Estate Tax May Not Be Repealed for Good (Faux)

[DemsUnite]

The unpopular estate tax is in the process of being phased out, but under the current rules, one year after it is gone altogether, it will come back at its original rate.

When President Bush and Congress get back from their summer break next month, one of the issues still on the table will be the president's call to end the estate tax for good.

Flanked by his economic team, Bush recently pressed Congress to repeal the estate tax, which has been dubbed "the death tax" by its opponents.

"We need to have certainty in the tax code. That's why I strongly believe that the tax relief we passed must be permanent, the death tax repealed forever," Bush said earlier this month.

But top congressional Republicans have abandoned the president's goal of full repeal. Instead, they're negotiating with Senate Democrats for a permanent, albeit much smaller, estate tax.

"There is a reason for both sides to compromise here for something that would be short of full repeal but would still provide a substantial reduction," said Sen. Jon Kyl (search), R-Ariz.

more

http://www.foxnews.com/story/0,2933,166694,00.html

[bunkerbuster1]

1. "unpopular estate tax"?

Not like Fox News to editorialize like that. I'm shocked.

[wicket]

2. yeah, no kidding!

grrrr....

[Maeve]

32. Unpopular with everyone THEY know, anyway!

Run a poll and see what "we the people" think, Faux.

[mknmehappy]

176. Don't most people support getting rid of this tax?

Where do most people fall on this issue?

[WCGreen]

193. It's insane to get rid of it...

It does not help the small business folk nor farmers it is all about preserving the wealthy class at the expense of the working class....

If this tax is repealed, then no gains on assets will ever be taxed... Period. That mean wealth earned and then can be passed on from generation to generation with no taxes ever being paid....

these same people enjoy the full fruits of the US government, which by the way is in the business of protecting property rights....

So if you earn you loose

If you own you win....

Try to refute me. I am a tax accountant and have clients ranging from waitresses to millionares.....

[comsymp]

60. The REAL shocker, though, is that they called it the ESTATE tax -

Thought it was supposed to only be referred to as the Death Tax...

Heads are gonna roll~

[slackmaster]

111. It becomes less popular as more and more people are affected by it

It suffers from the same flaw as the Alternative Minimum Tax - The AMT was a great idea when it was implemented in the late '60s but it was not indexed for inflation. As a result, more and more people at a lower relative level of affluence are subject to it every year.

A million dollars isn't worth a million dollars any more. Disclaimer: I have a personal axe to grind here. My own family faces some potentially difficult financial decisions depending on what happens with the estate tax over the next several years.

[northzax]

136. true enough

that it's not that much money, although my family, which a few years ago was probably in a similar situation to yours, found fairly easy ways to plan, and eliminated the tax liability entirely. But anyway, I think it should be predictable, and I think it's fair to have the exemption be $5,000,000. It can increase by 100,000 a year from then on. It's a reasonable amount, it is increasing above the current rate of inflation.

I would exempt from this, of course, post-death transfers between spouses or domestic partners, whether or not such a relationship is codified in law. If you shared a residence, and named that person, in your will, as your partner, anything they get is deducted before taxes.

I would also include the primary residence of the deceased, as long as the recipient has that property for a minimum of 5 years as their primary residence. If you live somewhere else within 5 years, you pay the inheritance taxes, if any were due.

this means that a person with an estate of $10,000,000 could leave a million dollar house to a child, 4 million to descendants and 5 million to his partner, all without taxes. seems fair to me.

[davidinalameda]

169. contact a good estate planning attorney

s/he will probably tell you to put your assets in a revocable trust

[ElaineinIN]

179. I hope not...

A revocable trust is a nullity for estate, gift and income tax purposes. You can put langauge in a revocable trust that will help save tax, but you can put the same language in a will, to same effect. A revocable trust helps with probate avoidance and other state law property issues--it does NOT help with estate tax planning in and of itself.

[phylny]

194. What you said.

We're not rich, but we've worked our asses off together for 25 years, invested what we could, paid a crapload in taxes every year, pay a crapload in property taxes every year, pay a crapload in gasoline taxes every year, shall I go on? And I'd rather see my kids benefit from our hard work when we croak than the government.

We've more than paid our share. Sorry if this is an unpopular view, but enough is enough.

[sui generis]

3. I am actually for repealing estate tax

Income is income is income no matter where you get it from.

If we had a fair income tax system and if we didn't spend 105 percent of our tax revenue on illegal wars, the estate tax would be dismissed as the misguided social engineering project that it is.

discuss.

[DoveTurnedHawk]

4. There Is Already a $1MM Exemption

So repealing the estate tax merely provides a windfall to the entrenched American plutocracy. It effectively creates a permanent upper class that, through no merit but a fortunate birth, inefficiently hoards wealth that was created primarily by their countrypeople.

The estate tax should be maintained and, if anything, increased.

DTH

[sui generis]

5. arbitrary social engineering

why one million? is it a pretty number? who picked it, using what criteria?

Repealing the estate tax means that whoever gets value or income has to pay INCOME tax on it, which actually amounts to more. I'd make an exemption for homesteads under a certain value, but other than that, I don't buy in to the hoarding wealth bullshit.

[unfrigginreal]

7. "I don't buy in to the hoarding wealth bullshit"

You say that with a straight face as the rich continue to get richer and the income gap between rich and poor widens?

[sui generis]

10. yes I do

and anyway, define "the rich" please.

the "income gap" is something you aren't thinking through - INCOME and ASSETS are two different things.

If you want to have a meaningful conversation about this you have to understand that some of the phrases we use are dated and irrelevant to the topic.

There are other solutions to the INCOME gap, btw.

[TahitiNut]

22. Your 'social engineering' posturing falls apart ...

... when you consider that the systems and mechanisms which CREATE the income inequities are also 'social engineering' (not some "natural" event), but they're 'social engineering' in favor of the privileged and wealthy!

A corporation, for example, is absolutely NOTHING but an artifice of 'social engineering' - it DOESN'T EXIST through other than a legal fiction enforced by the coercive power of government and law enforcement.

It's necessary to break through one's assumptions and challenge some paradigms when one uses the 'social engineering' or 'redistribution of wealth' sound bites ... and realize that these specious terms are used in a wholly biased and one-sided way.

[sui generis]

31. let's remove the terminology and use of the word "posturing"

then - it's perilously close to hijacking the theme of the thread.

If there is a problem, identify it and solve it using the most direct means.

Please restate what you perceive the "problem" to be, and we'll discuss from there.

[TahitiNut]

33. Fine. Call it 'rhetoric' ... because it fails an objective examination.

The selective application of such terminology on one side of an argument is propagandistic rather than objectively analytical. The estate tax is no more 'social engineering' than any tax ... nor is it any more 'social engineering' than a plethora of aritifices - artifices such as 'corporations' or 'equities' or 'derivatives.' All of these are creatures of law, not nature. All of these owe their very existence to some rationale of "common weal" or "public interest" ... which is the very reason a Constitution exists in the first place. Government itself is 'social engineering'!

[sui generis]

37. didn't answer the question

I wasn't trying to be mean, so be nice too.

I'm just saying the premise and assumption behind this has to solve a problem.

Describe the problem. Examine if there are better or fairer solutions. If we just blindly stick to supporting this system without at least picking it apart first then we're a bunch of dunderheads and we'll be jerked around by our nosehairs by the "other side".

Merely asserting that it's okay because it's social engineering and there are lots of examples of social engineering misses the point.

Does the government require money to operate? Is this the most rational solution? Are corporations, equities and derivatives associated with negative social value, and why? (that's a premise I'm getting from your reply). What are workable alternatives?

that's all I'm getting at.

I'd start with, less spending on defense contracts. More spending on soldiers, less military pork, avoid unilateral wars whenever possible, spend wisely, educate your population, increase net income.

[TahitiNut]

48. In my view, the answer is fairly direct.

Accepting that some form of government is needed for "common defense" then the cost of that government must be borne in the same proportions that the benefits are distributed -- while, at the exact same time, striving for equitable distribution of benefits. (Taxation, therefore, is not only ethically a cost recovery process, but also a part of the very system of attaining equity!) The disproportionality of benefit distribution must be at least matched by the burdens. "Government" includes every economic artifice which, by virtue of its very construction, distributes benefits disproportionally to participation. Since labor is demonstrably only compensated for about 1/3rd of the value of what is produced by that labor, we already have a massive "redistribution of wealth" -- a kind of 'taxation' (bearing the cost of an artifice of government) that occurs by virtue of the construct itself. Such 'taxes' (burdens) must be counted when assessing 'proportionality.' In justice and equity, labor should be "credited" with that amount confiscated from the wealth it produces - confiscated under the imprimatur of the government entitlement called "ownership." It's not really a question of whether or not we have a "welfare state" - it's a question of whose 'welfare' the state serves.

While I don't accept the myth of a "worker's paradise," I comprehend the long-embedded (and camouflaged) inequities of a system of governance that perpetuates the hugely disproportional entitlements of wealth. I also comprehend the seductions of such a system where the "dream" is not of a common wealth but of a personal wealth. FIGMO. Animal Farm.

With a basic comprehension of the above, and understanding that we're so far on the wrong side of equitable distribution of the burdens of a system of governance, I view any modification that increasingly favors the perquisites and entitlements of wealth (by far, the greatest beneficiaries of the system) as fundamentally unjust and corrupt.


On edit: The presumption that taxation itself isn't or shouldn't be an intrisic part of a system of economic equity is, I believe, at the very heart of the speciousness of the arguments that we should pretend that the system is equitiable -- or that any adjustments to its equity shouldn't include the mechanisms of taxation -- when folks argue for 'flat rates' or 'fair' taxation. I would be wholly in favor of 'flat' rates if and only if the system itself (including the mechanisms of taxation) were equitable. It's not. Attempts to 'outlaw' any part of that system as subject to the attempts to achieve overall equity is the propaganda of those who benefit (at least temporarily) from its inequities.

[sui generis]

58. well we clearly have very different values

and different ideas of what government "should be". Investments entail risk. Risk should be rewarded, because there is no safety net outside of your own resources if you fail. When you acquire income pay your taxes. If you acquire an asset that can be used as income, pay your taxes. If you happen to have a larger penis you should be taxed at a different rate. What? The example is almost as ridiculous. You want to punish people for inheriting wealth or genes or whatever because of who's welfare the state must serve. It makes the same amount of sense.

I don't like your ideas of social homogenization. I don't "belong" to the government, and if I bought into that I'd be okay with them taking everything in my estate and giving the rest to my nephews in favor over my unlawfully wedded life partner. Don't take me for granted if you are a government, especially The government of the U.S. I will take my assets, my skills, my income, and my resources and go someplace that values what I bring to the table without prejudging me because of my family name or my net worth.

Don't prattle at me about injustice and corruption in terms of wealth and science fiction parables, when I pay my taxes and take risks that provide other people with income and jobs, when I support the very social programs that take care of people who don't have income or jobs, and when I think that the health and wellbeing of ALL of our citizens, regardless of income, is the single most overriding value a government exists to provide.

