Is the "death" tax an issue for the Democrats or the Republicans?

[kentuck]

I listened to some of the questions and answers on C-SPAN this AM on this subject and it seems like this is an issue that is an opportunity for the Democrats? It affects such a small percentage of people in this country but could take about $700 billion out of our economy over a ten-year period. Of course, somebody else will need to take up the slack or else, the huge deficits will only get worse? Should we tax the dead or the living? Which is more painful?

[Deep13]

1. for us

The inheritance or estate tax is a tax on the rich who inherited their fortunes rather than working for it in order to encourage tax equity and egalitarianism.

[Cassandra]

9. Not everyone who leaves a large estate inherited it.

Some have worked hard, had some luck and earned it. But part of their good fortune is due to living in a country with laws and courts and an interstate highway system and public schools and any number of other things we consider part of the public good. The public good is something we all pay for (or should) even if our careers don't pan out as well as those who do really well.
As much as repukes like to say that estates are double taxed, most money is double (or more) taxed and that only really applies for that portion of the estate is in cash or equivalents. The capital gains on real estate or art or other valuables have never been taxed and without an estate tax, they never will be. Is it fair that I might have to pay a million $ for an apartment here in NYC but someone else might inherit a similar one tax free that originally cost under $50,000? And I say this as someone who stands to inherit some money from my parents.

[Deep13]

20. No, but those that get a large estate do not earn it.

Estate taxes do not apply to "some money". They apply to large estates of several million dollars. I remember having this discussion with my bone-head inlaws in 2000. They built a successful light industrial business. They were for Bush because he promised to phase out estate taxes in ten years. After than, the exemption expires. I told them Gore wanted an immediate exemption for all family businesses and farms with no sunset. They didn't care because Gore wasn't "talking about it", even though he was.

[Cassandra]

24. I inherited a small trust from my grandmother...

so I know quite a bit about the estate tax. Writing two huge (to me) checks to the federal and state governments was acutely painful since my brother and I could have used the extra income. However, the estate tax is graduated (which is not often mentioned), I knew it was proportional to the size of the estate and I know I'm very lucky to have the extra income. What I can spare I give to Democrats. :-)

[BlueEyedSon]

2. How about the "birth tax"???

About $120k per newborn!

http://www.house.gov/sherrodbrown/issuestaxbirthtax.htm

[Deep13]

5. Jesus!

In the '80s some idiot asked me why the government could not just take $2 from everyone to pay the national debt. The answer then was that everyone would have to come up with $6000 for that to work.

Now you are saying it is more like $120,000. That is criminal malfeasance to allow things to get that far out of hand.

[htuttle]

3. Isn't that the 'Paris Hilton Tax Break'?

[greekspeak]

4. it is not taxing the dead, it is taxing the dead's heirs

And the gripes about it are from crybaby richer-than-thous who hate having to pay taxes like the plebes.

[KarenInMA]

31. no, it's people who don't think

the gov should get two bites at the apple.

[ochazuke]

6. My take on the label "death tax"

It's the one Casy and Cindy paid. A certain percentage of our population has to DIE for bushCo policies. Or, suffer from mercury poisoning, or etc.

[papau]

7. Rephrase: Is Rich escaping Capital Gains tax via Estate tax an issue?

It should be. At death the capital gains tax that would normally be paid on transfer of an asset is never paid by the rich.

Annual tax should include years unrealized appreciation as income - with a 20,000 deduction per return, and with a 10 year phase in of the capital gain (unrealized) on all current assets to date law first takes effect - with 500,000 deduction on phase in per year to a max deduction of $5,000,000.

This would miss just about all the middle class - and hit the rich.

[KarenInMA]

10. Taxes were paid on this money originally.

Think about it this way:

If you make POST TAX contributions to your IRA, when you retire the money you've saved and earned isn't taxed. Now, if it was taxed, there would be no incentive for saving- you're getting taxed twice on the same amount of money.

It's the same thing for the death tax. Say my parents leave me $50,000. During their lives, they paid taxes on this money-through earnings, capital gains tax, whatever. The gov. has already had it's cut. Why should they get a second bite?

To call it the Paris Hilton break is ridiculous. There are many people who don't have a fraction of her wealth, and they get hit with this.

[Cassandra]

13. Say your parents bought a house with that $50,000...

as I said above, and it's now worth over $500,000. That extra $450,000 (minus money for improvements) in value has never been taxed. The government has not had its cut (for needed money to function). If it doesn't get something from those capital gains it will have to make up the budget shortfall from wages. What's your preference?

