Help with the Estate tax

[Democrats unite]

I was ambushed at work today about the Estate tax from two Republicans.

Now I do have to admit my knowledge of the Estate tax is nill. Can someone please give me an arguement on why the Estate tax should not be repealed.

[CarinKaryn]

1. It prevents certain families

from passing their stolen wealth down through the ages. Helps to redistribute resources to larger base of people thus helping the Nation to grow stronger as a whole.

[mmonk]

16. Nobody works for a lottery payout.

If you built a business out of something or saved and invested all your life, why shouldn't you be able to leave it to your children and grand children?

[creativelcro]

58. After death, all possessions should go to charities.

[arewethereyet]

60. why ?

Whn my Dad died, he left my brothers and I some money. He opted not to specifically leave money to our kids insted charging us to make good decisions as to how best to address this (there is a significant age range in the grandchildren).

It was not a huge amount of money but my daughter now has her pre-paid college tuition program that I started paid off and some investments to cover the books and board that the program does not cover and something to help her get started in life. This is what I believe my Dad would have intended for her as a loving grandfather's gift to a beloved granddaughter.

There is nothing wrong with charity and my Dad gave much money to them over the years. What's wrong with him wanting to do both ?

[creativelcro]

62. Fair enough... Dynasties seem so un-American...

[arewethereyet]

64. my last name is not Rockefeller

and we're not talking millions but thousands.

There would seem to be considerable grey in this area.

[0rganism]

77. Chances are, your inheritence was unaffected by the estate tax

If, as you say, you're talking about thousands rather than millions, your father was able to pass the money to you without the government taking a dip.

[arewethereyet]

117. it did not qualify but not my much

there were a number of beneficiaries.

[lostnfound]

120. Two babies: 1 has father who's dying, the other's will work a lifetime..

and provide support, good living, good schools, college.

If a person is free to give gifts and support to their kids while they are living, but at death it will get taxed at 50% or 70%..? Then the first kid who loses his father not only loses a dad but is financially disadvantaged because of it.

I don't have an answer I'm just pointing out that there's no way to make things "fair".

[Piperay]

114. What incentive would

there be for someone working to build up anything if that was what happened to what you had put so much into??? Most people want to work to leave something behind for their children so those children don't have to work themselves to death the way they did.

[Tansy_Gold]

116. Well, if the entire estate went to charity (or taxes). . . .

. . .. that would be a good incentive for the wealthy to make arrangements BEFORE their deaths to transfer as much of their estate to their heirs as possible.

But the notion of handing one's children an unearned imperial fortune ought to be anathema to Americans, especially those rightwing conservatives who don't like tax money going to those who haven't earned it. Obviously, what ought to be isn't what is.

[arewethereyet]

118. I'll have to disagree with that "ought"

n/t

[Beaker]

84. they also TAX that lottery payout UP FRONT...

if you win $5 million in the lottery, you DO NOT get a check for $5 million .

[SharonAnn]

124. Hmm, so people should receive unearned, untaxed income

from other people and pay no taxes on it? Cool, where do I sign up?

[Valarauko]

45. CarinKaryin, please tell me

Who did they steal it from?

[alwynsw]

68. It also prevents those of us who worked long and hard

to succeed financially from passing down a somewhat intact legacy to our children - or to charities.

The money I've earned has been taxed several times. My capital gains, deriving from stocks I've bought with my earnings and gains on stock issued to me by the company I founded have been taxed or will be taxed when I sell them. I am taxed on the dividends I receive. The money I bought my personal and real property with has been taxed.

Why tax those same dollars again?

What? Stocks and bonds I have not sold at the time of my death are not subject to capital gains? Wrong. My heirs and assigns pay taxes on them when they sell or cash them.

How many times are we going to tax the same dollar?

I pay my taxes. I do not do so grudgingly. The estate tax is nothing more than one last chance to diminish the friuts of my labor, most of which was done with both my children and certain charities in mind.

[0rganism]

78. How much do you think you'll pay in estate taxes, really?

Are you a multimillionaire?

Here's one way around the tax: give generously to those charities and individuals you wish to benefit while you're alive. Set up trust funds in their names rather than yours. Share the wealth. Then, when you die, the amount you pass on wouldn't register with the IRS.

> Why tax those same dollars again?

Why not? There is NO LIMIT to how often a dollar can be taxed, whether incoming or outgoing. You pay taxes and excise fees of which you're probably not even aware without complaint, yet somehow this particular tax offends where others do not? Craziness.

[Tansy_Gold]

113. Dollars don't get taxed; transactions do

The same dollar can be taxed until there's nothing left of it, because that's the way the system works.

We don't tax "dollars" per se; we tax the dollar value of a given transaction, whether it is a paycheck, a dividend check, a retail sale, or an inheritance. Some transactions are exempt from taxation: these may include insurance proceeds, sales of medication or food, sales of raw materials to be used in production, sales to charitable organizations, or inheritances under a certain exemption level.

It's the transactions that are being taxed, not the dollars.

But I'm sure this is all too theoretical and abstract for most people. sorry.


in a pissy mood,

Tansy Gold

[JanMichael]

2. For one it only effects the top 2% of families.

Here...

http://www.socsec.org/facts/sixtaxmyths.pdf

"The estate tax is extremely well targeted. It only affects estates greater than $675,000 (just two percent of all estates). More than 90 percent of such families had income over $190,000 in the year before death. The average estate that paid tax in 1997 was worth $2.3 million. It paid about $390,000 in estate taxes, or 17 percent of the estate’s value. Only 2,335 households, those with estates greater than $5 million, paid almost half of all estate taxes. Without the estate tax, the revenues that it annually generates for the government -- $16 billion and growing -- would have to be replaced by taxes that almost certainly would be more burdensome to low- and middle-income families."

"Because the law allows the first $675,000 of an estate (twice that per couple) to be passed on to family members and others tax free, and because of special provisions for family-owned businesses, transfers to children through gifts and trusts, and charitable bequests, the government collects only a relatively small fraction of even large estates. After all of those exemptions are taken into account, the rate on the taxable portion of an estate rise from 37 percent to a maximum of 55 percent. But as the figure below illustrates, the actual amount paid out of the average estate that pays taxes is just 17 percent of its total value.

Interestingly, the largest estates paid a lower percentage as taxes than the intermediate-sized estates because the wealthiest families made greatest use of the deduction for charitable bequests.
Such bequests are a very significant portion of the income of churches, universities, cultural institutions and foundations. Far from returning “confiscated wealth” to average families that are
struggling to make ends meet, elimination of the estate tax would encourage the very richest families in America to keep their wealth instead of contributing some of it to institutions that benefit the greater society. Estimates suggest that at least 12 percent of charitable bequests, close to two billion dollars annually, are the direct result of the incentives embodied in the estate tax."

One last thing. The Farm Association that had all of the people on TV talking about lost family farms couldn't provide ONE example of what they claim. Probably because most farms and businessess get a 14 year (give or take depending on the state) payoff!

[never cry wolf]

5. Great post

In addition, aren't the pukes always the ones that scream no one should get a free ride? Economic darwinism, ya know. Why should some kid never have to work or earn anything on his own merits just because he is a member of the lucky sperm club?

Shyte, if they inherit "only" half of a multi-million dollar estate they are getting a huge head start over 98% in the country.

[alwynsw]

69. Lucky sperm club?

It's been my hard work that created what will be my kids legacy. Are you implying that I cannot do what I wish with the money I made?