The government has no place delivering "judgements" about the "one percent" based on its income or net worth provided every other avenue of fairly addressing the issue of taxation has been established at the time it is earned. It makes me uncomfortable to think that accepted "progressive" thinking on this topic is so rigid and even fraught with terms like "justice". That speaks volumes in and of itself.

[DoveTurnedHawk]

91. The Celebration of the Individual Over the Community

I don't agree with that, at all. We already have a system that rewards hard work and individual achievement, in fact one could argue that America is the one country that most exemplifies that model.

But you don't get to take it with you when you die. If you are such a big believer in hard work and individual achievement, why should any wealthy person's children and descendents get a free pass, often living out lives of outrageous excess and decadence and dissipation, while others in the community who are at least as deserving if not more so are stuck in a cycle of poverty for generations?

The estate tax is just, and with the exemptions already in place, the children of rich people are still going to receive huge, disproportionate benefits. Taxation is not total confiscation. It is a reasonable redistribution of assets to benefit the common good and the community, rather than people whose only "merit" was the fortune of being born.

DTH

[toopers]

94. If the redistribution of achievement is such a good thing . . .

why don't we apply that model to everything? Because it is ultimately self-defeating and punishes the wrong behavior.

[DoveTurnedHawk]

98. What "Behavior" Is Punished With the Estate Tax?

Are people going to suddenly stop working or producing wealth just because their kids might not inherit 100% of the outrageous fortune generated?

Taxes are inherently redistributive in nature. They have been with us since the dawn of time. I have no problem with progressive taxation. Why do you?

DTH

[toopers]

100. There are several behaviors that are punished . . .

savings, independence, investment. Taxes are not inherently redistributive, redistributing tax revenue is intently redistributive. Taxes are inherently collective in nature. I have a problem with the progressive income tax because it punishes the wrong behavior and rewards the wrong behavior. There is one thing to say about government, it feeds upon the people and if left unchecked will try to accumulate as much power as possible. Money is power, taxes are a collection of power.

[DoveTurnedHawk]

106. How Does It "Reward" Wrong Behavior?

Are the poor there by their own fault?

The burdens in a community are placed on those most able to bear it. This is only logical. I don't know any Democrats who have a problem with the concept of progressive taxation.

DTH

[Name removed]

117. Deleted message

Message removed by moderator. Click here to review the message board rules.

[DoveTurnedHawk]

121. "You Sound More Communistic Than Democratic"

I just have to laugh at that, considering how "conservative" I am viewed by some here. Last I checked, the only ones who even use the word "Communist" any more are the pro-war thugs attacking the anti-war activists.

Progressive taxation is not Communist, it's not even close. I support a graduated taxation scale up to a maximum of 50% for the super wealthy, so that even at the extreme, people will still be pocketing at least as much as they are taxed. Those taxes should be used on domestic programs and the common defense.

The estate tax is no different. There is no right to pass along all of your wealth -- in most cases, gained primarily by the labor of others -- to those who happened to win the birth lottery by being born to a rich person.

DTH

[toopers]

128. Actually, you still have the right to pass on your wealth . . .

as determined by the government. The government should have no place in that decision.

Actually, in most cases wealth is earned, no inherited. Just out of interest, if you had a child that was handicapped and could not generate his/her own income, what should happen to that estate?

The reason I referenced communism is because of your statement, "The burdens on a community are place on those most able to bear it", which sounds an awful lot like "From each according to their ability, to each according to their needs." If this is not the case, I am sorry to have made the reference.

[ElaineinIN]

181. The right to dispose of property on death

has always been regulated. There has never been an unfettered right to give your property to whomever. Both Sharia and Jewish law have very specific rules about who gets what, both of which were either the law, or adopted into civil law. Under English common law, the right to inherit real property, being key to the stability of the monarchy, was closely regulated... trusts were developed under canon law, adopted as a matter of equity by some courts.

Even now, most states do not allow you to disinherit a spouse, and some have forced shares for children.

The government has always stepped in to regulate the distribution of property on death when it had a public interest in what that distribution would effect society, whether on a religious, political or social purpose.

[toopers]

118. And to answer your original question . . .

it rewards dependence on others, which is not the behavior to be rewarded. Everyone should be trying to move towards total independence.

[DoveTurnedHawk]

122. Part of the Luxury of Not Being Poor

Is being able to freely espouse principles which are often selfish and self-serving such as "total independence" at the expense of the overall context of our society and communities.

DTH

[toopers]

131. If one is totally independent of society (not taking from)

then they are leaving more for others. I am not sure how that is selfish. There are a lot of luxuries afforded people who earn, own, and maintain their wealth, and that is the way it should be.

[eridani]

190. Parasitic rich kids are the ones who get rewarded.

The more people are disconnected from the real world, in which other people feed them, make things for them, repair them and clean up after them, the more delusionally 'independent' they think of themselves as being. Financial 'independence' is really being the most dependent sort of parasite that can exist.

[eridani]

189. Bullshit. The current system penalizes small-scale savers heavily

Anything you get from a savings account or a CD is taxed twice. Capital gains are never taxed unless realized. Not having progressive taxes just encourages the parasitic dependence of the Paris Hiltons of the world.

[slackmaster]

116. I have to laugh at "Taxes are inherently redistributive in nature"

Sorry, there is no guarantee that tax money collected from one person is going to be redistributed to others who have less.

Much of our federal tax money goes into defense-related contracts - large corporations, whose officers and directors and senior employees take the lion's share of it.

They have been with us since the dawn of time.

For much of human history taxes have been taken out of the pockets of the poor and put directly into the pockets of kings and other "noble" individuals.

[DoveTurnedHawk]

120. Fair Point, I Should Have Said "Progressive Taxation" (eom)

DTH

[slackmaster]

129. I would still have to disagree

Taxing wealthier people more heavily than we tax people of more modest means carries no inherent guarantee that the money collected will be put to good use. All federal tax revenues go in the same big bucket.

What is the "redistributive" value of the billions we've squandered on the war in Iraq?

:shrug:

[sui generis]

101. So why the focus on wealth?

Why not say, sui has awesome genes that give him and his genetic descendants an advantage over other ordinary mortals. Those little wingie things are great for flying to work and he doesn't have to pay for gas.

He should not be allowed to do with his genes as he wishes - he should be forced to have his genes redistributed to benefit the common good? What if I just had longer telomeres than everyone else and could live longer and accumulate wealth longer? Should I be punished for longevity in addition to wealth?

Moreover, anyone who tests in the 99th percentile on a standardized IQ evaluation should automatically be handicapped for the rat race so they won't have or pass on an unfair advantage in their potential ability to achieve.

Perhaps it is a hallmark of my cynicism that I find it rather one sided and archaic to view financial resources as the only resource worth redistributing. I think we are not being progressive here.

It's not polar anyway, I just want a better balance between the individual and the community than the community thinks is fair, and I want to closely examine our closely held beliefs on the topic.

You made it a versus argument, which is inaccurate.

[DoveTurnedHawk]

104. Your Extension Is Absurd

You're also not being punished, even if you are smarter and/or have better genes. In fact, you will have inherent competitive advantages that allow you to succeed more readily.

But money is money. It's not your genes. It's not your intellect. It's the only feasible measuring stick in this situation. It is the currency of our lives, and it is what most of our effort is directed toward obtaining, however materialistic and unenlightened that may be.

The money you generate, whether through intellect, good genes, or hard work, is taxed to provide for the common good, the community. People who have less money are taxed less, while the people who are more able to bear the burden of taxation, specifically the wealthy, are taxed more. That is only appropriate in a community, just as the able-bodied are called upon to defend the community in a time of emergency.

The estate tax is rational and fair, and with the exemption in place, 98% or more will never have to even worry about it.

DTH

[sui generis]

114. well it is materialistic and unenlightened and absurd

as you stated, and I am talking about your willingness to attack rather than discuss.

This is a ridiculous argument. I am not convinced it is the BEST solution. And goddammit I hate the "absurdist" thinking that refuses to examine anything but rigorously and unquestioningly maintaining the status quo. I disagree with you, and that does not make me less educated, more grasping, or any less socially aware or progressive, regardless of what side of that 98% I happen to be.

Let's just say that in a few decades we'll have the ability to rebuild ourselves so that we do live half again or twice as long and can have more children and more income and asset accumulation years, but for 30 million dollars or some other normally unreachable sum. That will be a feasible measuring stick, with a negative scale. If the superwealthy don't die, you don't get the money. But the point here isn't science fiction - it's more nuanced.

It will be subject to the same "social justice" pressures you are trying to solve for today. If we can't restrain our crassness and absurdity with something as well studied as money, we sure as hell won't be able to restrain our crassness and absurdity when there are extraordinary differences in extra-financial advantage, and you can be sure that it or something like it will inevitably come to pass no matter how much you think you can redistribute wealth today.

I want the best solution, and that means earnestly questioning what we already believe is the best solution and why we think it's so. That is my stance. If questioning is bad, then I am the antichrist.

I'm rejecting this today, and I've told you why. I believe in community and doing the right thing and the greater good, but I DO NOT believe that the lowest common denominator in the community has a greater say in what is good for the community than everyone (or anyone) else. If that is the case, I will remove myself and my assets and resources to a community that really is rational and fair, and not just take somebody's word on a "progressive" forum that it is.

[hatrack]

148. Therefore, people who lose money gambling should be rewarded

They have, after all, taken risks with their very own money, haven't they?

[TahitiNut]

150. There seems to be only one difference in values,

Some folks believe that a legitimate economic system is founded on ever-increasing entitlements to income from the labor of others ... and some don't.

I've stopped caring what euphemisms folks use to apologize and disguise the headlong rush into getting a piece of the slave-owner's "action."

Soviet Communism was merely one kind of "ownership society." :shrug:

[eridani]

188. Wealthy people risk exactly fuckall with their investments

Nothing whatsoever. If you have more money than you need to live very comfortably, an investment that fails has exactly zero consequences for your life. Having less money is meaningless if you can still make the house payment, buy food, etc.

People that bet their rent and their kids' college tuition on an investment are taking risks. Rich people surely aren't.

[DoveTurnedHawk]

92. TN, We Haven't Agreed on a Lot in the Past

But on this, we agree 100%. Awesome post.

:toast:

DTH

[TahitiNut]

155. Thanks, Dove. We've only (ttbomk) had one serious disagreement.

Needless to say, my personal, direct experience will always trump any allegation or inference that it didn't even happen. No matter how agreeable I'd like to be, or accepting of other viewpoints, I can't see moving on that. :shrug: (But that's old news and hopefully will remain old.)

On questions of justice and fairness in governance, which includes the plethora of contrivances and mechanisms of our 'economic system,' I've not seen material differences. I don't, however, keep much track of who says what ... since I'm far, far more 'what-focused' than 'who-focused,' especially when on-line.

