TED-Ed: Is Capitalism Actually Broken?

[blue scorpion]

Actually, rarely.

To the inheritor, how is it not?

 

[NWRatCon]

To the inheritor, how is it not?

Stepped up basis. Assets are generally assessed as of the time of death. Inheritors take those assets on that "stepped up" basis.

Say you hold 1000 shares of Company X. You bought them at $5/a share but over 20 years they are now worth $200. You've never paid taxes on the gain, because it was "unrealized". Your heir receives those shares at $200,000 and neither you (your estate), nor your heir, pays any tax on the transfer.

Thank you for dying to make this explanation possible. This result is extremely common, and the complaint that inheritance is "taxed twice" is almost always a lie.

 

[blue scorpion]

Stepped up basis. Assets are generally assessed as of the time of death. Inheritors take those assets on that "stepped up" basis.

Say you hold 1000 shares of Company X. You bought them at $5/a share but over 20 years they are now worth $200. You've never paid taxes on the gain, because it was "unrealized". Your heir receives those shares at $200,000 and neither you, nor your heir, pays any tax on the transfer.

Thank you for dying to make this explanation possible. This result is extremely common, and the complaint that inheritance is "taxed twice" is almost always a lie.

One would, should pay taxes on the gain alone when realized, whoever "owns" it at the time. Sorry if I did not make that clear.

 

[NWRatCon]

One would, should pay taxes on the gain alone when realized, whoever "owns" it at the time. Sorry if I did not make that clear.

Ah, on that we agree. I think there should be a universal tax treatment for all transfers, whether by wage, dividend, interest, revenue or inheritance. If you made money, you made money.

 

[reinaert]

Working as intended, not broken.

 

[What if...?]

What's wrong with the data you have shown, do you think that somehow the poor have become poorer because the rich have become richer?

Nah. The lower quintiles just stay where they are economically.

All the excess capital of the world goes to the game of Highlander the world has been playing since humans concentrated power to the point we could all be forced to supply the stakes.

 

[What if...?]

So, I'm gonna summarize. Capitalism is an aging structure that has been subjected to deferred maintenance for a century. It's decrepit, but there are salvageable bones. It needs a complete remodel. It needn't be torn down, but it is beyond a fixer-upper.

I’ve been saying for years capitalism needs it’s four hundred year service.

 

[bomberfox]

In fact the fiduciary responsibility to shareholders is one of the things that made the gilded age so bad for workers. Corporations felt no responsibility towards workers that were making the product and extracted as much wealth by squeezing as possible.

 

[PirateMk1]

When you have singular people with enough money to fund missions to Mars by themselves and still be left with tens if not hundreds of billions then yeah, I don't think it's unfair to say capitalism might be completely broken.

In the 60's it took the government choosing to plough in a significant portion of US total spending to get to the Moon.

Any number of individuals at the time could have plowed their money into a moon shot. They chose not to. That said the way Elon is doing it is smart because he is using his R&D for others with the side goal of forwarding his Mars venture making money along the way.

 

[PirateMk1]

Ah, on that we agree. I think there should be a universal tax treatment for all transfers, whether by wage, dividend, interest, revenue or inheritance. If you made money, you made money.

Its why I prefer a single minuscule transaction fee or tax imposed on both sides of the transaction. No other taxes or fees with the exception of a highway use fee all the funds which go exclusively to the highways. Make the tax .5% a side, one percent total. Make plenty of money for the government and the tax is fair, everyone pays and its naturally progressive as the wealthy tend to move money around in large sums as well as corporations. You move one dollar you pay a half a penny. You move a 100 dollars you pay 50 cents. You move 1,000,000, you pay 5,000. Easy peasy. No fuss and it can be planned for indefinitely. There are 2+ trillion dollars a day in transactions in the US. The better the economy does the more money the government makes.

 

[psikeyhackr]

What good would those be without basic reading and math skills?
For a nation such as the US to have such a pathetic education system is outright tragic.

Oh yeah, I did point out that kids should not know how to read.

Adam Smith wrote, "read, write and account" multiple times.