[Isome]

95. OH' blah...

Unless you're a multi-millionaire it doesn't apply to you anyway. If you ARE a multi-millionaire, when you die, the money is NO longer YOURS. It belongs to your heirs. It is TAXED because it is UNEARNED income of theirs.

Get it straight.

[IrateCitizen]

96. You create your kids' legacy???

Personally, I think my parents would be much happier if instead I created my own legacy. And I'm certain that when I have kids, I will feel the same way.

YOUR hard work has created YOUR legacy. You can most certainly do with it what you want while you are alive. But when you die, it is no longer YOUR money. Passing it on to your children is a FINANCIAL TRANSACTION. And like all other financial transactions (made possible by the legal system within our government) it is taxed, as well it SHOULD be.

[SharonAnn]

125. Somewhere along the way, taxes should be paid. Most

increase in value has never been taxed and that's why our tax laws are structured for the tax to be paid when an "event" occurs where someone actually receives some "income". Such as selling appreciated capital assets means the profit on the asset is taxable. Same as for estates.

BTW, where is the "personal responsibility" bit in the Republican beliefs? Where is working to achieve?

[SharonAnn]

12. Much of a large estate's value has NEVER been taxed

For example, if you buy stocks at a low value and they increase in value over the years, you don't pay tax on them until you sell them (which is when the increase in value is taxable). If you hold them until you die and someone inherits them, their high value has never had taxes paid on it so the death event where they become "income" to someone should be a taxable event.

There is no difference in receiving unearned income of any kind. If I give you a large enough gift, taxes must be paid on it. If you win the lottery, you have to pay taxes on it. If you make money on stocks, you have to pay taxes on the profit of them. If you make money at your business or on your job, you have to pay taxes on it.

[JHB]

87. Add to that: capital gains reset

i.e., when you die, the "base value" of capital gains items (like stocks) is reset to the current level. If you've inherited X shares from Dad or Grandma or whomever, if you sell them you pay capital gains tax based on the change in value between the time you acquired it (the death of the bequestor) and the present... not the change in value from when it was originally bought until the present. THAT increase in value is left untaxed by capital gains: it WAS taxed via the estate tax when the quantities were large enough, but * and pals have done their level best to destroy even that.

[mmonk]

15. 17%?

How did they come up with that and what did my family do wrong?

[JanMichael]

30. Estate planning is big business.

Sadly, like the pdf study said, the smaller estates pay a HIGHER rate than the massive Paris Hilton type estates.

That's just wrong. If anything it should be just the opposite. Progressive if you will.

[Yupster]

52. My experience doesn't agree with

that site at all.

When my aunt died she had about $ 1.5 million. She never married, had a good job, saved a lot and owned a home in Staten Island, New York.

She made about $ 40,000 per year and lived fine on that. She was over 80. Ninety percent of the people made over $ 190,000? I think the only way to get that figure is to pick a year during the 90's when the stock market was going up 25 % a year, but even then, calling a paper gain in a stock, income is not really honest to me.

Anyway, like the site said, the dead don't pay the estate tax anyway, it's the heirs. In my family's case it was my mom, my dad, myself, my brother, my sister, my son, my five neices and nephews, my aunt's two friends, the animal shelter, the pet adoption charity, hospice, the church, the Red Cross, and who knows how many other charities. She gave to bunches of them. All these people and organizations got smaller shares because of the tax on my aunt's estate.

When the stats say it only effects the upper 2 % of families, that's not honest either because it effected me, and all the families of my extended family and none of us are upper 2 %. Maybe my aunt was (I doubt it), but it didn't effect her. She was deceased.

Anyway, people often express surprise at why so many people are against the estate tax when it only effects people who have X dollars or more. The answer is my family. It effected us all, and none of us have lots of money. We all know we had to share our inheritance with the government, and when we're told it only effects millionaires, we know of course the person telling us this is ignorant or dishonest because we know it effected us. I doubt we're the only family who has gone through this.

[LeahMira]

94. You have more now than before though, don't you?

It effected us all, and none of us have lots of money.

But you now have at least a little something more than you had before, and something which you personally did nothing to earn.

I'm sure you and your family were all good to your aunt and that she was good to you during her lifetime. Why do you now feel that you are somehow entitled to everything that was hers though? Why not be grateful for what you do have?

I can understand why someone would be upset at the idea that the resources a relative acquired during a lifetime would be taken by a government that would use those resources, say, to fund a war that your relative would never have wanted to support in any way, shape or form. But that's not what I'm hearing you say.

OTOH, if you want to make sure that your own children receive whatever you have, a good financial planner will be able to advise you. There are ways to lessen the tax burden, even for those of us with smaller estates.

[Isome]

97. The numbers are confusing me.

Your aunt only made $40K a year, and she owned a home, but she died with $1.5 million dollars saved up, or in property? What happened? Did she live like a pauper and invest heavily (and well, by those numbers)?

In any event, inheriting an estate worth over a million dollars is not a COMMON happenstance and that could very well put you in the 2%. Stop complaining about paying taxes and enjoy the fruits of your aunt's labor.

[Yupster]

107. Just an average middle class person,

but in many ways my aunt was an extraordinary person too. She was tremendously impressive to anyone who met her.

During the Depression, she graduated from college (a rare story already for a woman)and was lucky to get a job as a secretary to a young entrepeneur who was starting a coffee importing business. The business became very successful, he became a multi-millionaire, and she stayed with him for 45 years. She managed his office, bought Christmas presents for his wife, and their family in turn treated her as part of the family too. They were very generous to her, and she certainly deserved it.

As his business got bigger, she got raises and bonuses, until she was a high paid person.

He boss also taught her how to invest wisely, and she always did, putting away money every paycheck. She's one of those stories you read about "if a person saves X dollars for X number of years, he becomes a millionaire). That was my aunt. She also owned a two story home in New York City (Staten Island) which was worth 500 k. She was treasurer of the historical society, the church, and was involved in many different charities, mostly animal-related.

Anyway, her last few years she was on an oxygen mask. She owned her home and ate her bird-like meals alone or with my parents. She bought anything she wanted, but there just wasn't much she wanted being over 80 with limited mobility or stamina.

She was a great influence on my life. She took me to the Metropolitan Opera every week when I was young and told me about her trips to Africa, China and everywhere else.

On her passage, I think she had the right to decide where her money should go, not the government.

[Yupster]

108. I didn't inherit $ 1 million

or close to it.

My aunt's estate was divided between family, charities and friends. Sje left me and my brother and sister each a modest percentage, which we were grateful for.

[LiberalFighter]

65. I asked one of my sources

Which was my father. He had worked for the ASCS now called the Farm Services I believe. In the 40 years or so that he worked there most of them as the County Executive Director he never knew of any farm being lost as a result of the "Death Tax".

In most cases the farm will go to the surviving spouse. No Death Tax.

[alwynsw]

71. And what happens when the surviving spouse dies?

(rhetorical question)

[LiberalFighter]

79. Does it really matter?

It is only the spouse that has benefited from the value of the farm. Anyone else that receives the farm as a result of inheritance is receiving something for nothing.

