- cross-posted to:
- news@lemmy.world
- cross-posted to:
- news@lemmy.world
You know the Bank of Mum and Dad when you see it: it’s your friend who seems broke, but always has a safety net, or who suddenly (but discreetly) acquires the deposit for a home. It’s those who stayed with their parents while they saved for a flat, or stuck it out in a profession they were passionate about even though the wages are chronically low. It’s those who do not need to consider the financial costs of having children. It’s those whose grandparents are covering nursery or university fees, with the Bank of Grandma and Grandad already driving an economic wedge between different cohorts in generations Alpha (born between 2010 and 2024) and Z (born in the late 1990s and early 2000s).
This is the picture we know, but the Bank of Mum and Dad is not just a luxury confined to the 1% – it is also evident in families like mine. I grew up in a working-class household and was the first person in my family to get a degree, but it was the fact my parents had scrimped in the 1980s to purchase properties in London (and allowed me to crash in one throughout my 20s) that has arguably been the true source of opportunities in my life.
In recent years, we have rightly widened the conversation about privilege in society. And yet how honest are we about one of the most obvious forces shaping anyone under 45: the presence or absence of a parental safety net? The truth is that we live in an inheritocracy. If you’ve grown up in the 21st century, your opportunities are increasingly determined by your access to the Bank of Mum and Dad, rather than by what you earn or learn. The economic roots of this story go back to the 1980s, but it accelerated after the 2008 financial crisis, as private wealth soared and wage growth stalled. In the 2020s, rather than a meritocracy – where hard work pays off – we have evolved into an inheritocracy, based on family wealth.
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The only friends I have, including myself, that own their home are those with dead parents.
I was able to migrate over to work and study because my family paid for the trip and even though the deal was that I were to work and be by myself I could always call to ask for emergency money. I did that twice, one for paying for my college inscription and other for rent. Without that I wouldn’t had the comfortable life I have today.
My parents blew up any inheritance I would’ve ended up with due to bad decisions and shit luck.
Now my mom depends on me during her final years as we cruise the stars in a two-bedroom apartment.
A lot of my friends live together and share rent. Some with their parents, and a minority got hitched and live with a spouse. It seems like a lot of people depend on small family groups these days.
Multigenerational homes, or living with a bunch of people, was the norm until less than a hundred years ago. It was only a brief period of time of immense economic and technological growth that we saw people living independently in large numbers. We’re just watching a regression back to the mean. And I don’t know how we avoid it with a growing population, and not everyone wanting or willing to live in a city.
If you want to tackle this you have to take on inequality. Now we all know if corporates weren’t allowed to pillage profits for themselves, and had a salary tied to their lowest employee, this would go a long way to improving inequality and that alone could offer a lot of people a lot of opportunities. But as long as you have a system where people have to collect arbitrary numbers to acquire necessities there is going to be inequality.
I believe this is the main source of unfairness in my country. I have a good pay, but most of it goes for housing. So I live the same life as someone who works for a minimum wage if they inherited their home or can live with their parents.
Even though I had to work and invest way more to get to my salary.
But what is even worse is that in eyes of our government I am considered rich and I get no social benefits and I also pay way more taxes than those who are “poor”.
“Abolish inheritance”
But what about my inheritance
*sigh*
Inheritance isn’t the root problem. The problem is that the only people with any money are people who were able to save it decades ago. And that problem is because labor has been devalued, wages stagnated, and cost of living soared.
And all of that is because for the past 40 years or so, there has been more benefit to taking profits out of business than spending money within the business.
When you reach the top-tier income tax bracket, and the IRS starts taking 91% of your income beyond that level, $10,000 of business income is only worth $900 to you.
When your best employee wants a $10,000 raise, that money comes straight out of your “excess” earnings. It is $10,000 of your earnings that are not subject to taxation. Paying that $10,000 raise only costs you $900 once you reach that tax bracket.
But we don’t have a 91% top-tier income tax bracket anymore. We had a punitively high top tier rate for most of the 20th century, but it got cut down in the 70’s and slashed in the early 80’s. Now, the top tier income tax bracket is just 37%. When you reach that bracket, giving your best employee a $10,000 raise takes $6700 out of your pocket, instead of just $900.
Reagan’s views on the Laffer curve were correct: raising the tax rate beyond a certain point will actually reduce tax revenue. But tax revenue is not why we need the high rates. The benefit of high marginal tax rates comes from what business does to avoid them. We need to restore the business incentives that come with a punitively high top-tier income tax rate. We need businesses to increase their labor expenses to avoid that tier. Businesses should benefit the whole economy, not just the ownership class.
For similar reasons, we need taxes on registered securities, payable in shares of those securities. The shares collected as taxes will be liquidated in small lots over time, comprising no more than 1% of total traded volume, to limit their effect on the market. Exempt the first $10 million held by a natural person; tax everything above.
They could be smart about it. No taxation on inheritance under 2 million (I’m pulling these #s from the sky). Anything over gets taxed progressively; if if these billionaires won’t pay up during life we can grab it on the way out.
That’s already a thing. The estate tax only kicks in over 5mil. It’s typically dodged by putting all assets in trusts so that ownership never legally transfers it’s the trust that owns them. Trusts being a legal vehicle don’t die, and can have beneficiaries added and removed.
So tax trusts…
That only accounts for a small portion of parental contribution and is easily avoidable by an early inheritance.
People should always have access to essentials, and I count an affordable reliable roof over their head as one of those things. But are we ever going to be able to change the fact that someone on the receiving end of three generations of doing moderately well in life is going to be massively more advantaged that someone whose parents were 4th and 5th in large poor families?
Someone’s parents having even a modest home with a spare room in London puts them at a massive advantage over their peers who have to privately rent. But aside from ensuring the fundamentals are in place of affordable accessible homes, is there really any realistic way of nullifying that advantage and is it even right to do so?
aside from ensuring the fundamentals are in place of affordable accessible homes, is there really any realistic way of nullifying that advantage and is it even right to do so?
I don’t think that’s an aside, I think that’s the key to solving a lot of problems with our current society. Give everyone a roof and enough nutritious food, and most people can figure out how to live their lives from there. The problem is that the lack of housing and food options forces people into low paying jobs with no upward mobility, and continues the cycle of poverty.
I didn’t write that as “an aside”, I wrote “aside from”. You need to read it as “besides”. In the sense of “obviously this needs to be done fundamentally and as a priority, but besides that… etc”.
This tracks from my experience.