I dare say there aren't very many 'liberals' who don't see that we, as a nation, have gotten farther and farther away from achieving the kind of equity we'd call 'just' or 'fair' -- and that there've been few, if any, more reliably WRONG, both morally and factually, administrations in the history of this nation, if not the world(!), than the Bushoilini Regime.

From what I've read on DU, it appears that one of the most difficult things to break through is the perceptions (unstated assumptions) that some people have that "that's the (natural) way things are" when it comes to economics and taxation. We're so embedded in essentially superficial notions of investing, saving, earning, and owning -- even at the undergraduate curriculum level -- that we fail to see how arbitrary and artificial the systems truly are. We treat these things like Acts of God and make statements like "investing in stock has risk" in the same way we say "the sky is blue" and "fish swim." For example, few actually realize how very little of the money used to buy stock ever reaches the business -- or even what the implications are. Few are even actively conscious of what kind of business Enron was -- thinking business is business and Enron is like any other. Say "derivative" and most folks' eyes glaze over. The rhetoric of "estates" is so overwhelmed by the myth of some family farm that few realize that such estates are virtually nonexistent. I have NEVER seen the media describe the unrealized capital gains in a typical multimillion dollar estate's list of assets - and the tax implications vis-a-vis the common working person's experience of never even seeing most of what they pay in income taxes, let alone benefiting from the compounding of gains on those monies by delaying payment of taxes on the appreciation. The terms 'realized' and 'unrealized' just aren't part of the average person's active economic vocabulary.

The poor wage slave must accumulate wealth (under the mattress?) after paying taxes, but the capitalist gets to accumulate wealth until (s)he dies without ever paying taxes on the monthly/annual increase in accumulation (equity value) -- effectively using what would be the government's money (taxes) for free if it was their life's labor that was "unrealized."


On edit: Here's a little mental exercise I just thought up. I think very few people would approve of "loan sharking." I think very few people would think that someone was right in charging 50% or 100% interest on money loaned to another person, usually in dire need. None of us would want to be the borrower. I doubt many would admit to wanting to be the lender, even if they did. Then why is it that so many think it's OK (and even admirable) to collect a 100%, 500% or even 1000% "profit" selling a stock in a company ... one in which we had absolutely nothing to do with earning, where somebody else did all the work? I think there's something very, very bizarre in our sense of right and wrong as corrupted by our "economic system." What's particularly bizarre is the fact that the money loaned by the loan shark actually went to the person who earned, and paid, the interest. On the other hand, the money paid for a stock was not likely to have ever gone to the person(s) whose labor caused its value to increase. Strange.

[RUMMYisFROSTED]

184. Getting all "posty," are we? :lol:

One of your best.


To make it simple to your "sparring" partner:

5% of the people own 90% of the wealth. Someone is getting ripped off.

[ElaineinIN]

25. In my experience

anecdotal as it may be, the asset gap is wider, as many of the really rich have assets that do not produce current income, but that are held for long term appreciation. Its not uncommon to have someone who is worth $40 or $50 million in assets, but with an annual taxable income of $1.0 million.

[sui generis]

35. Exactly - however

I am probably closer to the plutocracy side of this equation. The income I have earned was earned at the cost of horrific educational expense that I paid for, nobody else, and of having a skill set that gets the resources and companies together to provide jobs for people who are technically on the other side of the "gap".

I am also fortunate in having a number of extraordinary heirlooms (my "heritage") and my own asset investments. Why is it that after I have paid my taxes (which I am happy to do) and done what an American should do to grow an estate for their heirs that I should be punished as if I were a Rockefeller, a Gates, or a Walton?

Who is it that thinks a million dollars is a reasonable "cutoff" in the 21st century.

Why should my heirs pay some extraordinary tax on the assets that form my heritage (artwork, musical instruments, antiques) or else be forced to sell part of it?

If your invested assets are producing income, you get taxed on income or the AMT (however appropriately or not). If the goal is to tax people more fairly, then tax their income, once, before it becomes an asset. If the goal is to say that it's unfair for anyone to not be middle of the line middle class then of course we should have an inheritance tax. For a capitalist country, it just seems like a profoundly socialist policy.

Those guys with the 40 million dollars in assets - they're going to put them in life trust anyway so that only the part that is used is recognized as income, at the time it is used, rather than all at once as a windfall. There are STILL loopholes that allow the wealthiest to avoid paying materially, even with the current system.

I just have a hard time reconciling the policy with what I think of as "America".

[PeaceProgProsp]

49. There is nothing that you got that you couldn't have gotten if we didn' t

have a society and a government providing the infrastructure in which you succeeded.

Now, how do we ensure that people can continue to succeed like you did? By providing an infrastructure that rewards work (and which provides a reasonable safety net that allows people who try and fail to live with dignity).

If we allow immense privilege to be inherited we will not have a world that does that.

I, personally, think we should have a tax code that taxes inheritance progressively according to the income of the recipient. That would encourage people to leave their estates in small chunks to many people, and the poorer they are, the better. If you leave a million dollars to your millionaire son, it will be taxed at 50%, but if you break it up into 10 100k gifts to your sons kids and to a few non-profits, it will be collectively taxed at 10% (for example, your mileage will vary).

[sui generis]

68. and I've already paid for that.

I don't want out of paying my way. I want out of paying it unfairly and for the wrong reasons.

BTW you just described receiving inheritance as income. Now if we just close the loopholes at the top it will be a lot more fair than blindly taxing the dead guy, so in an odd way we're agreeing.

[lastliberalintexas]

171. Inheritances *are* income- and UNEARNED income at that

You paid taxes on the money when YOU originally received it, and it was taxed as either earned or unearned (capital gains) income at that time. The next transfer of the asset or money is another transaction and results in unearned income to your heir. Ergo, they are taxed.

God, I never thought I'd hear so many defenders of wealth accumulation on a progressive website.

[toopers]

172. What is wrong with the accumulation of wealth.

We all want to do what is best for our families!

[lastliberalintexas]

174. Are you kidding me?

Are you familiar at all with the history of humans? Or even relatively modern American history? Do you want us to return to the days of rule by plutocracy, where the Vanderbilts, Carnegies, Morgans and Rockefellers essentially control everything?

Do you understand economics and the disincentives that go along with wealth accumulation?

Do you even know how many estates are effected by this tax? Do you know that it is only about the top 1-2% of estates in this country?

Try this instead of simply repeating right wing talking points-

http://www.cbpp.org/2-18-04sfp-pr.htm

[ElaineinIN]

183. As I indicated in my post with sui

I do think there is a point where wealth accumulation becomes an excess... a point at which we turn toward monopoly and fall away from rewarding incentive, risk and hard work.

Need an example? How about the Bush family.....its bad enough where they are now. Imagine where they would be if they didn't have the family fortune in essence cut in half every generation or so.

[ElaineinIN]

81. I think that you and I may be closer together

than you think on some things... but there is one big difference, as far as I can put together.

My thought is this.... the purpose of the estate tax is really two fold: one is raising revenue, the other is to break up extra ordinary accumulations of wealth, recalling that the estate tax's genesis is in the 1910s when the power of the trust families such as the Rockefellers, etc., was at its zenith, raising the spectre of the very anti-capitalist monopoly issue. In this regard, the estate tax was part of an overall anti-trust scheme--it wasn't anticapitalist at all. While I recognize that you don't place much faith in the accumulation of wealth argument, at least once upon a time people were concerned about it.

I can also say--again, anecdotally--that from what I've seen in my practice, its a real issue. Signficant accumulations of wealth, in fact, discourage work, discourage innovation, discourage risk taking--all things that further an economy on a macro level. At the same time, those individuals who have no economic motivation to innovate and take risks are the same people elevated to positions where these things are crucial, as there truly is an inequality of opportunity, education and networking.

Now, with these goals in mind, is $1.0 million an appropriate cutoff? As I state below, probably not. If your goal, aside from taxation, it to prevent undue accumulations of weath, the question becomes what number is it that gets you to a point where your wealth is not only a hinderance to personal development, but a drag on innovation and actually anti-competitive. I'm no economist (calling Prof GAC), but I'm sure someone could do a study on that somewhere.... I think that raising the limit and indexing for inflation are probably appropriate.

But this brings me to a point where we will probably disagree. You ask, "Why should my heirs pay some extraordinary tax on the assets that form my heritage (artwork, musical instruments, antiques) or else be forced to sell part of it?" I ask, why do you think that you have the unfettered right to leave property to anyone? The fact of the matter is that property law for time immemorial has never given people the unfettered right to leave property to anyone. You see this as punative on your heirs. The fact of the matters is your heirs got lucky as a matter of birth, no more or less lucky than the next Powerball winner. They didn't work a day in their life for your funds, so to attribute to them an entitlement to have it, or you a right to give it to them, is a new concept. In my mind, this new property right is especially problematic if the exercise of this right is actually detrimental to society in the form of the anti-competitive aspects of excess wealth accumulation. I would say this, your heirs should pay some tax on assets they inherit if that tax will offset the negative implications of the ill effects on a capitalist economy and socity that occur when excess wealth accumulatin occurs.

Although the AMT desparately needs reform, I don't think an income tax does the same thing that an estate tax does--its a different policy goal. As you probably know, with a carryover basis regime, capital appreciation goes signficantly untaxed. In some countries, the transfer of property is treated as a sale for capital gainst purposes, triggering the appreciation at that point... that might be a way to go, I don't know.

Finally, as to the living trust bit-- it doesn't work that way. The gift tax steps in to prevent such thing. Right now, during your lifetime (Generally) you can only transfer $1.0 million in property without incurring a gift tax, which is the same as the estate tax. Basically, its a wealth transfer tax. So when you place assets in trust, that transfer is subject to tax as well. If someone put $40.0 million in trust to day, you'd be looking at roughtly $18.0 million in tax. Are there ways around it, sure... but you need to have a gift tax to prevent income shifting to lower generations in lower brackets (note that even when the estate tax is repealed, the gift tax isn't but is lowered to the top income tax rate for this purpose).

Is it un-American? I'd say that giving everyone an equal opportunity to benefit from their labor and preserving the capitalist environment from monopoly is quintessentially American.

[sui generis]

95. beautifully said! thank you

You've responded by addressing issues, and solutions - the main purpose for my "exploration" here. Thank you for your insight.

You have great instincts - I did part company (just a little) on whether to redefine my understanding of whether it was my right to do with my property as I wish - I am probably closer to a socially aware libertarian (I think) when it comes to my worldview of the "should be's" of government, but also practical.

I don't like the idea that the government is playing social adjuticator based on wealth - and I mistrust the motives of anyone, including the collective "government" for setting a fair standard or cutoff in that definition. After all it is in their best interest in the absence of all other inputs to make as many people as possible subject to "extraordinary" taxation, and justify it for the greater good.