Those that argue that sons and/or daughters that worked on their parents farm all their lives should not have to pay taxes are wrong. They are not working on the farm without wages. They don't have to deal with the same risks that the farm owner has to unless the children are partners. Now if this is a family farm where the sons are partners then the inheritance would only be for that portion of the farm that is in the deceased's name. It would be in the best interest in most cases for the surviving partners to keep that portion of the farm intact. In this type of scenario the partner(s) receiving the inheritance and after paying any taxes if any would be receiving that portion of the inheritance at a reduced cost then if they paid for it at market value.

In addition, the parents are able to make annual tax free gifts to their children that will reduce the inheritance tax liability. The tax gifts can include additional interest in the farm.

[Yupster]

74. Obviously the farm can't go to the spouse

most times. Half the time the first spouse dies and half the time the second spouse dies after all. Unless someone keeps getting married and having spouses die on them.

[Tansy_Gold]

89. Farm inheritance

In the case of working family farms, the children/heirs who help the parents work it are brought in as partners or co-owners long before the parents die, usually through gifts and other transfers. Only rarely, in cases of poor planning or general ignorance, does a farm owner die and leave an undistributed operation worth millions to his unsuspecting heirs.

The portion of a farm operation that is already owned by the heirs is not subject to inheritance tax; they own it already, so they don't have to pay on it. Even if a family farm is worth $20 million at the time of the farmer's death, if he has several children who are in the operaion with him, they are probably co-owners: Smith Family Farms, A Partnership.

I've worked in the farm credit system and I've seen how convoluted some of these ownership arrangements can be: numerous partnerships that are in turn partners in other partnerships, so the ownership is repeatedly divided to reduce exposure to inheritance tax.

Several years ago, one of the clients of the farm credit office where I worked died very suddenly at a relatively young age (62). Although his "estate" was worth close to $10 million at the time, no taxes were paid: between the various exemptions and the pre-arranged distribution of ownership, none of the heirs actually inherited anything over the limit.

That's why I get so upset when people, like some here on this thread, keep whining about the family farms. IT DOESN'T HAPPEN, FOLKS. IT JUST PLAIN DOESN'T. I won't bore you further with my experiences both in farm credit -- where we saw everyone's financial statements AND their estate planning -- and my 35 years of being married into a midwestern farming family. But suffice it to say that these tales of working family farms being lost to the tax man are bullshit.

The case of family farms that are sold after the deaths of the owners BECAUSE THE HEIRS AREN'T FARMING is entirely different. As I wrote in another post in this thread, my in-laws recently sold their Indiana farm. Neither my husband, his brother, or his sister have had anything to do with the farm's operation for 20 years or more. They have not "earned" any ownership of the estate nor was any given to them, because my in-laws always saw the property as their main investment, to be liquidated when they aged and needed the cash. That is exactly what they have done.

Had my husband or his siblings engaged in the farming operation, that would have changed: they would have been made partners so that their share of the farm would have devolved on them intact at the time of the parents' deaths. But they aren't working on it, so why should they have any inherent right of ownership, including the right to have the estate fall into their laps untaxed?

In the case of an aunt and uncle who had a farm which one of their sons helped operate, the farm itself was transfered to his ownership over a period of about 15 years, while the parents retained a life estate in the house, which protected them, while they lived, from any reversals of fortune the son might incur in his operation of the farm. When the father passed away some years ago and the mother moved into more comfortable housing for her advancing age, the house was then deeded to the son. Although the estate is probably not going to exceed any taxable limits, it wouldn't matter: everything has been transferred successfully to the son without any exposure to tax liability.

There was a story in the NYT a couple of years ago by some guy who was royally pissed because he was going to have to pay inheritance tax on his parents' estate, which consisted of about $1 million in AT&T stock. They had worked all their lives at menial jobs and socked away a little bit here and there for 60 years, eventually accumulating this nest egg. When the son inherited it, he was pissed because he didn't get the whole thing! He had to pay part of it in taxes! Of course, he hadn't EARNED a cent of it, and even after the taxes were paid, he had a windfall of something like $600,000. But that wasn't good enough, oooh, nooo, he wanted it ALL.

It bugs the shit out of me to hear people whine and gripe about not getting their full inheritance from some relative who died and left a bundle. Usually it's a distant relative who never married, who left something to this great-grand-niece or fourth-cousin-twice-removed. Now, could someone explain to me why that great-grand-niece or fourth-cousin-twice-removed should feel "cheated" when they get a gift that just isn't quite as big as they wanted it to be?

I pay tax on my income, like everyone else. That already-taxed income goes to pay for my groceries and their sales tax, my car payment and license taxes, my utilities and their taxes, my mortgage and property taxes (primary and secondary), and my puny little 401k, which will be taxed somewhat on distribution. EVERYTHING gets taxed more than once -- what makes anyone think inherited wealth should be different?

We pay sales taxes to fund our state and local services. We pay property taxes to support our schools. We pay taxes so we can have the kind of country and community we like to think America is. if we remove the tax from the inheritance of extremely large estates, we will not have that kind of America. We will have the kind of country and community that bred revolution.

Seems like avoiding revolution is a pretty good return on the investment of those inheritance taxes.

Tansy Gold

[alcuno]

3. Did they call it the "Death Tax?"

That's part of the usual argument that I hear. I really don't understand these people. It's income. The person/persons receiving it are getting income. I truly do not understand the difference between someone winning $30,000,000 in the lottery and someone receiving a $30,000,000 inheritance. Each is "free" money that the individual did not earn. The money that they receive is the result of the labor of others.

The Democrats offered the Republicans $7,000,000 in inheritance NON-TAXABLE and that still wasn't enough for those greedy bastards. What kind of society deliberately creates slacker, parasitic children? You can currently inherit roughly $2,000,000 and pay no taxes. Who are these Republicans protecting? Duh, let me guess.....

Let me add that I COULD be one of those slacker, parasitic children but we were raised that it's mom and dad's money, not ours. I'm sure we'll receive an inheritance but, by God, if we ever act as if that money is ours, it'll all end up with the Catholic Church.

[mmonk]

14. I could live with a $7 million exemption!

Real life isn't like that (or wasn't when my folks passed). They have been raising it though (exemption).

[alcuno]

32. Hello? The Republicans turned it down. It wasn't enough.

I mean really, who couldn't live with a $7,000,000 exemption? Their greed knows no bounds.

[Democrats unite]

4. Thanks for the posts

And a special thanks for the .PDF file.

[mmonk]

6. This is where

I agree with the republicans, but not exactly for the same reasons. Once you decimate an estate like estate taxes of the past have done, you can't tax it no more. It's killing the goose that laid the golden egg. It doesn't keep going generationally. OK, you can flame me now (hey, it's about the only thing I agree with them on)..

[JanMichael]

7. "Decimate"? Have you done any of your own research?

You're just wrong man!

Evidence?

Unbelievable.

[mmonk]

10. I went through it with

my father's estate and previously with my mom's (they had to divide it as much as possible to pass on as much as they could)? Care to see how much I had to sell off to give the government? It was too early to be affected by the increase in exemptions allowed recently.

[JanMichael]

18. Multiple heirs?

Would've happened anyway, the splitting that is.

Either way it's income. That's what this is about, it's income. Throw in the potential for Plutocracy and I'm not going to change my mind.

I'm never opposed to being flexible though.

[alcuno]

8. mmonk, I am begging of you to reconsider.

What do you mean "you can't tax it no more?" The money goes to the government which spends it. God knows we aren't saving it.

And please think about the lottery winners. What is the difference between taxing someone who inherits money and someone who wins it? I don't understand the difference.

