Quote:
Originally Posted by CliffFletcher
Maybe we can set aside the practical problems with an inheritance tax and turn to a problem it’s trying to address: the hardening of Canada into an intergenerational class system. A society where your parents’ income and affluence is responsible for setting your trajectory in life. Where the rich are all the children and grandchildren of the rich, the middle-class are the children and grand-children of the middle-class, and the poor are all the children and grandchildren of the poor.
We aren’t there yet. We aren’t the U.S., a country that contrary to myth has very low social mobility. But we’re trending that way. The wealthy and upper middle class are turning away from public education. The well-off are ponying up hundreds of thousands of dollars to ensure their children can own homes. The trillions the Boomers will pass on will gift the fortunate with windfalls and leave others with nothing.
Is this something we’re okay with? Was Canada’s egalitarianism of the 20th century a temporary anomaly that must inevitably give way to a society divided sharply by class?
And this isn’t about Jeff Bezos and the 1 per cent. The divide I’m talking about is the divide between a family with two professionals earning $100-150k, and a family with an adult earning 50k and another working part-time, or a single mom trying to raise two kids on the salary of a retail clerk. It’s the divide we seem really uncomfortable talking about - between the top 25 per cent and everyone else.
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So if mom and dad work hard and save some money, you don't think they should be able to pass that on to their children? Are we going to eliminate all personal motivation from the system and share everything equally? Because if we are, please let me know so that I can retire tomorrow and stop working so hard.
Also, your premise that all wealth creates class division is just not as cut and dried as you are suggesting.
First of all, anyone can be successful - the barriers to success are small. Yes, there are advantages to being wealthy, and yes, there are barriers from being poor, but everyone has some opportunity at success. And everyone has plenty of opportunity for failure. According to one source, only 21% of American millionaires received any inheritance, and only 16% received more than $100,000. (there are lots of studies and numbers online, so I am not going to bother quoting any one of them as the studies are typically informal - it is the aggregate data that is more relevant here)
Second, receiving that inheritance is not the automatic ticket to wealth building and class segregation that you are suggesting. Again, there are various informal studies that give a wide range of data, but the aggregate message is clear: people who receive an inheritance are often inclined to blow it, and the numbers for the 3rd generation (the grandkids), appear to be even worse. I have seen studies that suggest as many as 80% of inheritances are gone within 2 generations. Actual numbers are impossible to determine, but we can be confident that a significant number evaporate or largely evaporate.
Another thing that we tend to see is that the recipients tend to
spend the money (one study suggested that most recipients spend at least half of the money fairly quickly (within a couple years or so). One of the complaints about saving is that the money isn't being spent - it isn't isn't 'in use'. However, once passed to the children it does tend to get spent. So that concern isn't all that great either.