I have no problem with paying taxes or buying into a fair government that doesn't hurt one socioeconomic group at the expense of claiming to help another, whichever way you interpret that. I just have a problem with the dynamic and highly subjective idea of what "fair" taxation is, so I must question that what we are doing is the best solution for today's world, or the best tool in the toolbox, or that we're even using the tool correctly.

[ElaineinIN]

102. You['re welcome !

And thanks for the compliment. We'd best be careful, we can't have well reasoned, polite disagreement breaking out all over DU... imagine the chaos? LOL

[PassingFair]

159. "Why should your heirs pay taxes"???

Why should any of us pay taxes on ANYTHING?
Why should I be taxed on money earned by the sweat of my brow, while my neighbor inherits, tax free?
Why should lottery winners pay taxes?

It's not about YOU, its about your heirs, they will receive "money for nothing".

Nobody rides for free.

If you're worried about estate taxes, donate the money to ANY charity.

[sui generis]

164. Here's why

I'm not avoiding paying taxes. You missed my point entirely.

I said tax it ALL as income, according to our sliding income scale.

Merely taking half of it because I'm dead and the government can is not acceptable for a couple reasons:

1. I'm smart enough to keep it from happening with a fortunate combination of lawyers and plain determination, and motivated to do so

2. If it were fair I would play nice and do my part - but as it stands, my adopted children may not be recognized as heirs at the time of my death because I'm queer. My life partner may not be recognized as an heir, because we live in a legally unrecognized relationship. My life insurance companies may play the constitution card and say that I attempted to circumvent the law by having a primary beneficiary that is not legally recognized, and refuse to pay out my policies. If all of that comes together, the state will still try to claim half because I should have consumed rather than be consumed by accumulating money - the reward is for my heirs to lose half.

I am not spending my whole life putting together the things I do to pass it on to the fucking government because they've made my life illegal. I pay taxes, I give extraordinarily generously to charity, and if I happen to bring in over that threshold (easily) then I'm happy to pay my fair share of taxes to keep the government going but by god I'm not giving half of it to the same fucking government that thinks I don't have a right to my own property while I'm alive.

The original constitution draft read "life, liberty, and property" by the way. It was removed to keep land barons from accumulating real property and challenging local government.

I disagree with values based taxation. I hate that I am on the "other side" of the "social justice" equation, just because you say so. That is hurtful, and wrong. I have a right to my own property and I will exercise that right, because I can, whether you or anyone else likes it or not. If that right is more difficult to exercise here I will move my assets and resources elsewhere, because I can. I am a team player but if the collective team starts treating me unfairly, I will leave the team, and I am not alone in this.

[PassingFair]

177. I never accused you of not paying YOUR taxes.

This is not about you, it's about your heirs. They will be the ones benefitting from your death. They have not worked for those dollars. They should be taxed on what they receive.
I agree that you will get a raw deal due to your being discriminated against vis a vis your spouse. That sucks.
But your children, adopted, natural, or purchased, whatever, should pay taxes on money they inherit.
IMO.

[lastliberalintexas]

168. Wow, so you INDIVIDUALLY paid for every brick put in your schools?

And you individually paid for the other construction costs of your school or classroom? And you individually paid your teachers, counselors, and the school's kitchen staff? And you individually paid for every one of your textbooks, craft supplies, and materials and equipment used in science experiments? And you individually paid to pave the road leading to your schools, as well as for the bus that likely got you to and from school? And you individually paid for the maintenance and upkeep on every school you attended?

You're right- you obviously got where you did with no help from the community. How dare we progressives think that you should actually contribute to society so as to return any help. :eyes:


What utter bullshit. No one- and I repeat, NO ONE- gets where they are in this world completely on their own. To think otherwise is wholly arrogant and narcissistic.

[lastliberalintexas]

170. Oh, and- the reason that your heirs pay taxes on this transfer

is that it is unearned **INCOME** to them. Economics 101.

[phylny]

195. Wonderfully put. I applaud you, and agree n/t

[toopers]

86. Yes, but they probably have already payed taxes on the

acquisition of that wealth, or will once they choose to monetize those assets. Therefore, the estate tax is a double taxation, at the very least.

[ElaineinIN]

99. But its not

... first of all the boogyman of double tax is a red herring in my book--we get double taxed on all kinds of things (state, local, property etc. etc.), all paid using after income tax wage dollars. Double tax, in and of itself, doesn't really bother me, if there is some reason why the tax scheme is that way. From a pure revenue raising perspective, would it be alot better for all of us if they rolled it into one and sent us one big bill? Sure... but at least at this point in our history, taxation not only serves revenue raising goals but other goals as well (see my posts with sui on this point), so having an estate tax, regarding of whether or not its "double" doesn't seem to me to be that big an issue.

but, even if we posit that double tax is a bad thing, I'd tell you that it isn't really a double tax. Given the step up in basis for capital assets (the heirs costs basis in the property steps up to fair market value on date of death for capital gains calculation purpsoes), all unrealized appreciation in an asset upon death goes *poof* and is never taxed for income tax purposes. So if grandma bought IBM in 1929 for 1 penny and it's trading at $100 at the date she dies, all 99.99 in appreciation is never taxed when sold by her heirs.

Not only that, but all life insurance proceeds are excluded from income tax.

Not only that, but all gifts or inheritances are excuded from income tax.

So the fact of the matter is that I can get arrange things so that a heck of a lot of money passes not only free from estate tax, but free from income tax as well.

[toopers]

115. But there are plenty of non-monetary assets that are taxed . . .

once a certain value level has been reached. And I do have a problem with double taxation, so that maybe where we have to leave our discussion.

[WhereIsMyFreedom]

11. "Income is income is income"

Are you advocating that people who receive inheritance treat it as income for tax purposes? I would be all in favor of that, provided that we manage to close the loopholes that allow the ultra wealthy to avoid paying most of their income taxes.

[sui generis]

29. pretty much what you said

but closing the loopholes is what is required to make the system fair, not depending on an outdated rationale for preventing "transfer of wealth".

[ElaineinIN]

21. Actually, it doesn't

Because new code Section 1022 provides for an allocation of basis adjustment up to $1.3 million--assuming of course that the Bushistas dont get rid of the capital gains tax altogether. It also does not repeal Code Section 102, which excludes gifs and inheritances from income tax.

[TahitiNut]

26. The 'cap' on untaxed estates is roughly equal ...

... to the maximum amount one could accumulate almost purely through saving income obtained through a lifetime of labor.

Again, the rationale for an estate tax is largely due to the unrealized (and thus untaxed) capital gains appreciation at the time the estate is formed. Indeed, it could be argued that the estate tax is actually lower than the tax that would be applied if the assets were taxed as though sold, with the realized capital gains taxed at current rates.

It's insane to grant some privilege to such transfers of wealth when we tax nearly all other wealth transfers at higher rates.

[HuckleB]

79. Exactly.

Nevermind that, with our piss poor social safety net, the estate tax has led to an increase in donations to organizations that provide safety net services. Yet, the Feds have not come up with a way to make up for the loss that a repeal will lead to in this sector.

[mosin]

105. Clarification

The 'cap' on untaxed estates is roughly equal to the maximum amount one could accumulate almost purely through saving income obtained through a lifetime of labor.

Could you clarify what you mean for me? My wife and I will undoubtedly die with far more than $1.5 million each (the current amount sheltered by the unified credit), and we each started out in life with nothing. In fact, after we paid for college and grad school with loans and private scholarships, we started out in a big financial hole. Unless you have a very restrictive definition of "saving income," I would take issue with your statement. I know a lot of GE and P&G retirees in the Cincinnati area who retire with $2 or $3 million in their retirement accounts alone. Right now they and their kids face a huge combined tax from income taxes (because the money is coming out of a retirement account and has never been taxed) and estate taxes.

I'm optimistic that the compromises under discussion will end up precisely where I think they should be. The estate tax will be preserved with much lower rates (the old 55% top rate was absurd) and a much higher unified credit. I would choose something around $5 million per individual and index it for inflation. That's high enough to shelter most small businesses and farms and life savings, but would limit the Bill Gates of the world in establishing hereditary dynasties.

[TahitiNut]

147. "Investment" income is usually income from the labor of others.

Very often, the 'income' isn't realized - i.e. the 'investment' is held in the form of equities or regulated accounts, the market appreciation of which has been left to accumulate. Indeed, it's a 'feature' of IRAs, 401Ks, Keoghs, and whatever to permit such investments to be made from gross income before taxation, often from wages and salaries. Thus, there's a systemic entitlement (i.e. created by government) established that affords preferential treatment to dollars put in investments over dollars used for food, shelter, clothing, medical care, etc. It's hard to see the morality or equity of such preferential treatment -- but we'd all sure take advantage if we could. (That's sad.) Many can't. (That's tragic.) The choice, however, is usually accompanied by a view of government as 'other' ("they") rather than 'self' ("we") -- some opposing entity. (That's democratic escapism - abdication.)

So, when I say "through saving income obtained through a lifetime of labor" I don't mean investing in equities. Instead, I envision a kind of (theoretical) saving that preserves the value against inflation -- probably best symbolized by an account in a (now obsoleted) Savings & Loan (or Credit Union), where the legal myth of 'ownership' is eliminated and the appreciation is not given the privilege of exemption from taxation.

I'm not a Marxist -- I don't buy into the 'solution' myth of a society freed of private ownership of the means of production and the associated entitlement to income from the labors of others (what most call "capitalism"). I do, however, appreciate the 'problem' - the tendency of such economic systems to deteriorate and descend to the ethical septic tank of a banana republic or plantation economics. I mentally wrestle with the question of balance -- i.e. how much can 'owners' take from 'workers' before the system becomes the ethical equivalent of slavery.

The notion that everyone can become an 'owner' in some illusory "ownership society" is even more ridiculous and mythical than the Marxist 'solution' where everyone supposedly IS an owner (in common), merely through the intermediation of the state. Does anyone really and truly think the Communist ideal's only shortfall was that the "ownership society" was manifested in government rather than some cabal of private organizations? (Think about that.) Alternatively, if they're advocating some "ownership society" that's not available to all, then where's the justice? Where's the equity? Is the die cast at conception? Is it merely a question of winning the sperm lottery? That's not ethically any difference from a Monarchy.

[mosin]

163. "I'm not a Marxist"

Is it merely a question of winning the sperm lottery?

Yes, my wife and I were lucky enough to be born into working class minority families in rural Texas in the 1960's. Talk about silver spoons!

I appreciate your sincere answer, but you and I have virtually nothing in common in our economic viewpoints. I believe capitalism (under modest reins) is the only moral system of economics and government. With a modest safety net in place for the truly unable, I believe everyone should be responsible for his or her choices.

And I do believe virtually everyone can become an owner in an "ownership" society. My wife and I have done it by working hard and saving 20% of our gross income regardless of how hard that made it to scrape by in the early years. We worked and borrowed to pay for college. After college, we took turns and worked to put each other through grad school. And the day we were both finished with school we started saving and investing. We knew that people could live on 80% of what we made, so we chose to live on 80% of what we made.