[mmonk]

13. If it is a small business

or any real type of holdings, you have to sell off alot of it to pay the taxes. Since they have raised the limits, it has gotten better. But if you have something that produces income, then you have to sell it off, its not producing income for you any more and thus you aren't paying taxes on it anymore because you had to sell it off for a one time tax.

[JanMichael]

19. But I thought that businesses/farms don't have to pay it all at once?

That may be state specific, although it's a Federal tax, so what would states have to do with the terms. I've heard 14 years in some instances.

"But if you have something that produces income, then you have to sell it off"

You have to sell it?

[mmonk]

22. Sometimes

It isn't as bad as when I had to go through all that. However, doesn't after a certain amount of years, it has a sunset where it goes back to the way it used to be? I don't know, but I'm going to meet with someone to set up trusts for my disabled son. Anyway, I'm not for eradicating estate taxes completely. It's just in the past, it was punitive. Also, it will never be bad enough for me to vote republican.

[JanMichael]

28. I think we're pretty much on the same page.

Modification to keep pace with changing times is perfectly reasonable.

Everyone should take the time to do what you intend to do regarding your son, it's the responsible thing to do. Same with a Living Will.

[Yupster]

75. Yes, in 2011

the estate tax excemption goes back down to $ 600,000. When Bush runs around saying he wants to make his tax cuts permanent, that's what he's talking about. I'm assuming he'll get his way because congress I don't think will put the tax back on the way it used to be. In 2011, $ 600,000 will not be that much money. And we'd have grandparents shooting themselves in December 2010 to not have to pay the estate tax if they die in 2011.

[Bridget Burke]

93. No, it's the grandkids who'll be doing the shooting!

**

[Isome]

98. That's a silly argument.

$600,000 may not be "alot" of money, but it's not enough to shoot yourself over because your adult children will be taxed on it. Estate planning can wipe away any fears all these average income-producing people have about their heirs paying taxes on their inheritance.

The entire issue has been made out to be a crisis, just as the GOP wanted it to be.

[Nikia]

23. Might it be smart to incorporate?

I think that successful small businesses can get around estate tax by incorporation. I think that aging parents can slowly sell the business to their offspring this way. It might be the smart thing to do especially with businesses that require a lot of land, machinery, or merchandise.

[mmonk]

29. You can give

$10,000 grand a year to each person to bleed your holdings. If you are incorporated and do it by stock gifts, then they get more control of the corporation at some point. A sub S corp works like a partnership though, so the taxes have to be paid proportionately by the individuals.

[alcuno]

34. I think it's now $11,000 and that's from EACH parent.

So you can get $22,000/year non-taxable from your parents.

[LiberalFighter]

66. I was going to reply the same but..

there would still be the shares owned that would be taxable.

Selling it slowly should work.

If the family members bought into the business there might be other advantages that would help them.

[alcuno]

27. These aren't the people they are trying to protect.

Remember. Democrats offered a $7,000,000 cap on untaxed inheritances and this wasn't enough for the Republicans. I'm not certain of the value of small businesses, but my guess would be that they are worth less than $7,000,000. There is much that can be done now to shield small business/family farms from having to be sold.

There is a monumental difference between a $700,000 estate, a $7,000,000 estate and a $70,000,000 estate. Or a $700,000,000 estate. Or a 7,000,000,000 estate. Is there no limit? That's what these people want; to liken the family farmer or the small business owner to the wealthy in this country; the wealthy (top 1% income bracket) who account for less than 400,000 people in the entire nation.

They've hitched their star to the small business owner as if there was some sort of comparison.

[nothingshocksmeanymore]

73. That's the crux of it right there

[LiberalFighter]

80. I take it that you did not have any financial interest in the business.

That you were not a partner in the business.

[prisonerseven]

25. The difference?

If a youger generation inherits the family farm and has no intention of selling it but must fork over a sum of money they don't have to keep the farm then it is unfair. Have you priced a 200 acre farm lately? It's no wonder people sell to developers for millions to create sprawl and pay their taxes.

[never cry wolf]

33. Couldn't they take out a mortgage?

Get a loan with the farm as collateral and then earn their own way by paying off the loan. The farm is not a liquid asset that can be used to pay taxes but if a 200 acre farm is worth say $1,000,000 after exemptions you pay tax on about $300,000 of it at 17%. I am shooting in the dark with these numbers, but surely with something with that much equity it would be easy to obtain a loan and keep the farm.

[prisonerseven]

39. Why on Earth would family need to pay tax to carry on the family farm?

Much less take out a loan to do so. They lime most others will sell to the higest bidding developer to build sprawl and pay the tax due from the huge profit. It makes no sense to be against sprawl and push for an estate tax that punishes family heritage.

[Tansy_Gold]

41. It doesn't happen to family farms. Period.

So calm down.

Farms are treated differently; usually when children share in the operation of the farm, it is either incorporated or "gifted" to the heirs long before the parents die.

For years, Farm Bureau touted that line about all the family farms that were being lost to inheritance taxes, but they were NEVER able to produce a single example. Not one in the whole country. Couldn't do it.

This is not a country of family farms anyway. Most small farms sold out to the corporations long ago or to the developers.

My in-laws just sold a 140-acre family farm in Indiana in September. With a small, well-kept house and a 150-year-old barn, it sold in three separate parcels for a total of $380,000. They will pay approximately $30,000 in capital gains tax on it.

Developers generally pay far less for farm property than they sell it, because they incur the costs of development (roads, water lines, sewers, etc.). A developed lot may sell for $100,000/acre, but I assure you, the farmer who sold it never got that kind of money.

Tansy Gold

[alwynsw]

70. A point that needs clarification, please

Given the nnumbers you state, their basis in the property should be about $200,000.00 giving them roughly a $180,000 gain. I'm likely a little off because I do not know what Indiana's cap rate is.

If you did not include state cap gains, their basis was $180,000.

I can produce a couple of examples within my family of farms lost because of both state and Federal inheritance taxes. You'll find records of the sales in McLean County, KY. FYI, those were lost because there was insufficient capital to pay the taxes, which were based on assessed value rather than fair market price. The assessed values were far lower than the going rate for farmland at the times in question.

[Tansy_Gold]

102. Farm inheritance

My post was meant to indicate a current market value of a small family farm in Indiana. As the sale was so recent and details have not been totally finalized, I do not know for sure what their ultimate tax liability will be.

Part of the farm was inherited in the 1960s, part was purchased, and still another part was inherited in the 1970s. I do not know the original prices or anything else. Again, I was simply trying to show what the going rate for farmland is today in one part of the country.

The big brouhaha has always been over the myth that farms being currently worked by inheriting family members have been sold out from under them to pay onerous inheritance taxes. Once again, the American Farm Bureau was pressed repeatedly to produce a single case of such "theft by the tax man" and could not do so.

Most farms being worked by presumptive heirs are gifted or deeded to them in advance of the owners' deaths. Children are brought in as partners so that they have an established ownership that is not inherited.

Inheritable estates consisting of small family farms are lost to the inheritance tax when the heirs are not working it and the estate is a windfall. If there have been no provisions made to cover the inheritance tax, then yes, the property and/or other assets must be sold to pay the taxes. But if the heirs are working the farm and/or are owners, this burden is considerably lessened.

Neither my husband nor his two siblings have had anything to do with the family's farming operation for more than 20 years. There was no reason for us to expect to inherit it free and clear, and we'd only have sold it anyway because none of us is interested in farming.