[KarenInMA]

23. Then my parents have been paying property taxes

on the house the whole time they owned it. The government does not DESERVE "it's cut" of something that was purchased with money from wages that were taxed, or intrest/dividend income that was taxed.

my preference is that the government make up it's budget shortfall by being more fiscally responsible.

[kentuck]

26. Damn....sound like a Republican...

:)Maybe they should raise FICA taxes on the working poor? As if no one else pays property taxes? You deserve nothing nothing from your parents.

[KarenInMA]

29. That's uncalled for.

Did I say they should raise taxes for the poor?

No I did not. You're right, I dseserve nothing from my parents. Personally, I hope they both live to be 105 and spend their last penny salsa dancing on the Riviera the day before they die.

My solution is to lower taxes all along. Force the US to me more responsible </libertarian>

[kentuck]

34. OK .. what do you cut to bring our present budget in a modicum of balance?

We are only spending about a $trillion dollars every two years more than we are taking in. We have the lowest taxes in the industrialized world. Do you prefer to pay no taxes at all? What kind of society do you want? I suppose you are an avid believer in the free enterprise system? I hope your parents live to be 105 and longer. And I hope you don't have to pay any taxes on your first 2 million dollars. But after that, unless you have figured out how to protect it in a trust, I hope they tax the shit out of you...

[KarenInMA]

37. Well,

I would start my not spending a billion dollars a month in Iraq.

Then I'd cut out pork, like a 50 million dollar bridge in Alaska that goes to an island with 30 people on it.

Then I'd reform our welfare system to get people a chance at live, not just a bunch of hand outs. That would be INCREDIBLY expensive at first, but would pay of in about 10 years.

Then I'd legalize drugs, and tax the shit out of them. Stop subsidizing the prison industry, and have the nifty little side effect of bringing down crime levels.

Oh, and I'd reduce the salaries of all senators and representatives.

And I wouldn't even have a fraction of 2 million dollars. My parents aren't rich, there blue collar thrifty people. My point is the government will function on however much money we give it. No need to give it more.

[Cassandra]

30. They've been paying property taxes on the assessed value.

In some areas, like out on Long Island and probably other places, the assessed valuations are made differently between older properties and newer ones, so property capital gains may have been taxed unevenly. Also, property taxes are local taxes, so they got services in exchange for those taxes; fire, police, schools, yes?
I would also prefer the gov't be more fiscally responsible, but repukes seem to love pork even more than Dems do.

[ElaineinIN]

14. Here are the fallacies in your argument....

1. Your parents earned that money, you didn't. You've never been taxed on it, and without an estate tax (and even with the estate tax in most cases) you never will.

2. Your parents might not have been income taxed on it, either. If it is appreciated property, such as stock, here's how the income tax works. Assume they bought it at $10--that is their basis in the stock. At the time they died, it was worth $50. If they sold it the day before they died, they would pay capital gains tax on $40. If you inherit it and sell it the next day at $50, your basis is "stepped up" to $50, your sales price is $50, all the capital gain disappears (*poof*) and no tax is ever paid on the appreciation, by your parents or by you.

4. By the way, if that $50,000 was in insurance, the build up of the cash value of the insurance during your parents life time was income tax free, and 99% of the time, the death proceeds are income tax free. And, if done correctly, can be estate tax free with a minimum of planning.

3. The definition of income is an "accession to wealth", so one would normally think that that would include gifts or inheritances. But there is a special exception to this rule, excluding gifts and inheritances from your income. So your inheritances (except for IRAs and other retirement plans) and gifts are free from income tax in your hands. And, if done correctly, can be free from estate or gift tax within certain limits.

4. Okay, its all wages your parents scrimped and save so they can leave you $50k. Fine. Currently law allows each individual to leave $1.5 million at death before the tax is paid. In 2005, that goes to $2.0m per person, $3.5m in 2009. Current scuttlebutt is that there will be a compromise of $5.0m per person.

5. Okay, you've got a farm or business. There are ALREADY a number of special breaks for farms and businesses. Although this is a rallying cry for the death tax folks, I can tell you from my practice that the "forced sale" thing rarely happens. Want more breaks for these? Fine, but its not an argument for repeal.

