Edward Conard

Top Ten New York Times Bestselling Author

  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

AI Summary. Americans are set to inherit $72.6tn over the next 25 years, more than double the amount from a decade ago. Nearly half originates from the top 1.5% of households, who use trusts to avoid the 40% estate tax, concentrating wealth as households worth over $2m now control 62% of investments.

Ben Steverman Bloomberg
Date Posted:
Is Database:
Database

Americans are set to inherit $72.6tn over the next 25 years, more than double the amount from a decade ago, driven by soaring markets that bolster the ultra-rich. @BenSteverman.

Can wealth concentration accelerate if estate taxes remain structurally avoidable?

Core argument: Americans will inherit $72.6tn over 2025–2050, more than 2x the amount projected a decade ago, driven by asset appreciation that concentrates wealth among the top 1.5% of households who control 62% of stocks and bonds vs. 48% in 2010.

Americans are set to inherit $72.6tn over the next 25 years, more than double the amount from a decade ago, driven by soaring markets that bolster the ultra-rich. Nearly half of this wealth transfer will originate from the top 1.5% of households, who utilize trusts to shield fortunes from the 40% estate tax. The 2017 tax overhaul doubled the estate tax exemption, causing revenue from the levy to drop by over 50% in two years. Cerulli estimates that households with over $2m now control 62% of stocks, bonds, and other investments, up from 48% in 2010. Charitable organizations will receive $11.9tn, or 14% of the projected $84tn transfer, marking an increase from three years ago. Despite philanthropy, wealthy families continue to minimize taxes through strategic financial planning, with dynasty trusts allowing wealth to grow tax-free across generations. This trend underscores a return to Gilded Age levels of wealth concentration, raising concerns about economic inequality.

Takeaways by Macro Roundup® AI

  1. Americans will inherit $72.6tn over 2025–2050, more than 2x the amount projected a decade ago, driven by asset appreciation that concentrates wealth among the top 1.5% of households who control 62% of stocks and bonds vs. 48% in 2010.
  2. The 2017 estate tax exemption doubling reduced federal levy revenue by over 50% in two years, enabling the wealthiest households to shield nearly half of the $72.6tn transfer through trusts and dynasty structures that allow wealth to compound tax-free across generations.

".... Americans can expect to inherit $72.6 trillion over the next quarter century, more than twice as much as a decade ago, in the latest indication of how soaring markets are poised to bolster the next generation of the ultra-rich. Almost half of allU.S. wealth transferred from the end of 2020 through 2045 will come from the top 1.5% of households, according to estimates from research firm Cerulli.... Charitable organizations will get a significant influx of money through 2045: $11.9 trillion, or 14% of the $84 trillion projected to be passed on to heirs or philanthropies, Cerulli estimates. That’s a larger share than it was just three years ago. Households with more than $5 millioneachare giving away about $120 billion annually, and their donations could exceed $200 billion a year by the end of the 2020s....Overall, Cerulli projects 42% of transfers will come from the top 1.5% of households....While some forms of wealth, like real estate, are more widely held, the rich control the bulk of stocks, bonds and other investments. Cerulli estimates households with more than $2 million control 62% of these assets, up from 48% in 2010...."

Ben Steverman, "Tax-Free Inheritances Fuel America’s New $73 Trillion Gilded Age," Bloomberg, February 2, 2022, https://www.bloomberg.com/news/articles/2022-02-02/what-the-73-trillion-great-wealth-transfer-means-for-america-s-super-rich

Tax-Free Inheritances Fuel America’s New $73 Trillion Gilded Age

Americans can expect to inherit $72.6 trillion over the next quarter century, more than twice as much as a decade ago, in the latest indication of how soaring markets are poised to bolster the next generation of the ultra-rich.

Almost half of all U.S. wealth transferred from the end of 2020 through 2045 will come from the top 1.5% of households, according to estimates from research firm Cerulli. Using trusts and other techniques, the wealthiest Americans can shield the bulk of their fortunes from the federal government’s 40% estate and gift tax levy. President Joe Biden and Democrats in Congress have so far failed in efforts to plug such loopholes and otherwise boost inheritance taxes.

The growth in dynastic fortunes has become a flash point in Washington, with the advocacy group Americans for Tax Fairness warning in a report released Wednesday about the “return to Gilded Age levels of wealth concentration.” The 2017 Republican tax overhaul, which included a doubling of the amount the wealthy can pass to heirs without triggering the estate tax, caused revenue collected from the levy to plunge by more than half in the span of two years, with just 1,275 families paying $9.3 billion in 2020, according to Internal Revenue Service data.

“It’s easier to pass on wealth without facing as much taxation as even a decade ago,” said Chayce Horton, one of the authors of the Cerulli report. Trusts “are becoming increasingly popular over the last five to ten years as high-net-worth wealth has ballooned.”

Of the advisers surveyed by Cerulli, 93% cited trust strategies, with the most popular being grantor trusts. That category includes grantor-retained annuity trusts, or GRATs, used by Nike Inc. founder Philip Knight and the family of Walmart Inc. founder Sam Walton. Grantor trusts exploit a long-standing loophole that House Democrats had proposed closing before the provision was deleted from the Build Back Better package.

“This is yet another data point showing that paying taxes is essentially optional for the mega-millionaires and billionaires,” Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, said of the Cerulli estimates in a statement. “I’ve been increasingly concerned about how the abuse of trusts allows wealthy heirs to avoid paying any taxes at all. We’re continuing to work to get the votes to close these egregious trust loopholes.”

Tax-Free Inheritances Fuel Americas New 73 Trillion Gilded Age: Extended Excerpt Image 1


Charitable organizations will get a significant influx of money through 2045: $11.9 trillion, or 14% of the $84 trillion projected to be passed on to heirs or philanthropies, Cerulli estimates. That’s a larger share than it was just three years ago. Households with more than $5 million each are giving away about $120 billion annually, and their donations could exceed $200 billion a year by the end of the 2020s.

Still, even the most philanthropic families seek to reduce their tax bills. Wealthy Americans and their advisers spent much of last year making moves to avoid or minimize the hit from potential tax increases. Many rushed to set up trusts and transfer money into them by the end of 2021, just in case the rules were changed in 2022.

Overall, Cerulli projects 42% of transfers will come from the top 1.5% of households. Increasing wealth inequality boosts the level of bequests because the richest Americans are less likely than the middle class -- or even the merely affluent -- to spend down their fortunes before they die, Horton said.

While some forms of wealth, like real estate, are more widely held, the rich control the bulk of stocks, bonds and other investments. Cerulli estimates households with more than $2 million control 62% of these assets, up from 48% in 2010.

Tax-Free Inheritances Fuel Americas New 73 Trillion Gilded Age: Extended Excerpt Image 2


For the ultra-rich, bequests will often end up in dynasty trusts, which can hold wealth that “will accumulate tax-free for an unlimited number of future generations,” according to the Americans for Tax Fairness report, co-written by William Rice and Robert Lord.

“If tax and other policies aren’t reformed soon, the wealth in dynasty trusts created by today’s billionaires will reach staggering heights,” the report said.

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