think our tax-policies in the US should be skewed towards helping out, even more, the rich or the highest quintile.

It's group that does exist, and that we should be actively seeking to grow out (and explicitly separate) from the top echelons of 'earners', especially given that traditional conduits of true wealth in this country are enjoying explosive, unregulated growth.

In point of fact—treating, for a moment, the "secondary here"—I think our tax-policies should be geared towards avoiding further consolidation of wealth and power in the hands of that upper quintile, and should instead seek to redistribute economic efficacy and resources of livelihood to those other four quintiles. Again, I am willing to make estate-tax exemptions for societal goods—I think promoting family homes staying in families is a social, community good; I think promoting small family businesses staying in the family is a social, anti-corporatist economic good—but I am also interested in going even farther than Julio ("taking steps to [not] yoke ourselves to a hereditary ruling class even more than we already do") and indeed taking steps to puncture or dismantle the hereditary ruling class we certainly do already largely labor under.

I don't disagree with the underlying sentiment here, but you seem to cut the petit bourgeois out of the equation entirely.

And overall, I think the estate-tax is one of the more morally just and easily justifiable forms of taxation we have in our distributive tool-belt. I think a progressive income tax is fair, even with rates as high as 50% on top earners; I think a much higher corporate tax than this new tax regime will have is fair, given how easily corporations dodge much of their taxes anyways—but in each case I understand, and to a small degree even sympathize with, arguments against them. But the estate tax is a ****ing slam-dunk as far as I'm concerned.

I'm amenable to the idea of levying significantly higher taxes on specific areas of wealth acquisition. But I think the most effective methodology is consistent taxation on lifetime income, not a money grab at the end. It's major disincentive that essentially begs people to proactively circumvent the system, for years. And many do. Certain things need to be off-limits, such as retirement packages/benefits. Real estate is another story entirely, as are small/family businesses. I really gravitate towards the idea of tax easement if voluntary contributions are made to sanctioned programs or some similar scheme.

[Hawk]

I'm more than willing to discuss protecting/exempting said individuals/families if we can build the institutuonal will to take a much more rigorous approach with the "'super rich' wealthy elite". But until such time I'll be wringing my hands and shedding my tears for the truly disadvantaged, not the inconvenienced minorly rich who did it the right way.

I'd posit that a good starting point is to retire the rigid haves v. have-nots mentality. In this ****ed up capitalist system we're well within there are absolutely true forms of each - but there's a **** ton of variants betwixt, too.

[Hawk]

I guess this might be a good time to ask whether a household that has amassed a net worth of $5.5M also has access to estate-planning tools and tax expertise that will keep them well under the threshold. So $5.5M taxable probably means substantially more gross, right?

People jump through hoops to avoid 'inheritance' taxes on everything from property, to trust funds, to capital gains. The more money you have to throw at the the process, sure, the 'cleaner' it becomes, but the behavior is not endemic to the exceedingly well-monied.

[jpx7]

I'd posit that a good starting point is to retire the rigid haves v. have-nots mentality. In this ****ed up capitalist system we're well within there are absolutely true forms of each - but there's a **** ton of variants betwixt, too.

I don't entirely disagree—and yet the new tax package makes it even more difficult to avoid such mental pathways. The number about to lose healthcare because of the backwards step of repealing the mandate (and yes: we both prefer single-payer, but still); the new excise on higher education; the penalties for middle-class homeowners in the "wrong" states. Being attacked forces one into old dichotomies, lapsed as they are. But that's also a classic boss strategy to divide the natural allies against each other, so I'm sure I should do better in this regard.