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Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: TigerPaw who wrote (10519)	2/1/2006 4:30:32 PM
From: TimF	Read Replies (1) \| Respond to of 541933

That is not the way it generally worked prior to the progressive income tax and inheritance taxes That is often the way it has worked. Even when a controlling interest goes to one person, smaller interests going to other people do drain off the position. If 90% goes to one heir then you still lose 10% per generation. You also lose whatever wealth is taxed away or given to charitable causes. In any case we do have inheritance taxes an a "progressive" income tax. So it doesn't matter as much how things worked in the past when we didn't, unless you are arguing that those particular taxes aren't relevant and you seem to be arguing the opposite idea. Also the money being spread over multiple heirs is not the only factor I mentioned. Another important factor is that passive disinterested owners often do sell their position or parts of it. If they are not going to be involved in the company it makes sense to diversify. And relatively passive owners will not normally grow their own wealth (whether or not they diversify) in the same way or to the same extent as the earlier more active owners. Other people come up with new ideas and create new wealth at a much faster rate than the passive owners. Without the outsized returns that the original owner received the wealth of the heirs, though large, becomes a smaller and smaller factor over time. Sometimes you had active aggressive owners in a family over a period of generations and they can continue to get unusual returns on investment, but that is more the exception rather then the rule. And again you would no longer be talking about passive owners. And even when these exceptions occur they don't go on indefinitely. The Medicis are not significant anymore if the family even continues in a recognizable form. The Rockefellers, Vanderbilts, Goulds, Carnegies, Astors, Morgans, Fricks ect., are not what they once where. They don't dominate the economy even collectively. (You can even throw in some of the modern wealthiest families like the Gates and the Waltons and it would be hard to make a solid argument that they dominate the economy.) Our tax policies might have contributed towards this but the effect would remain without them at worst it would be smaller. Tim