When my in-laws pass away, whatever is left of the cash estate will come to us, and we will be grateful for whatever windfall we get, without whining and grousing about not getting it all. And they live long enough to use it all up themselves, well, that's fine too, because they earned every penny of it.

[never cry wolf]

43. Sprawl SUCKS

There is no reason that a family with an estate with enough value to even qualify to pay an estate tax cannot find a way to pay that tax and maintain the "family heritage." Read the other posts here, it is unearned income for the heirs, why should it not be taxed like all other forms of unearned incomed and make the heirs work to pay back the taxes at least, a small portion of what they are receiving after exemptions. Do they not enjoy the benefits of this country more than most? Besides, what are they doing for their family heritage if they sell off to the highest bidding developer? o me that sounds like greed.

As far as sprawl, it is a HUGE problem and should be discouraged. Populations wil inevitably increase and more homes will need to be built but as new suburban developments are built inner cities are abandoned and people end up commuting 40-50 miles daily to work in their SUVs and driving 2 miles to Walmart or the grocery store rather than walking to the corner store or using public transportation. Not to mention the effect this has on open space, water sheds, natural habitats, etc.

On that subject I kow of what I speak. I am an architect, I have been a plan commissioner in my community for 13 years and lived in europe for a year. Did you know that Paris, with over 2,000,000 people has approximately the same land area as Champaign/Urbana? This country is all about exploiting natural resources asap.

[prisonerseven]

46. unearned income

If the children of a farm owner worked all their lives on the farm and then it gets heired to them it is not unearned income. They earned it plain and simple.

[never cry wolf]

48. Read post #41

It doesn't happen. Besides, there are many farm workers that work hard all their lives on a farm but don't happen to be in the lucky sperm club. The same applies to factory workers, retail, etc. Maybe you're saying that anyone that works hard at one place should inherit a chunk of it upon the death of the owner?

[prisonerseven]

56. Family hand downs are different than employer/worker relationships

I does happen and it's not fair.

[Isome]

100. No, it doesn't happen.

Read post #41.

According to the Treasury Department, of the 2.3 million people who died in 1998, only 642 left farm assets equal to at least half the total estate. In 2001, the New York Times reported that the pro-repeal American Farm Bureau Foundation could not cite a single case of a family farm lost due to the estate tax. ...

There are already special estate tax rules for family farms.
First, farmland can be valued at between 45% and 75% of its fair market price. Second, any estate taxes due can be deferred for up to 14 years. Finally, farm couples can exempt up to $2.6 million from taxes, rather than the standard $2 million per couple. ...

.::.Fair Economy.::.

We have to stop believing the hyperbole of the right and get in the habit of finding out for ourselves.

[LiberalFighter]

67. So they received no income working the farm?

They don't need income to eat? For housing? For transportation? For other essentials and non-essentials?

[sharkbait2]

54. That's just plain wrong

Go in to debt simply to pay the government taxes on something they shouldn't be taxing in the first place? Talk about usury. What utter bullshit. I agree this is theft plain and simple.

How many other countries have a death tax?

[Tansy_Gold]

55. It's not a "DEATH TAX"

The dead person is not taxed: he's dead anyway and wouldn't give a shit.

The inheritor is taxed on her/his INCOME, just as the rest of us pay INCOME TAXES on our INCOME.

Most other countries have similar or even more onerous INHERITANCE taxes. The ones that don't generally have a huge gap between the haves and have-nots.

Do take a look at Paul Krugman's essay in The Nation on "The Death of Horatio Alger."

http://www.thenation.com/doc.mhtml?i=20040105&s=krugman

<snip>
Suppose that you actually liked a caste society, and you were
seeking ways to use your control of the government to further entrench the advantages of the haves against the have-nots. What would you do?

One thing you would definitely do is get rid of the estate tax, so that large fortunes can be passed on to the next generation.
<end snip>

[prisonerseven]

57. Most other countries are not America

America was founded to NOT be just like most other countries.

[sharkbait2]

63. Propaganda

The tax is wrong... and also, I believe it was implemented much later (are you going to argue that its an original form of taxation implemented at the time of the founding fathers?)

This country is sucking more and more, so I wouldn't be too proud of America being "different" than every other country.

I also don't think the support for this tax at DU is in touch with the stand of a main percentage of the population on this issue.

[NashVegas]

92. Pshaw

The US got its first estate tax in something like 1797.

[Nikia]

9. It generates income that people can afford to be without

I am not sure how much money is generated by this tax, but if it is repealed, this income is lost. That means that programs must be cut or there will need to a tax increase somewhere else.
The deceased will not miss the money. The tax is only on the amount above a certain threshold so it should not be a hardship for the heirs to get a little less of their parents inheritance. Any increase in income tax can be argued to be a hardship though.
Of course there are the other often mentioned arguements about how it encourages charitable giving and that is paying back a society that has allowed the deceased to make their fortune as well as preventing aristocracy in America.

[Valarauko]

47. I remember reading

that the program was barely breaking even.

[GreenPartyVoter]

11. responsible wealth is the site you want

http://www.responsiblewealth.org/estatetax/

[fishguy]

17. Great site for info is Network Lobby and Paris Hilton example

Go to www.networklobby.org

Type in estate tax under search

It has a great quote from Andrew Carnegie about inherited wealth.
The site also makes some great points about inheritance.

Here is the perfect example of why we should have an inheritance tax=Paris Hilton

No one can argue that an idiot like Paris Hilton should not have to pay an estate tax.

Who would have thunk it? Having a Catholic Social and Economic Justice Lobby and Paris Hilton in the same breath....

[prisonerseven]

20. It is mostly fair but the 650k is way too low

With todays land values it's easy to exceed the 650k limit with the smallest of farms. Hell, my Uncle has a 50 acre working farm in Wisconsin with two barns, a hay barn and a tractor + workshop barn that is valued at over 1.5M with a three bedroom farmhouse that is falling down.

When he dies he wants his three kids and survivors to take it over and with the estate tax they will be forced to sell it since it does not bring in enough to pay the estate tax. The eestate tax needs to be set at a trigger of at least 3 million for most families with farm inheritance as their sole income and heritage.

[JanMichael]

24. It's either 1 or $2 million tax exempt.

The 650 was a couple of years ago.

Dude, I hate to say this, but there are no reported incidences which you spell out in your post, none, not a one. It's a myth.

Myth #5 actually:

Myth 5: The estate tax forces the sale of family businesses and farms to meet the tax bill. There have been occasional cases where an estate dominated by a family business or farm has been hit hard because the household failed to plan for the estate tax. But the rarity of such cases can be seen just by looking at the numbers. In 1998, about 2.3 million people died in America. Of these 47,500 (fewer than two percent) left taxable estates. Of these, 1,400 left estates in which a family business or farm constituted at least half of the total estate. Such family-owned businesses or farms receive special treatment in the estate tax law so only a small fraction of these 1,400 estates could be forced unexpectedly to liquidate a family enterprise. Of course, such sales might be forced by the need to divide assets among a number of children, but that would occur with or without the estate tax. If the specter of losing the family business or the family farm is the basis of the attack on the estate tax, it is a mighty slim reed to lean on. And the obvious remedy is not to abolish the estate tax but to reform it.

[prisonerseven]

31. We agree on the reform

I agree with the estate tax but it needs to be much higher. Reform is in dire need of reform and I know of several cases where the farm was sold to developers (creating spraw) because the estate tax was due at the death of its owner.