6. What is an argument for repeal? Encouraging heirs to be productive members of society, valuing worth, encouraging equality of opportunity, and undercutting the impact of the de facto aristocracy occuring in this country based on birth and not on accomplishment.

[KarenInMA]

27. Ok. rebuttal.

1. My parents earned that money, and worked hard to have a good life for their children. Most people would happily provide as much as they can for their children.

2. Stock markets- That's the way the market works. For don't get a tax credit (or at least not a comparable one) for the money you LOSE on the stock market. Also, it's a risk. If you take the risk, you deserve the rewards.

3. Productive memeber of society- look, regardless of what percentage of money you take from Paris Hilton, she's never going to be, a productive memeber of society. She has too much. However, I do not support the idea of an person who has a career, in their 30's-40's or so, who inherits money form his parents and then needs to in turn, give some of that back to the government. It's just not right.

[Cassandra]

36. I get a tax credit for money lost in the stock market.

Admittedly, it's not a lot per year but I think I'll enjoy the carry forward for a long time (and if I don't I'll be past caring). Trying to look on the bright side here.

[kentuck]

15. What is the limit before any taxes are paid at all...?

How much is exempt? $3 million?? Does that matter?

[KarenInMA]

28. No. It doesn't and shouldn't matter

Regardless of how much you recieve, you will be paying taxes on it as it goes along- income/divident tax, property tax (if it's property). I don't think a special tax should be added, just because it changes hands.

[papau]

16. Not True - there is a capital gain tax - and it will never be paid - If

your parents had sold the items and the estate was in cash, they would indeed have paid a capital gain tax.

But that is the whole point of the Estate tax - it is a super cheap way for the rich to avoid paying capital gains tax on items transferred to the kids - yet the kids get treated as if they have no liability for capital gains except going forward from today's market value.

How Post tax IRA fits into this is that post tax IRA - under today's estate tax law - transfers as cash with no income tax - only the estate tax is paid - and no income tax is paid on pre-tax IRA if moved to a pre-tax IRA that will be taxed on withdrawal.

Indeed getting IRA mixed into this discussion is a problem for the current Estate tax loophole folks - the suggestion I have avoids all that for middle class to low rich folks as the deductible is set very high. Indeed, the current Estate Tax deductible makes "IRA treatment" the least of the fairness issues to those that pay the estate tax - the rich.

If you have under $5 million and are worried about a non-zero estate tax just PM me and I will explain why there is just about zero chance you/your heirs will need to pay any estate tax.

As an aside - all money gets taxed many times - mainly as you earn it via the income tax, and as you spend it via the sales tax.

[ElaineinIN]

19. One quibble

IRAs and other retirement plans are IRD, and as such don't qualify for a step up in basis, so they are inherited, in general, with the full associated income tax liability, ususally at ordinary income tax rates. They are terrible assets to die with. Better to spend that or leave it to charity, and leave the other assets eligible for step up to the kids.

[papau]

21. True - and a good point! :-)

:-)

[rman]

25. estate tax does (did) not apply to the vast majority of people

calling it death tax and suggesting it applies to a sizable portion of the population is just one another example of the RW's lies.

The mainstream media repeating it and not calling the RW on their lies, is evidence of complicity.

[still_one]

8. It affects a very some percentage of people, the wealthist

the reality is if they get rid of this tax, reduce other taxes, and increase spending on the military and the war in Iraq, something will have to give

This is what the neocons have been planning for years, to use that as an argument for why we need to cut and prvitize entitlement programs

Here is there hit list:

1. Social security
2. Medicare
3. other social programs

please look at what deregulation has brought us:

1. higher energy prices, with new monopolies created which are less and less regulated
2. higher phone prices with new monopolies created which are less and less regulated

remember when they degregulated the banking and S&Ls?


They are now talking about deregulating water

The middle class is slowly being destroyed in this country

[Ian David]

11. Call it "The Paris Hilton Tax." n/t

[kentuck]

12. But couldn't this issue somewhat neutralize the Repubs #1 issue...

about lower taxes? Isn't this the issue to educate people about taxes being a necessary part of government and when everyone refuses to pay, what will we have left? Would it be better to tax Joe Six-Pack or Paris Hilton? Bill Gates is worth more than many countries GNP. Should his family be able to keep all his wealth once he dies? What have they done to deserve it? Simply being the "child" of a wealthy person entitles you everything that the parent may have earned in his life?