If you think it makes us "rich" by the time we retire because we have a few million in equities and real estate, then so be it. We're hardly Bill and Melinda Gates. And if we leave a little money to our kids, it hardly makes it unethical or a monarchy. There is no guarantee of equity in starting point or in outcome--nor should there be. There is nothing unethical about some having more than others. The only guarantee you need is one of equal opportunity to improve yourself and your condition and to live a life of your choosing.

[TahitiNut]

165. Yet another parade of strawmen.

:shrug: It'd apparently be a waste of my time to wade through the strawmen in your post since so very little of what I post seems to have been read. For example, you say "If you think it makes us 'rich' ..." and ignore the fact that I make no such simplistic, irrelevant assertions. Mind-reading? Yeah. Right. :eyes:

I'll merely take note of one assertion. You say:
"And I do believe virtually everyone can become an owner in an "ownership" society."
Well, welcome to George W. Bush's myth of "Ozzie and Harriet" Amrika!!

There's not a hair's breadth of difference between that claim and the claims of Lenin and Stalin. I guess there've been Greater Fools throughout history.

[mosin]

167. Waste of time

I read everything you posted. I described our background, not as a strawman, but in response to your reference to the "sperm lottery."

Otherwise, it was clear that we have no basis for a worthwhile dialogue. Despite your claim that you are not a Marxist, it sounded like so much Marxist nonsense to me: Wrestling with questions of how much "owners" (your scare-quotes) can take from "workers" before it becomes the "ethical equivalent of slavery." Whenever anyone introduces the concept of "wage slavery" into a discussion, I tend to move on.

Does anyone really and truly think the Communist ideal's only shortfall was that the "ownership society" was manifested in government rather than some cabal of private organizations?

And in response to your original question, I believe that neither the Communist ideal nor the Communist reality has anything resembling real ownership.

For example, you say "If you think it makes us 'rich' ..." and ignore the fact that I make no such simplistic, irrelevant assertions. Mind-reading? Yeah. Right. :eyes:

I didn't say you did. It was an reference to the overall tendency in the thread to support a broad estate tax in order to soak the rich or even (in the words of yorgatron) to "Eat the Rich!" The current estate tax hits many Americans who are not what most people would consider "rich" (especially if the higher unified credit goes away after 2010).

There's not a hair's breadth of difference between that claim and the claims of Lenin and Stalin. I guess there've been Greater Fools throughout history.

I was thinking that about your philosophy. I'm an unapologetic supporter of capitalism, albeit with a modest safety net. My philosophy has nothing in common with that of Lenin and Stalin, while you apparently deny any belief in the American Dream or, worse, associate it with Shrub, Jr.

[TahitiNut]

173. The reason seduction works ...

... is because the 'victim' likes it ... and vigorously defends the 'right' to like it. :shrug:

[eridani]

191. What makes you think you really paid for your education?

You paid for some of it, to be sure, but most of it was on the public dime. Your tuition fees didn't even come close to paying what it costs to maintain institutions of higher education.

[indypaul]

53. The current exemption from estate tax is

$1.5million and in 2006 thru 2008 is
$2million in 2009 it increases to $3.5
million and there is NO estate tax should
death occur in 2010. The exempt amount in
2011 reverts back to $1million to be adjusted
for inflation. Married couples through use
of "credit shelter trusts" can double these
exemption amounts if they so desire with some
planning. Simply stated the estate tax generally
applies to the increased value of assets that
has not been previously taxed until one dies.
It is NOT principally double taxation of income
and applies to very few estates as outlined above.
It appears that a few members of Congress could be
viewed as voting their own self interests when this
legislation comes to a vote. It has already passed
the House and more than a few Senators will, I'm
sure, be voting with their own situation in mind.
The question seems to be what is a fair exemption
amount? I believe it is only fair to ask the question
also of how will this revenue be replaced if the
repeal is successful? Do we just borrow more?

[HuckleB]

134. Indeed.

And somehow everything you bring up is continually ignored by those who promote the repeal of the estate tax.

[indypaul]

161. Don't expect common sense to overcome greed. n/t

[sasha031]

6. Paris Hilton tax cut

It surprising they are actually calling it the Estate Tax instead of the Death Tax now. remember the commercials about the people losing the family farm do to the Death Tax. I hate these robber barons!

[slackmaster]

154. Not really an appropriate dysphemism for the Estate Tax

People who are absurdly wealthy like the Hilton family are able to structure their finances to avoid the Estate Tax completely.

[ElaineinIN]

182. completely?

If you figure out how, let me know.... I'll make a fortune.

I know all the tricks, and to avoid it completely with a fortune the size of the Hiltons would be virtually impossible...

[MurrayDelph]

9. It grows a little every year. Last year it was $1.5 million

I know, because my dad died about a year ago (this next Sunday).
After we factored in the overpriced value of his house (crummy
house, nice Los Angeles neighborhood), the estate
was worth $1,565,000, and we had to file all sorts of stuff because
of the 65k.

[TahitiNut]

17. That's because it was "REFORMED" twice before the 'repeal.'

The "Ownership Class" has been beating the tom-tom of the (so-called) death tax for decades. In the 90's, the estate tax was reformed twice. Yet that STILL wasn't enough for the greedy bastards! Before the 'reforms' could even come close to being complete, they deceitfully invented 'examples' based on obsolete laws to continue to pile on lies and deceits to advocate repeal.

[madrchsod]

20. opps sorry about calling ya stupid

i forgot about the inflated housing market in many parts of the country. i guess if my mom lived in cali her estate would have been over 2 million!

[Yupster]

23. My aunt died about 6-8 years ago

and she had about 1.5 million also.

We got hit pretty hard by the then 600,000 excemption.

I'd be on board with a compromise of 3-5 million.

When people say it only hits the top 1 % of the people they're wrong because probably neither one of us is close to any 1 % of anything, yet we were both hit by it.

[ElaineinIN]

24. Actually, that does leave you in the top 1% currently

Those figures are from the IRS--the filing obligation was the top 2%, the payment was the top 1%.

What happened was that the $600,000 exemption, which was put in effect in 1976, was never changed until 1997 (I think.. going from memory here). In the meanwhile we had two stock market booms and inflation--wealth in absolute value numbers went up, but the exemption did not. In addition, we now have the housing bubble, so it will hit more people then one might think.

So it did (and does) make sense to increase it, and probably still makes sense to index it for inflation, which they did with other exemptions in the transfer tax area. Where to increase it to is somewhat arbitrary, I suppose, but I think trying to maintain the the tax on the same percentage of the general public makes sense.

[PeaceProgProsp]

64. People need to talk to lawyers when they have that much money.

You can avoid taxes, but you have to do it in a way that makes it harder to pass on vast amounts of straightforward wealth to wealthy people.

And there is even more we could do with the tax code to strike a balance of not taxing people's estates while making sure they're not passing great amounts of power to powerful people, and, rather than eliminating estate tax, that should be our policy goal.

[ElaineinIN]

84. Ahhh....

"Avoid" has such a criminal tax fraud ring to it... we prefer to refer to it as "tax minimization" ;)

[ElectroPrincess]

107. The little old lady I see each day pan handling by a D.C.

metro entrance, would probably have loved to be in "a similar" predicament. Unfortunately after years of destitution, there's no family to fight over the crumbs (thousands of dollars) anyway.

Please remember fellow Christians that after a certain level of stability (solid middle class), hording ones money is a mortal sin? Too bizarre that the wealthy Christians (both Democratic and Republican) never can quite "get it!"

Look at the people who RUN our country? They all have in common ONE very ugly personal flaw: Greed.

I thank God every day that I was born into a middle class family. I am so blessed ... I need to give more to those who have little. I'm looking into assisting with the outreach program through the Franciscan Sisters in my parish.

Anyone of middle class can "feel so complete" by donating just one day a week or month to help those who are poor and disenfranchised.

Perhaps I'm just goofy, but, to me, it does feel better to give rather than receive.

America has sadly turned into a country of POWER and every increasing individual and corporate GREED. It's just plain ugly - the values we are passing on to our children.

[sui generis]

146. not christian, princess

but I have values nonetheless.

And some people of means give extraordinarily. The multi billion dollar Gates Foundation, the Rockefeller Foundation, the Meadows Foundation, hundreds, if not thousands, of single family Foundations serving charity, culture, and the underprivileged, much less corporate foundations and groups of giving individuals.

Give props where props are due.

If Bill Gates liquidates his position to give it all to the poor, MicroSoft would collapse and the market would vomit blood. Speculation on the direction tech companies would cause layoffs, hiring slowdowns, and wage freezes. Sometimes, using POWER for good is a good thing. One woman's greed is another man's job.

Values are complex things. Giving and generosity and empathy to you fellow human, these are values to pass to your children.

But judging someone for not giving the same way you do or for giving more or less or not as often is not a good value to pass on.

[ElectroPrincess]

149. You're right, we all sin ...

And yes, I should not judge. My major point was that the commercial world has poisoned us to the point where many people who are "doing well" are still selfishly grasping for more and more.

Yes, I judge those folks harshly but love them none-the-less. They are miserable because no matter what they have, they yearn for more. In a way I should feel pity.

Thanks for reminding me that "to each his own."


With regard to your statement below ...

"MicroSoft would collapse and the market would vomit blood."

That may not be all so bad. ;) You forget that the American Middle Class tend to NOT be heavily invested in the illustrious stock market.

[lastliberalintexas]

175. Do you have a guess as to why those foundations were set up?

Maybe to avoid paying more in estate taxes, eh? :)

Yes, good will and charity may have also played a part, but they were not the only reasons. Tax avoidance plays a huge role in how people donate to and set up charitable institutions.

[ElaineinIN]

185. Why is a foundation tax avoidance?

The fact of the matter is that if money is given to a foundation, it is gone vis a vis the family. They can't use it for their own personal purpsoses--that's called self-dealing and its subject to an excise tax under Section 4941 and a taxable expenditure excise tax under Sectio 4945. Now that's not money in the govenrment coffers, but it is social capital to be used none the less for purposes other than a new porsche.

The most you can do is have a family member sit on a board and get a salary, but under the self dealing rules, those salaries need to be reasonable and comparable to the amount paid to a third party in an arms length dea.

[eridani]

192. What in bleeding hell do you mean, 'hit hard'?

One day you got $900K that you never worked a single second of your life to earn, and this is supposed to have been some kind of problem? Presumably you'd also whine if someone said that they'd leave $500 in an envelope in your mailbox, and when you went out to collect there was only $200 in the envelope.

[ElaineinIN]

18. Actually, this year its $1.5m per person

Next year its $2.0m
In 2009 its $3.5 per person

Most scuttlebutt I've heard is a $5.0 m exemption per person, meaning a couple could leave $10.0 million before the tax kicks in. Also, rumor has it they are lowing the rate so that it is the same as the income tax or capital gains rate.

[ElectroPrincess]

109. I would only add two words to your stellar argument ...

Paris Hilton :puke: I rest my case :-).