[never cry wolf]

36. In the early 80's

The poor old Wrigley family went through a tax problem when the old man P.K. died. They were forced to sell the Cubs. (Collective awwwww)

Of course they managed to retain their gum empire and the Cubs have been better off for it.

Too bad the Halas family didn't have the same problems!!

[prisonerseven]

40. You're comparing the urban Wrigley field to a family working farm?

No collective awwwww or anything else here.

[never cry wolf]

44. I was being sarcastic

Believe me, I am not worried about the Wrigley's next meal. It is these mega-rich that are getting the bee sting (relatively speaking) from the estate tax, not the working farm family.

[alwynsw]

76. No myth

Tell that to my cousins who had to sell out to pay the inheritance tax.

[IrateCitizen]

86. Sell out? You mean they had to sell everything they owned...

... in order to pay it, and came out at a net LOSS in the transaction?

I highly doubt it. People like you make it sound like those who are subjected to this immoral "death tax" have to go bankrupt in order to pay it. That is hardly the case.

The thing that blows me away is how it is somehow immoral to tax the inheritance (inheritance is, after all, a FINANCIAL TRANSACTION -- all of which are taxed in some way by the government) of those who are on the receiving end, but yet to give a public assistance to those most in need in our society is somehow "hurting" them from "pulling themselves up by their bootstraps". :wtf:

[Tansy_Gold]

104. If indeed your cousins were actively involved in a family . . . .

.. . . business or farming operation, they would not have had to "sell out." If the estate was large enough that they had to sell off some assets to pay the taxes, that should have still left them with a sizeable inheritance.

If your aunt/uncle had been a smart enough businessperson to accumulate a substantial estate, she/he should have had enough smarts to provide for the transfer of the business or farm.

That your poor dear cousins (sorry for the sarcasm) had to pay some tax when they came into possession of an estate large enough to be taxable just really fills my heart with pity ---- NOT.

The repeal of the estate tax and even the raising of the already sizeable exemptions BENEFIT ONLY THE WEALTHY. I do not understand why there is so much outrage over the taxing of the extremely wealthy, and certainly no outrage over the burdens borne by the poor and working classes (whose labor often helped establish those fat estates).

your friendly neighborhood socialist,

Tansy Gold

[Eric J in MN]

35. The exemption is 1 million and rising dramatically soon.

The 2003 exemption is 1 million.

The 2004 exemption is 1.5 million.

The 2006 exemption is 2 million.

Also, the estate tax on farms can be paid over 14 years.

http://www.taxpolicycenter.org/TaxFacts/papers/estatedown.pdf

[alcuno]

37. Is the bypass trust still in use?

I believe it's a way for parents to double the amount to their children.

[prisonerseven]

59. Way too low

A healthy family farm easily tops 2 million now.

[HereSince1628]

21. It is where capital gains finally catchers up...

Much of the wealth in estates is accumulated as a consequence of the rising value of the estate. For example a house purchased in 1948 for $9500 can become worth $100,000 in 2000 at the person's death.

That gain in value has never been taxed.

If you buy a stock and it goes up you owe tax on the capital gain at the sale. Similarly, if you buy a house and sell it (and if it isn't reinvested in another house) the increase in value is taxed.

Estate tax is just another way for the state to get its share of capital gains tax at the time of the transfer...

most estates are too small to be hit hard by estate taxes, and the tax on the transfer of wealth at death is more a scare tactic.

People with estates large enough to be impacted typically protect their estates through use of trusts or incorporation.

[motown]

26. I dont think it was an ambush

[fabius]

38. Estate Tax and Robber Barons

Three good reasons for the Estate Tax:

- revenue for the government

- "generational" redistribution of wealth helps even out equality of opportunity.

- and not least important, help avoid violent revolution!


The years between 1865 and 1900 saw an rapid increase in concentrated private wealth, paralleling the rapid industrialization of the US.

Although the benefits of this industrial growth were undoubted, there were some significant problems associated with just a few individuals exerting so much control over so many people with their financial power.

In the new industrial and financial environment the great advantage went to the most greedy, ruthless, and those with political connections. Outright bribes of politicians were common. The problem for the economy and regular folks was the series of boom-bust cycles and "panics" as the Wall Street manipulators rigged the markets, and the leading industrialists squeezed out competition.

The early 1900's finally saw political leaders start to take action with Teddy Roosevelt's anti-trust movement and other progressive reforms. In 1916 (approx) the estate tax in its present incarnation became law (earlier temporary estate taxes were meant to pay for wars). The rates at first were lower but were raised much higher in the 1930's.

During the Roosevelt administration there was a conscious effort to make sure rich people didn't get vastly richer while other people were suffering. This continued during the war when it was felt that war profiteering was unpatriotic.

Now to be honest, the top estate tax rate (and the income tax top rate) of the 1930's to 1960's (60 percent to 90 percent) seems a bit too much. But I believe an argument can be made for some kind of estate tax.

The natural result of an unregulated market economy is that some people will progressively get richer and richer. We see this happening right now. The estate tax and progressive income tax act as a sort of brake on this process. If this continues without impediment, it is certain to be economically damaging. At what point it becomes detrimental is arguable (If one percent of population owns 40 percent of the wealth as they do now, it may be OK, but clearly if the top one percent owns 90 percent of wealth we have a big problem!)

The estate tax and progressive income tax act as a sort of brake on this process.

If the rich are let alone to build dynasties we end up with Louis XIV's France or Nicholas' Russia and you know what happens then.

For the robber-baron era, a good book is "The Robber Barons" by Matthew Josephson, and old classic of 1934. I think FDR used books like this to help get his point across.

The Repug argument against the "Death Tax" is mostly BS. Even until the Bushite repeal, the exemption was about $650,000 and there are ways to get around some of it, for instance, donate to charity; set up a trust; a wife can inherit 1/2 of estate tax-free, etc. It was never that much of a burden on anybody, but the plutocrats have always hated it.

[Tansy_Gold]

42. Essential Reading

"Wealth and Democracy" by Kevin Phillips.

[JanMichael]

49. I keep telling people about #3 but they're to stubborn to get it.

I'm a Lefty too, maybe I should just quit wasting my breath and let them tie their own rope?

[sandnsea]

72. Carnegie - for the public good

"The growing disposition to tax more and more heavily large estates left at death is a cheering indication of the growth of a salutary change in public opinion. The State of Pennsylvania now takes-subject to some exceptions- one tenth of the property left by its citizens. The budget presented in the British Parliament the other day proposes to increase the death-duties; and, most significant of all, the new tax is to be a graduated one. Of all forms of taxation, this seems the wisest. Men who continue hoarding great sums all their lives, the proper use of which for public ends would work good to the community, should be made to feel that the community, in the form of the state, cannot thus be deprived of its proper share. By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life.

It is desirable that nations should go much further in this direction. Indeed, it is difficult to set bounds to the share of a rich man's estate which should go at his death to the public through the agency of the state, and by all means such taxes should be graduated, beginning at nothing upon moderate sums to dependents, and increasing rapidly as the amounts swell. . . . This policy would work powerfully to induce the rich man to attend to the administration of wealth during his life, which is the end that society should always have in view, as being by far the most fruitful for the people. Nor need it be feared that this policy would sap the root of enterprise and render men less anxious to accumulate, for, to the class whose ambition it is to leave great fortunes and be talked about after their death, it will attract even more attention, and, indeed, be a somewhat nobler ambition to have enormous sums paid over to the state from their fortunes."