[MN ChimpH8R]

17. Not an issue for me

Those who inherit large sums of money, rather than a family-owned business or farm, should be taxed for the same reason lottery winners are taxed, for that is exactly what they are.

Why on earth should some dimbulb asswipe like Dan Quayle, Paris Hilton or ANY member of the Chimp clan NOT have to pay taxes on what is, in effect, money from the sky?

If people like Bill Gates, Sr. and Jr., and Warren Buffet have no problem with it why should we drones?

The only reason the 'pukes are upset is because they wish to establish dynasties of, in FDR's words, malefactors of great wealth.

[Cassandra]

41. Not exactly like lottery winners...

since one can be really fucked up by one's family on the way to an inheritance, whereas the lottery drops into your lap.

[Greybnk48]

18. funny you should mention this

I just had a discussion with my plumber about this. He saw all of my bumper stickers and started on a repug rant while he was fixing my pipes. Among other things, he said that FDR ruined this country with social programs and that no one should get a free ride "If you don't work, you don't eat." He added that if we quit giving handouts we would not need so many taxes. Which ties this to the death tax.

I asked him about the death tax, which he was, of course, against. He gave me the usual "Tax twice, tax twice, awwkk!." And the old well it's their money bit. I pointed out that his view was contradictory. First, no one person is being "taxed twice". The earner of the money is dead, the new owner is being taxed, and we tax PEOPLE not money. Secondly, the children of the wealthy did not themselves earn the money, so an inheritance is a selective handout. The heirs have already been handed an expensive education and powerful connections via their family ties. Isn't that enough?
Society/consumers made the dead person wealthy and the money, therefore, should go back into social coffers.

[bleedingheart]

33. I like your style...

my retort to the "taxed twice" is this....

"If you worked for your father's business you would be paying taxes on the salary you received...so in the same vein the inheritance you receive is taxed by the same logic"

I also tell people to be grateful if they do receive an inheritance given that the alternative is getting nothing or having their parent's estate chopped up to pay creditors. (A lady down the street died in debt....her house and all assets were sold to pay off her creditors...I am sure her kids would have been grateful to pay taxes versus deal with that mess...)

[newportdadde]

22. To those rich people inheriting millions:

I feel your pain. Its going to be a terrible thing to not inherit the entire 100 million.. awful just awful. In order to help ease this burdern I am willing to take it from you. I alone will live with the shame of not receiving the full 100 million. I will take the ridicule you would have faced from other socialites as they laugh at you walking away in your threadbare clothes with only 70 million.

Its free money! Stop bitching at paying tax on over 2 million damn.

[KarenInMA]

32. What about those inheriting $200,000

stop using the extremes.

[IrateCitizen]

38. $200,000 is not subject to the estate tax...

The previous threshhold was $650K for one family member, and $1.3 million for a mother and father (both didn't have to die at the same time). Then, I believe that the threshhold was raised to $1 million and $2 million, respectively.

An inheritance of $200K has not been subject to the federal inheritance tax for a long, long time.

[Cassandra]

39. Is that the amount you are worried about?

If that's their total estate there will be NO TAX. So, you can breathe now. This tax is about the extremes; that's the point.

[Mayberry Machiavelli]

40. If your parents gave you the 200K the day before they died as a gift,

wouldn't you be subject to some kind of gift tax on it?

So if so, what is it about the fact that they died that makes it sacrosanct?

Basically I see this as just one more in a series of policies all designed to favor those who already have wealth. It's all part and parecel of shrubco culture. Getting into tony schools based on bloodline and connections and money rather than merit. Getting businesses that you then get to run into the ground, instead of other perhaps more qualified people, because of family name. Becoming the anointed son because of bloodline rather than any accomplishment.

Everything possible to maintain and enhance concentration of wealth and influence within robber baron families.

[ElaineinIN]

42. Then there is no federal estate tax

The point is that the estate tax only hits the extremes. Only the top 2% of people have a filing obligation; only the top 1% actually pay the tax.

[IrateCitizen]

35. First things first, stop using the term "death tax"...

It's a fallacious moniker. Start using the term "Paris Hilton inheritance tax" or something like it, because that's essentially what the Estate Tax is.

The term "death tax" has been used to get the average American to think that they will be affected by this. Framing it in the terms of who REALLY is affected -- those lucky enough to have won the birth canal lottery and who spend their lives doing absolutely nothing useful -- will turn public opinion against the Republicans' proposal.