[TahitiNut]

12. Nonsense.

A huge part of the rationale for the estate tax is the unrealized (untaxed) capital gains that comprise the vast majority of any estate subject to the federal estate tax. Under today's federal income tax structure, unearned income is taxed at less than half the rate of earned income.

"Earned" income is that which one receives by allocating a part of one's LIFE to producing profits for some 'owner.' We call it labor but it's also time ... time under the authority of another ... time which is life itself. It's time not spent with one's children, one's spouse, or one's family ... not nurturing and not educating and not building for their future. Yet this time is not compensated by what's lost ... but by some fraction of what some 'owner' gains. Where's the 'estate' of such working people? Their legacy (raising children and caring for family) is 'taxed' in the very process of selling their labor -- DOUBLE (and higher) taxation, in effect.

If an estate contains assets (stock, real property, etc.) whose cost was less than 1/10th of their market value at the time the estate was formed , then over 90% of that estate's value is capital gains - capital gains left untaxed, even at half the rate, as the basis of the assets are reset at the time the estate is formed. There is NOTHING in the 'estate tax reform' measures that addresses this HUGE LOOPHOLE.

[not fooled]

40. TahitiNut...

...nails it

:) :) :) :) :)

[madrchsod]

13. i paid 0 in estate taxes

estate taxes only effect people who are to stupid to find someway to avoid them or they have so much money there isn`t anyway left to hide their money from taxes.

[karynnj]

15. Would you then favor counting inheritances as income?

Consider two people:
1) A grew up with great wealth, attended the best school - with access to tutoring as needed, either used family or school connections to get a job that would lead to a successful career, was brought into a family business, or was given the money needed to start a busness. If he loses his job, he has the network to easily get another good job.

A's parents die leaving him $10 million dollars. $1 million is tax free. The question is, should he be taxed on the $9 million?

2)B is poor and gets a low paying job. This person pays medicare and ss tax starting with the first dollar earned. Remember your first job and your reaction to your first pay check. His job is likely not secure and finding a new job may mean starting at the bottom again.

The government needs a certain level of funding - permanently removing the estate tax lets A get an income transfer of $10 million dollars without paying a cent. The reason for the strange plan to have the tax go to zero, then reappear at the 2000 level was that permanent removal would blow the budget. (Remember this was the budget with a large surplus, rather than the large deficit).

Either services (likely those that benefit B) would have to be cut or the income tax rates have to be raised. How much would you have B pay (or give up) to give A his win fall?

[papau]

28. And it would logical to repeal if the rich would pay capital gains tax

but they won't

so we continue with the Estate Tax - a tax that the rich actually requested so as to not have a capital gains tax at death.

Indeed an annual unrealized appreciation tax might be a good idea so no one has a big bill in a single year - but that is another discussion.

[TahitiNut]

30. Bingo.

:thumbsup:

[sui generis]

39. bingo, nonsense, lovely

debating style.

You have some good points, just hate the delivery.

I don't like back door solutions to front door problems. While I understand that government we choose to tolerate is able to function based on our fiscal contribution in the form of taxes, I don't like the idea that there are problems we look at on the income side that we translate into post mortem taxes.

It's a spit and bailing wire solution, to put it in less sophisticated terms. If you don't have the resources to fix it right the first time, all the rest it just "patching". That's not progressive thinking.

Are there better solutions than this McGyvered day-late crap?

[papau]

82. tax on change in unrealized appreciation each year is the way to go

but the rich make the rules and will not allow that.

indeed since 95% of the income of the 13000 richest families in the US comes from "investment", the real game is have a zero tax on "savings" and to only tax wages.

Sounds fair.

back in 1920 folks felt the income of the rich - investments - should be taxed at a higher rate than the income of the woeking stiff - wages.

boy - have those rich folks convinced us that that was wrong.

Indeed now we pass current expenses on to the next generation rather than tax the rich.

Indeed we have negative or near zero savings rate in this country because of the negative savings - the deficit - of the federal government = a deficit the rich prefer to the idea of them paying more in taxes.

[sui generis]

88. well see, I agree with you here

investment spurs the economy. People who invest more stand to lose more. People who earn more should pay more UP FRONT, unless they are putting those earnings back into "the economy" to stimulate more investment. In that case they should pay taxes on the part they use at the time it come out of the economy, but that is a special case with special tax laws.

The problem in my mind is that if you are willing to say that bajillionaires need to be taxed a bajillionish more for reasons of social justice, the same people who set the "standard" for defining social justice will start to bring that back down to ordinary 100 thousandaires, and lower, and it IS malicious when they keep using terms like "justice" without simultaneously talking about reducing non-social spending, like unjust unilateral invasions of foreign countries for their oil.

There are very real problems if we want to address "social justice" that have nothing to do with fairly irrelevant "concentration of wealth" arguments.

[papau]

90. Sadly the folks with the money are the only ones that can pay a tax

and you lose a lot of the resources you need for social justice if you apply a tax rate more to the ones with less money via taxing wages at 100 cents on the dollar and taxing investment at something less than 100 cents to the dollar.

I agree that that fact that this correction - taxing investments at 100 cents and including annual unrealized appreciation - hits the rich more than the poor should have nothing to do with any evaluation as to whether it is a "just" change.

And indeed if funding social justice is done via an annual wealth tax, I would have no problem with that.

[toopers]

93. That is a horrible idea

You will kill the little guy who is able to put away part of his wealth each month in a nest egg. Now he will not only have to pay taxes on his realize income, but now he will have to pay taxes on income he does not even have the money for -- or is trying to save for a rainy day. That would kill small families and punish the wrong behavior.

[papau]

96. But with my little guy deductible plus paying 10% of the tax each yr over

10 years, we have a tax with no real problems -

unless you view taxing the little guy like we tax corporations as a problem.. Indeed carryforward/carryback in this day of computers could be put on a 1099 INFO form to be sent from the IRS.

[toopers]

103. I am not sure I understand.

Can you explain in more detail. The way I read it -- let's say I buy a piece of real estate for $1, next year it is worth $2, so I have to pay taxes on the $1 gain. Now, I have not increased my cash flow with that gain so I may have to sell the land in order to pay the taxes. Is that the way I should understand the tax system you are suggesting. On top of that how do we determine the true value of the property, until it is sold?

[papau]

110. Here is a bit of detail

Buy for 100
wages 100
interest earnings 10
capital gains -realized and unrealized 0
Tax is 10% - so pay 10% of 100+10 or 11

Next year wages 105
property up 5%
interest earnings 10
cap gain (unrealized) is 5

tax is 10% of 105 plus 10 plus 5

Now add a deductible of 5 for non-wage earnings, and a 10 year carry forward.

2nd yr becomes
interest plus unreal is 15- but then less 5- so taxable is 10
so no extra tax on cap gain

change unrealized cap gain to 10

then after deductible taxable is 15, 5 is yaxable over 10 years, so increase in taxable is 0.5, and increased tax is 0.05

at end of year carrying value of that property is market up to "market" of 110 (cost plus unrealized taxed to date). IRS records carryforward of 5 of which 0.5 has already been taxed

Yes there is a tax on an item that is not a cash flow - tough. For most it is very small. For the rich, sell something and be a little less rich after paying a fair tax.

There is no build up of capital gain to tax at death - so no need for an estate tax.

Getting the current value of anything is done everyday as one does the "net worth" calc. - approximation such as appraisal used for real estate tax, or market value of shares, or market value of company, or market value of art by appraiser every 5 years with approx appreciation during the inbetween years - are all done now for insurance on the artwork, on the house, etc.

[toopers]

126. This seems complicated . . .

It sounds like you are untaxing a tax. Then why tax in the first place -- assuming I am understanding this correctly? Your appraiser issue is somewhat scary. Again, wait until the market determines value then maybe it should be taxed. However, I prefer a federal sales tax. Simple, fair, difficult to get around, and takes power away from the politicians and gives it to the people.

[papau]

137. A "sales tax" misses all financial transactions - funny how that works!

The spread annual unrealized cap gain income is not a great deal different that a dozen rules in the IRS Code for corporations.

There is no untaxing - there is a making the tax progressive and not a bother for the millions who have a very small percentage of their income from investments and capital gains. The rich - who get 95% of the gain - are hit - and the under 200,000 types who live on wages tend not to be hit. Indeed the joke that everyone owns stock so this hits everyone is indeed called a joke for a reason. The type of stock ownership (in a 401k for example) - and the amount of stock owned - tiny for those making less than 50,000 a year - make clear that it is again the top 10% we are talking about - and indeed over 60% of these tax dollars would come from the top 1/2 of 1% of wage earners.

Granted a wealth tax would be more direct - but we were discussing the Estate Tax - whose existence is tied to the non-payment of the capital gains tax by the rich on death.

The tax spreading over 10 years fits what we do with corporations - is a nice break like that to be avoided because it adds a bit of math?

And as to your mis-statement "a federal sales tax.... Simple, fair, difficult to get around, and takes power away from the politicians and gives it to the people" it is not simple - what type of transaction gets very complicated - again financial transactions that hit the rich are always too complicated or will force transactions overseas (we can tax overseas transactions of US citizen - but folks forget that). So it is not fair - it is biased very heavily in favor of the rich.

And as we found with the luxury tax in the 90's - ir easily avoided by the rich who have the ability to structure their purchases so that anything other than a worldwide tax will never get paid on the vast majority of the transactions of the rich.

The only sales tax that makes sense in any is the value added tax in corporations -it is really hard to avoid - but even here I prefer a fair income tax. It is a zero sum game to encourage exports by each nation by waving the value added tax - and has no logic except to keep the corporate tax burden down.

[papau]

113. I will be in DC is a few hours and then with grandkids in Fl- be glad to

continue this discussion after 9/8

[toopers]

135. Enjoy your visit..

Hopefully, I'll see you around the board.

[jfxgillis]

36. Estates aren't income ...

... mostly.

They in great measure consist of unrealized capital gains, hence, never been taxed.

Next?

[TahitiNut]

166. They're both, actually.

The formation of the estate includes, most often, a preponderance of unrealized (and therefore untaxed) capital gains, since the estate is appraised at then-current market values. The distribution of the estate is income to the heir(s).

[Lasher]

130. Not in this case

No, you're wrong! Before Republicans messed with it, the estate tax provided a $1M exemption of ALL taxes, for anything left to their heirs. No income tax, no nothing. 2 parents could combine this exemption so that they could leave up to $2M free of all taxes.

Under Bush's changes, this exemption has been increasing each year. What Dubya wants is a total & permanent exemption from all taxes of inheritances.

Please consider this article I did on the subject:

http://modernamerica.blogspot.com/2005/06/paris-hilton-tax-cut.html

[iconoclastic cat]

8. Look, mommy, trial balloons!

[underpants]

144. ----------------------- ........ LOL ........... ---------------

too funny

[UpInArms]

14. let's repeal the "Birth Tax"

otherwise known as the National Debt



The estimated population of the United States is 296,828,332
so each citizen's share of this debt is $26,741.69

[unfrigginreal]

16. LOL

Now there's a repeal that I can get behind.