More here:

http://odur.let.rug.nl/~usa/D/1876-1900/reform/carnegie.htm

[arewethereyet]

50. one thing I know about it as a negative

in the instance of family farms or other sorts of family businesses where the farm/store/what have you is the repository of the family's savings(as opposed to having more liquid assets ala cash), when the patriarch or matriarch dies and has never put the business into some sort of trust, the family can be forced to liquidate the business in order to pay the tax thereby deriving the heirs a job (assuming that they relied on the farm/business as the source of their employment).

A medium size farm or business can qualify and those people area screwed. And this happens more often than when the Thurston Howe Sr's of the world die as they were clever enough to protect their assets prior to it becomming an issue.

It may not happen a lot, but when it does, it hurts middle class people more often than you might guess.

[JanMichael]

51. Empirical evidence suggests otherwise.

But hey, if it gets repeated enough times people will believe it.

[arewethereyet]

53. personal experience behind what I say

had a friend whose family was originally from Iowa, their farm got nailed in this way and it was his understanding that this was not unusual.

When my Dad died he was very close to qualifiying. He was a depression era kid, worked his way up from humble means, spent a boatload of money on cancer treatment in the 70's on my Mom and on my wayward sister. Still surprized himself when he started putting is affairs in order and discoverd what a life of bying only what he needed and what his children really desired could wind up with.

My dad was no fat cat. And I know many more exactly like him.

Maybe not empirical enough for you but its sure as heck real.

Its a bad idea.

[Tansy_Gold]

105. Family farms are only sold to pay taxes when the heirs. . . . .

. . . . are not part of the operation of the farm or business.

MANY FAMILY FARMS ARE SOLD TO PAY TAXES because the heirs aren't farming them any more. We are no longer a nation of farmers. Farming income, especially from small (under 500 acres) operations, is too low to support the multi-generational families that would establish the potential for inheritance. Most children of small farm families have moved into the suburbs and cities and are no longer engaged in farming.

Since they aren't working the family farm, they have no financial interest in it other than the crass greed for a windfall inheritance. That kind of estate should be taxed like any other -- stocks, bonds, jewelry, whatever.

The same is true of businesses. If you are working in your family business, you are probably going to be made a partner or part-owner in some fashion. The portion you own is NOT an inheritance and is NOT taxed upon your parent's death.

sheesh.

[arewethereyet]

119. incorrect

in my examples they WERE TRYing to work the farm but because they had to have the money to pay up and there was not sufficient liquid assets (everything was in the farm) now they are doing something else.

[AP]

61. Inheritance should be taxed according to the income of the recipient.

That way way, if the testastor wants to avoid taxes they divide their money among the youngest, poorest people they know, and give small amounts to each.

[Killarney]

81. What happens in 2010?

I thought that the death tax wouldn't be an issue in this election because it can't be touched until 2010... did I hear wrong?

In any case, I think there is nothing wrong with an estate tax after $7 million. What the Dems offered was completely reasonable.

[wuushew]

82. Profound ignorance regarding family farms in these posts

According to the Treasury Department, of the 2.3 million people who died in 1998, only 642 left farm assets equal to at least half the
Check out the link for more info http://www.ufenet.org/estatetax/ETFarms.html

total estate. In 2001, the New York Times reported that the pro-repeal American Farm Bureau Foundation could not cite a single case of a family farm lost due to the estate tax. Neil Harl, an Iowa State University economist whose tax advice has made him a household name among Midwestern farmers, said he had searched far and wide but never found a case in which a farm was lost because of estate taxes. “It’s a myth,” says Harl. “M-Y-T-H.”




In addition since most of us here consider ourselves liberals, why should we accept wealth not obtained through the merits of one's own work during one's own lifetime? Something is only worth the value of the labor that goes into it correct? That is why people should put value in education and developing human talent as capital.

Land values increase, money collects more or less on auto-pilot. I fail to see how these activities not directly related to one's own personal contribution should be endowed. Farming proponents here will bemoan the loss of the noble family farm. My opinion in this matter is that if economic realties prevent those without means from entering the BUSINESS of agriculture then the government has no responsibilty keeping more people employeed in this field then necessary.

How did generational farms first start? It is because the barriers to entry were low and the level of economic return were sufficient to allow farming as a living. If this is no longer true why should we make conceits(including agricultural subsidies,tarrifs etc.) to either small businesses or family farms? Allow those entities which are best able accomplish production to do so and allow those to arrise which can succeed in one lifetime. When such entities become too big it is the responsibility of the goverment to breakup of the monopoly and or tax large businesses to death. I will not concede anything in the name of the nobility of something be it the hard unglamorus life of farming or small business owner.

[Cary]

83. Great Arguments

The only reason for the Republican's irrational zeal to repeal the estate tax, other than their personal greed, is their dogmatic antipathy toward taxation in general. They seem to think that they should not have to pay taxes.

Before the enactment of the 2001 Act I wrote to Dennis Hastert, asking him to explain himself in light of the following:

1. This country was founded as a reaction against inherited wealth and privilege. Where is the historical precedent for their arguments against having an estate tax? Answer: nowhere.

2. In the good old days, before we were plagued by Republican knee-jerk anti-tax sentiment, there were always Congressional hearings before passing tax legislation. Tax laws should be consistent since people spend valuable time and energy arranging their affairs and relying on consistent tax laws from year to year. The last time they passed such sweeping legislation, the result was the Savings and Loan crises because all sorts of tax shelters were, all of the sudden, outlawed, leaving S&Ls holding the bag. In the case of estate and gift taxes, what effect does the "elimination" have on states, charities, and other worthy entities and individuals? No Republican seems to care.
And, 2 years later, we're starting to see some of the results. In fact the stupid "elimination" that was actually enacted renders it impossible to plan, except if one plans to die in the year 2010.
Which raises an interesting question: Why do Republicans want all wealthy people to die in the year 2010?

3. The elimination of the estate tax also eliminates all links that the states have to the estate tax. Obviously, this is related to number 2 but it deserves a better explanation. I believe 32 states, like my own state of Illinois, were pick up tax states. The Federal government encouraged states to enact pick up taxes which meant that the state tax was equal to the Federal estate tax credit given for any state taxes owed. This encouraged uniformity. The 2001 Act phases this credit out. While the Federal tax really wasn't a large part of Federal revenue, the taxes the states collected were huge under this scheme. Therefore it is invitable, as I pointed out to Hastert, that the states would have to enact their own taxes. So what's the point?

4. Likewise, the Federal scheme encourages all kinds of charitable giving. Charities always have more good things they need to do, and always blow their budgets. Planned giving generally saves the day for them. The estimates for huge declines in planned giving are starting to come to fruition.

5. The estate and gift tax scheme was a uniform scheme, making the tax equal regardless whether the gift was given during one's life, or upon one's death. The reasons for making it this way are obvious, right? I guess not, since we no longer have a uniform scheme.

6. As has been pointed out in this thread, the rationale for family farm and family business hardships is a red herring. It simply doesn't happen that way.