[bvar22]

46. If the "Estate Tax" is repealed,

The "Birth Tax" on the Middle Class and Poor will be raised as their share of the National Liability increases.

Repealing the Estate Tax INCREASES the Tax Burden on the Middle Class and Poor!

[zbdent]

19. The Paris Hilton Inheritance Protection Bill?

Tell me it ain't so! It ain't going to lapse, is it?

[npincus]

27. I think all Walmart employees should be very concerned

about their mega-million dollar estates being plundered by the government.

[kodi]

34. three words sum it up

noblesse oblige,

or



I await the "shortening" time

[sui generis]

41. three more words

Give Me (a) Break

You really don't understand the French Revolution or you would not have posted that picture. It's not clever and there were great injustices done so that the unwashed masses could get their jollies watching people murdered in public.

[FlemingsGhost]

125. "unwashed masses"? Careful, your slip is showing.

Not that we haven't seen it before ...

[sui generis]

140. and in public

"unwashed masses" is a literary reference to how the French mobs were perceived. It's also a tongue in cheek statement for people capable of absorbing nuance, as I am.

Your not-so-clever nuance of "outing" me as a freeper is loony tunes and mortally offensive. This is your one free pass.

Hang out some more, read some more sui, then tell me what you think.

[FlemingsGhost]

143. LOL ... (n/t)

Flem.

[sui generis]

141. and another thing

"we"????

ha ha hahahahahaha

please, enlighten "us".

[kodi]

178. you do understand the meaning of noblesse oblige do you not?

and if the uber rich think that paying 1/2 the tax rate of those who make exactly what they spend on necessities will satisfy the former's societal obligation when there are 30,000,000 poor americans you are sorely mistaken. I don't know what history books you have read of the Guilded Age, but whatever you are reading is lacking in an apprecication of just why there was enacted an estate tax in the first place.

why don't you explain for the rest of the class the equity in why investment income is taxed at one-half the rate of wage income? the rich don't work, they live off their principle and income earned from their investments.

there is no industrialized nation with a wider monetary disparity between the wealthy and the rest of the population than america....and it has increased dramtically over the past 5 years......and that is what helped kick off the French Revolution.

but if you really wanted to show your propensity for anal retentiveness you should have pointed out that the crowd was clothed from the era of the mid-19th century, not the Reign of Terror.

[PeaceProgProsp]

38. 40% of the people on Forbes 400 wealthiest Americans list INHERITED their

wealth.

I guess it's encouraging that 60% worked to earn their wealth, but I think we have a problem when we have a society that rewards so many so richly for being lucky.

In the UK there's an incredibly hefty estate tax on the royal family which is designed to gradually reduce their economic power until they're no longer wealthy for being born wealthy.

That's the right idea.

[sui generis]

42. I'm a capitalist, not a socialist.

I believe in strong support of social programs, social welfare, social medicine, but I also believe in the other side of the coin, that society doesn't get to "reward" or "punish" anyone for anything other than a crime.

[PeaceProgProsp]

43. We're punishing society by making it so easy for people to inherit priv-

ilege and opportunity and so hard for people who have good ideas and work hard to succeed.

Wealth should be the reward for contributing to society and creating social value not because you're trying to reward or punish any individual. It has to be that way so that society can survive and move forward.

Inherited privielege and the absence of reward for innovation and labor led to the demise of every empire in history.

[sui generis]

44. That's all very normative thinking

"should be's" - mean there are problems.

Is this the right solution for the problem you mentioned? How does this solution target on rewarding people who have good ideas and work hard to succeed?

It doesn't. We are hurting ourselves with this kind of thinking, and we're not doing a damn thing to reward people who have "good ideas and work hard", having expended all our effort on this straw man.

[PeaceProgProsp]

50. I think you're totally dodging what I said.

What I just described is the reason we have progressive taxation. It's not a "should be." It's and is and was and it's based on solid economics and history, and it's something America believed for decades and the Republicans are now taking it apart. It's obvious where this is going. It's going back to monarchy. We're going backwards, and it's going to have awful social and policy ramifications and we know it because we saw it happen once before (or, we saw it happen many many times in failed societies which concentred privilege and power in the hands of a few and allowed that power to be inherited).

[sui generis]

66. it's a straw man

fair taxation for everyone.

Not socialism. Not "going back to monarchy", not making wealth the bogeyman this week.

As progressives we don't berate people for their skin color or eye color or their culture of origin, but all bets are off on wealth. Wealthy people are our "einviger jew".

I'm not dodging, I'm disagreeing. We do not have an obligation to play Stop the Monarchy - your assertion is like saying Stop Beating Your Wife.

BTW there are many many reasons "failed" societies failed, not just the tiny highly distorted reason you are putting forth. If we want to address the topic fairly we have to be fair in our assertions, at least, I demand it whether or not anyone agrees.

I want the best solution, whatever it is, but I also want to examine the premises I hold dear to see if I'm basing something on false or irrelevant assumptions.

[PeaceProgProsp]

69. Oh come on. It is not.

"Normative." "Straw man." "Stop beating your wife."

Those are dodges so you don't have to address what I'm saying.

The argument I made is the reason we ever had progressive taxation, so it was obviously an idea that had enough substance at one time.

Rewarding work and not oncentrating wealth in the hands of people who don't work to earn it was the reason the US leapt past Europe during the Industrial Revolution. It was the underlying ideological reason for WW1.

If we got rid of estate tax, politically and economocially powerful people would get their power from marrying other wealthy people and it would be one more of the many ways we're polarzing wealth and it will contribute immenseley towards turning America into the kind of society that we out-competed from the early 1900s up until 1973 and our society would fall apart even faster than it is right now.

Why do you think we got an estate tax and progressive taxation in the early 20th century?

[sui generis]

74. Not dodging

I disagree. Clearly the light of your "truth" is not mine.

Anyway, it's clear that I am not dodging when I say I disagree with your premises, as I have, and why. It is one system. I am questioning if it is the best system. You are blindly saying it is and brook no other solutions. I distrust that.

I can't be any more direct.

[PeaceProgProsp]

78. Why do you think we got a progressive tax code and estate tax in the first

place?

[PassingFair]

160. The Hitchens' brothers called....

you're late for the Poppinjay Club meeting.

[kodi]

180. skin/eye color are not a priori reflective of socital power as is wealth

Yours is such a bogus argument. Wealth is social power and it is enhanced dramatically by its application in the political arena where the courts have said that money applied in this arena is constituted as speech.

The normal and proper aim of the corporate community is to make money for its managers and for the owners of business all the better if its members also contribute to the general prosperity. However, business acts on the prevailing business philosophy, which claims that corporate self-interest eventually produces the general interest. This comfortable belief rests on misinterpretation of the theory of market rationality proposed by Adam Smith.

He would have found the market primitivism of the current day unrecognizable. He saw the necessity for public intervention to create or sustain the public interest, and took for granted the existence of a government responsible to the community as a whole, providing the structure within which the economy functions.

Classical political thought says that the purpose of government is to do justice for its citizens. Part of this obligation is to foster conditions in which wealth is produced. The obligation is not met by substituting the wealth-producer for the government.

Business looks after the interests of businessmen and corporation stockholders. Stark and selfish self-interest obviously is not what motivates most American businessmen and -women, but it is the doctrine of the contemporary corporation and of the modern American business school.

It does not automatically serve the general interest, as any 18th century rationalist would acknowledge - or any 21st century realist.

[toopers]

97. Of course, you fail to mention how the royal family accumulated

their wealth -- by taxing those they ruled! The government should not be your ruler!

[toopers]

45. Let's just go to a federal sales tax.

That is the best thing to do.

[sui generis]

47. disagree - that's regressive in the other direction

that wasn't even a good nice try.

The nuance here is that we think there are problems with our "social justice" system that can be solved by punishing the wealthy, rather than come up with solutions for problems in our "social justice" system.

[toopers]

Sorry, I guess I missed it.

the article is about changing parts of the current tax system, as is many of the posts on this thread. I do not think we should punish anyone unless they have broken the law, so my post was about the tax system, not the law.

[PeaceProgProsp]

51. That will punish people who spend most of their income.

The average savings rate in America is now in the negatives. People are spending more than they make. A sales tax for many Americans will be a tax on money that you never got as income.

For the few very wealthy, it will be a huge reduction in their effective tax rates.

[toopers]

52. Just think, if they never got it as income . . .

then they should be able to put it away as savings and not miss it.

[PeaceProgProsp]

55. A lot of poor people aren't going into debt by choice.

They're going into debt because they have no choice and it's the only way to survive.

And how is it fair to reduce the tax on a millionaire who spends 100k a hear from 350,000 a hear down to 35,000 a year (a 90% reduction in income tax burden), and increase the tax burden of an EITC recipient from, say negative 2,000 to a sum that represent, say, 40% of their annual income, plus they'll have to finance it so that their tax bill starts to compound interest?

Even if you want to scare the poor into reducing their consumption dramatically, you have to admit that that isn't fair.

Furthermore, the most profligate consumption in America isn't among the poor. It's among the rich. And by reducing their tax bill, you'll actually fuel their consumption immensely.

Is that what you want to do?

[toopers]

54. And actually, it will punish the people who spend the most . . .

which happens to be the people with the highest incomes. So it really is a consumption tax. considering all the resources this country burns through, that is a good thing.

[PeaceProgProsp]

56. Nope. As I said above, if you reduce the income tax bill of the wealthy by

90%, they'll have more money to spend on consumer goods despite the new sales tax.

[toopers]

59. And tell me, what is wrong with that.

We want them to spend the money.

[PeaceProgProsp]

61. You seriously want a tax code that punishes the poor and makes life

easier for the wealthy?

Seriously?

As I said, the consumptio levels of poor people is often barely discretionary. They're spending money on what they need to live.

You know that the poorest Americans make LESS today than they did in 1975? You know that we, as a nation, are destroying the value of labor and rewarding the wealthies? And now you want a tax code that hands even more money to the wealthiest while taking it away from the poorest?

[PeaceProgProsp]

57. You'll fuel the consumption of the wealthiest and kill it among the poor.

And the poor are the people who need and value things more.

[toopers]

62. A sales tax automatically rewards the right behaviors . . .

increase income, increase savings, punish consumption.

[PeaceProgProsp]

65. It rewards having huge amounts of wealth. It punishes poverty.

[PeaceProgProsp]

67. It punishes buying anything while you're unemployed.

It punishes old people who have no income and have to buy things.

[toopers]

70. It punishes the heavy consumers the most.

Think about the consumption that occurs in the US. I cannot remember the specific example, but it was something like, we have 20% of the worlds population, but consume 75% of all the resources. When you think about saving the earth, taxing consumption is the best way!

[PeaceProgProsp]

71. The heaviest consumers are the very wealthy and they would consume more

because you'd be reducing their income tax burden immensely and that would free them up to spend more on consumer goods despite the added sales tax.

The richer you are the more you'd benefit.

[toopers]

75. And what are the people who spend the most going to do with their money

sit on it . . .Money has no value unless it is in circulation. Heavy consumers will spend more of their money if they have more money. And they probably will fund more with charitable giving.

[PeaceProgProsp]

76. So your policy goal is to facilitate consumption for wealthiest

and discouage it for the poorest?

Hmm.

Nice democratic values there.

Why isn't the policy goal to allocate the tax burden fairly? Why don't we have everyone pay an amount in tax that reflects where they are in terms of wealth. The wealthy will pay slightly higher marginal rates on higher levels of income, because the poorer you are, the more you value everything and to tax them the same or more (which is what a sales tax does) you are punishing them.

[PeaceProgProsp]

72. And unemployed, students and retired would pay tax on money they never

got.

How can that be fair?

They consume tiny fractions of what the ultra-wealthy consume, but because they have no income, their tax burden would be on money they never received.

They'd borrow money to pay their tax bill and their lenders would make even more in interest because of it.

Sales tax is a gift to credit card companies. So in your world, the best thing to be would be the billionaire owner of a credit card company -- the kind of person Jesus would have thrown from the temple.

[toopers]

73. Ok, why don't we rebate certain living expenses

Send people their taxes back each year for the money they spent on necessities.

[PeaceProgProsp]

77. Because that leads to tax revenues approaching zero.

You're saying, let's not tax the wealthy too much and let's not tax the poor too much. So who's going to pay to create a society which allows people to work and be productive?

[toopers]

80. You are making the assumption that the wealthy do stop something

they are doing now, and that is spending money. Actually, they will probably spend more of their money because they realize more of their income. And since this rewards the correct behaviors (income is not a bad thing anymore) more people will work and be productive!

[PeaceProgProsp]

83. You reduce their tax bill by 90-95%,

they'll never spend enough to make up for that lost revenue. And if they buy collectibles from other individuals, they won't pay any taxes.

[toopers]

89. Why don't you think they will spend enough?

If they buy collectibles, they pay taxes on what they buy -- collectibles. If they are collecting, then they will continue to collect -- it is the nature of collectors who collect collectibles.

[1932]

127. Because they're rich, not stupid?

And there's no sales tax on collectibles/auction sales/private sales.

You'd pay tax on the capital gains if you sold the item for a profit IF there were an income tax, and that's what a national sales tax would replace. So rich people would engage in a little more consumption, and it would be tax free.

Also, if you eloiminated the income tax on a 1000000 earner, you'd have to charge a sales tax of 35 pc and hope they spent 1,000,000 a year to recapture the lost income tax. If you expected them to spend 500,000, you'd have to have a sales tax of 70% to break even.

[maxrandb]

63. It's Extremely Unpopular With

the 00000000001% of Americans that have to pay it.

Of course, since that 00000000001% control 99.9999999% of the wealth, I'm quite sure it will be repealed.

[UofIDem]

108. Actually...

I always hesistate to get in debates like this, but since I'm fresh from tax class with my ultra-progressive income tax teacher, I have some information which actually bears on this discussion, and probably isn't twisted by the repukes.

According to him, estate taxes typically are found, in polls, to be regarded by large majorities as the most "unfair" tax of them all. Need proof? Find the poll results from when Californians repealed the state estate tax by a margin of almost 70-30. The problem is that no matter how high the bar is set, people tend to think that they too will be affected some day, or they think that it isn't right to levy this type of tax.

Secondly, there is a lot of concern that the repeal of the estate tax would dramatically raise the tax burden on the middle class and poor. While no one could reasonably disagree with the assumption that if tax losses in one place must be compensated by tax gains from another, the portion of government revenues represented by the estate tax is less than .01% of our GDP. The fact is that eliminating the estate tax makes only a hair of difference. In fact, when calculating projected government revenues, the amount estimated to be estate tax revenues frequently fall within the margin of error for the calculation, which essentially means that the goverment isn't even considering it as a source of serious revenue, and these calculations were done when the estate tax was far more expansive than it is today (Last numbers available were under Clinton when all estates over 650k were taxed).

This is a political battle, not an economic one. While I can respect that the estate tax makes a political statement about how we treat aristocracratic tendancies in the upper class, the rich are really not passing their money down by tearing down blue collar workers in any meaningful way.

[wuushew]

123. $1,000,000,000,000 over ten years considered chump change?

Recently, the House of Representatives passed legislation to permanently repeal the estate tax and the Senate is likely to take up the issue in the coming months. Repeal or near-repeal of the estate tax represents a massive tax cut for the heirs of the wealthiest at the expense of working Americans. Including the interest payments on additional debt, full and permanent repeal of the estate tax would cost nearly $1 trillion over the first ten years of implementation.<1> Many of the supposed “compromises” under discussion would cost more than 90 percent as much. These costs would add to current annual deficits of over $400 billion<2> and the $7.7 trillion national debt.<3> The nation would bear the weight of these enormous costs as a whole, but the benefits would go to a small number of America’s wealthiest heirs.

A group of Senators led by Senators Baucus, Schumer and Kyl have already begun negotiations over the future of the estate tax. This memo outlines the severe problems with full or substantial repeal, and provides guidelines for more positive reform options.

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=860671

[ElaineinIN]

133. The sunset provision

Some of you may have heard that the "repeal" of the estate tax occurs on Jan 1, 2010, but that legislation sunsets on Jan 1, 2011. The reason why they had to phase in to it over ten years, and then let is sunset, is because the cost in the out years was so great that the Senate couldn't pass it and meet their internal rules about balancing. By sunsetting repeal, they could deal with the budget issue yet still say that the "repealed" the tax, if only for those who die in 2010. And, by the way, the biggest jumps in the unified credit (the most costlyl from a revenue side) occur when? In 2009, after the 2008 elections and when shrublet is no longer in office. Convenient.

[ElaineinIN]

132. Collateral damage

One of the most damaging aspects to the most recent revision to the estate tax was the repeal of the state death tax credit. I won't bore all of you with the details, but in effect what it did was repeal the state estate tax for most states, because the state estate tax was usually a function of the federal state death tax credit. Now, one might argue that the amount of revenue raised by the federal tax is a drop in the buck (however, I will tell you that right around the beginning of the Iraq war, I was at a presentation with an IRS E&G attorney who indicated the revenue for the past year was almost exactly the same as the amount requested by the shrublet for the first war appropriation... $78b I want to say...) however, the effect on the state revenue base has been absolutely devestating. Here in Indiana, they cannot repeal the inheritance tax, because it is the primary funding mechanism for county governance. So I respectfully disagree with the idea that this isn't an economic battle, as well as a class and values battle.

[sui generis]

145. interesting to line this up as a "battle"

I wonder though, how is this materially different than a sin tax? If enough wealth in a state is redistributed, taxed, or just squandered often enough to fall below threshold, what then for the counties?

If the cost of smoking or drinking is high enough that people drink and smoke less, how do cig taxes provide a stable base for the public education system (thank you Texas)?

It seems like values-based taxation (smoke and drink less, ye dastardly sinners) are in conflict with fiscal goals in some cases . . . ;)

[ElaineinIN]

186. Well

in my mind, its a battle of priorities. We can debate the value of the estate tax and alternatives in a vaccuum, but it doesn't exist there. It exists in a system where getting rid of the tax will cost the fisc. So if we are going to spend money, either in the context of cutting the income side of the balance sheet as opposed to increasing the spending side, we have to ask how the choices we make reflect our priorities. Even if we positied that the repeal of the estate tax were a good thing (which of course, is not something I necessarily believe), we still need to ask, if we were going to list all of our priorities regarding spending and income cutting that are on the table... where is the estate tax? Is it more important than increased education spending, for example? The real battle is over where our values are as a society, and what we value estate tax repeal over, resources being finite.

As with you sin tax analogy.... I think the difference is that a sin tax is imposed on an activity, not an asset, and the goal of a sin tax, directly, is to reduce the occurance of the activity. A sin tax is successful if it is never collected. I've seen posts above that say that the inheritance tax discourages saving... I've never seen it, honestly. I've never seen anyone stop saving or stop working because of the estate tax--most people are worried about their retirement, the well being of their spouse, and the ability to pass on what they can on a tax efficient basis then just stopping activity.

[sui generis]

142. good answer

- I especially like the qualification of your tax prof as "ultra progressive". ;)

Welcome to DU - it's all fun and games until we start putting each other's eyes out.

:hi:

[ElectroPrincess]

153. "This is a political battle, not an economic one."

Don't BANK :blush: on that tenet! Can we say Class Warfare is coming to a city near you?

[slackmaster]

112. Writers who abuse hyperbole deserver to be taken out and shot

According to a 2001 article in Forbes magazine, estate tax was levied against 47,483 estates in 1998.

http://www.forbes.com/2001/04/04/0404estatetax.html

Other sources say the figure is a little less than 2%.

How close was the popular vote for President in the last two general elections?

[Mr.Green93]

85. Pay up Pukes

Pay your fair share. All of it.

[yorgatron]

87. EAT THE RICH!

:evilgrin:

[sui generis]

119. well I got what I asked for! They discuss.

I was actually more interested in other people's opinions and insight on the topic and what underscores their rationale. Some days I am surprised by the intelligence, insight, and social conscience that define us enough to talk about these issue, and then made uncomfortable by the judgementalism that follows so quickly, the strange but subtle aftertaste of insecurity that drives the snipe.

It's funny, once "social justice" is brought up, the camp splits up into crusaders and oppressed, and everyone is crusading and oppressed on all sides.

:empty thoughtbubble:

oh well! :shrug:

[DoveTurnedHawk]

124. I'd Rather Crusade for the Poor...The Rich Never Lack a Defense (eom)

DTH

[toopers]

139. Nor an offense. . . .

as a matter of fact some are very offensive!

[ElectroPrincess]

152. Very few people can graciously handle unbridled power or wealth /eom

[ElectroPrincess]

151. Here's one from the underclass ...

Drop the curtain and Bring in The Clowns! :+

The horse is dead, please stop beating him, i.e., driving your one view home ad nauseum. Just because we choose not to argue with you doesn't mean we *all* agree.

[sakabatou]

138. Should be called the wealth tax

[HuckleB]

156. Why?

You think that's more accurate than "estate tax"?

[FreeStateDemocrat]

158. Yes, since it would only tax the extemely wealthy.

[ElaineinIN]

187. The estate and gift tax

are commonly referred to as wealth transfer taxes by those of us who deal with them regularly... a death tax is actually a specific kind of tax, it occurs in Europe from time to time.

[Megahurtz]

157. Wow. Lot's of Rich people having discussions on this thread.

Lucky Yous.:popcorn:

[FlemingsGhost]

162. Yeah ... my thought, exactly. It's pretty comical, actually.

sui generis, "capitalist" extraordinaire, is my favorite.