7. The "repeal" of the estate tax also means the elimination of the stepped up basis one gets if they receive an asset from someone else upon that person's death. The new law enacts a "carry over" basis, which means the new owner takes the donor's basis instead of the value at the date of death or on the alternate valuation date. Carry over basis previously proved unworkable. Moreover, this will result in capital gains taxes from more modest estates that otherwise would have escaped taxation--which is a hint as to why the Republicans were so enamored with elimination of the estate taxes. For some insane reason they think it's better to tax the hell out of the middle class while easing the burden on the unfortunate few that find themselves in the top 1% or so.
It really must be hell to rich in this country and have to pay all those taxes.

8. Contrary to current conservative philosophy, there has never been any inherent right for a dead person to pass on their wealth. In fact I don't think this right existed under British commonlaw, either. Once dead, a person has no rights. Right? So how did this matter ever become any kind of "freedom"? It just did, when conservatives declared it to be so. In fact every state has laws that empower people to make wills, or write wills for them if they fail to do so. The state obviously has an inherent interest in seeing an orderly succession of assets. And, in fact, this right lies in the state, and not in the individual. So there is nothing inherently unfair about taxing assets that are passed on to subsequent generations.
In fact, in my observation, family wealth is not necessarily a good thing. I counsel my clients to carefully consider whether and how they plan to pass wealth on to their descendants.

9. Call me stupid but, personally, I would rather pay more taxes after I'm dead, and fewer taxes while I'm alive.

How's that? I could probably go on but I have to go help other people avoid these taxes.

[Tansy_Gold]

106. Great Reply!

Welcome to DU, Cary! Glad to have you aboard!

[davidinalameda]

85. the estate tax doesn't hit anyone

with less than a million in assets, it may be more and in 2010, the whole thing is suspended for a year

the only reason that anyone would have to pay is because of poor planning on their part

there are so many ways to get around it

go talk to a decent estate planning attorney and they'll advise you on how to avoid it.

it is such a non-issue

[Yupster]

88. It hit me

when my aunt died and I have less than a million in assets.

[IrateCitizen]

90. That's because the ceiling was lower then...

In any case, in what way were you ENTITLED to the entire inheritance without paying taxes on it? What had you, personally, done to create that estate that you were not properly compensated for, or that was not figured into the estate planning? And I would guess that if it were subjected to the estate tax, you still came out of the deal with a quite healthy little nestegg, right?

See what I'm getting at here? People act as if an inheritance is somehow their ENTITLEMENT -- that they want something for nothing. Many of these same people (I'm not including you in this group) get pissed about the poor receiving "entitlements" just because they are poor. But the thing is, social spending that goes directly to the poor has historically been one of the biggest sources of providing economic mobility. In the world dreamed of by most of the opponents of the estate tax, not only do the progeny of the rich get to keep all their inheritance just by winning the birth canal lottery; but those "entitlements" to the poor get gutted, creating a virtual caste system devoid of economic empowerment.

That's not the kind of America I want to live in.

[Yupster]

110. I just think on her death,

my aunt's things should have gone to whoever she wanted them to go to. It was her stuff. No one else has to agree with me.

[Isome]

101. YOU have less than a million...

But she didn't. The numbers from the last post about the aunt making 40K a year and leaving a $1.5 million estate still aren't making sense here.

[Yupster]

109. Why not?

what doesn't make sense?

I'm using the word income to mean money she lived on. She had hundreds of thousands of dollars in government bonds and notes. I don't consider the gain she made in those as income since she just left it all reinvest in her bonds. I guess legally that would be income though it was reinvested. She had to pay income tax on it every year anyway I guess.

She also had hundreds of thousands of dollars in New York state municipal bonds which would have produced tax-free income, but again, she just had that all reinvest.

[SheilaT]

115. The real shame about your aunt

and her $1.5 million was that she didn't have good estate planning in the first place. She could have been gifting that money every year to lower her estate. She could have set up a charitable remainder trust. She could have had a life insurance policy that would have offset estate taxes. She could have given to charity in a way to offset estate taxes.

The lesson to be learne here is that if you acquire any sizeable estate -- and sizeable is however large needed to trigger estate taxes -- then consult a good estate planning lawyer.

[Cary]

121. Sheila, everything you say is true but. . .

maybe the lady wanted to pay tax?

If she died this year the tax was somewhere around $400,000, leaving a pretty nice gift. Most people tend to agree that they would rather pay $10,000 or so during their life to avoid paying a $400,000 tax after they're dead. But some people really don't care what happens after they're dead and I can't say they're wrong.

In this case the lady apparently had no dependents and the estate ended up being a windfall. The lady had more money than she needed but perhaps that money made her feel better somehow?

My only point here is to point out that maybe rendering unto Caesar isn't as evil as conservatives make it out to be. And that's my real point: I'm really sick of these conservatives. I've been listening to some of these smug and downright abusive talk radio hosts. They make me sick. I'm especially sick of their gloating at the moment about how great everything is because of GW's tax cutting mania and proclivity toward war.

They are declaring him to be the best President we've ever had. Someone, please, put me out of my misery!

And yet I'm encouraged by a focus group they broadcast on cspan last night, and on the good posts on this board. Some of us haven't lost our minds yet. I do hope we can do as Dean prescribes--get out the vote and beat this SOB in 2004. And this time we need to get that vote out enough so that the Supreme Court doesn't have a chance to steal the election.

NO MORE ACCIDENTAL PRESIDENTS!

[Yupster]

122. No, I feel pretty comfortable

speaking for my aunt here. She would rather her money had gone to her family and charities than the government. That comes from the talks I had growing up with her for 35 years, and the fact that she kept so much money in munisipal bonds. We lived in the same house for 21 years, me downstairs, she upstairs. I'm pretty comfortable speaking for her here.

[Cary]

123. Well, Yupster, I'm sorry. . .

but she could have easily arranged her affairs to avoid paying any taxes.

My real point here, of course, was not your aunt. And please don't think I don't appreciate your point. I do. My problem is that I don't like the conservative point of view. I don't like conservative politics. I really don't like having conservatives in control, perpetrating their b.s. on us.

[fob]

91. Ah the old Estate Tax = Death Tax debate

Those who are not affected by it are some of the most vocal supporters because of the belief in the American Dream. That one day, with hard work, they too will be wealthy enough to be hit by the Estate Tax!

There are some fine posts here that show how remote that American Dream actually is. DUers have posted stats, facts, and given the time will probably have charts and graphs for you as well. I have been in an ongoing debate with a repug friend of mine for several years about this, and I can tell you that FACTS only confuse the matter! Here is what you should tell your current debatees why the Estate Tax should remain and they should support it too;

It's the Patriotic thing to do! Ask not what your Country can do for you, ask what YOU can do for your Country.

and REPEAT as many times as they engage you regarding this, offer no facts, charts, explanations or excuses. As a matter of fact, if you can add a certain amount of righteous indignation when you say it, that's even better.

fob

[ClarkUeberAlles]

99. the most logical

and cogent argument to me is that a person is inheriting untaxed and unearned income and therefore should pay taxes on that just like any other income. I think its too intellectual for the average person to make connections between charitable giving and the estate taxes, or to hit people up with charts and graphs. Plain and simple, its untaxed income.

[JesusNoRepublican]

103. There are Wealthy Liberals who argue FOR Estate Taxes

See the outstanding materials at http://www.responsiblewealth.org/estatetax/ and what Andrew Carnegie says against the rich handing down wealth to their children at http://www.LiberalsLikeChrist.Org/about/carnegiegospelofwealth.html .

[Cary]

111. It's Not Income

I'm sorry but I have trouble dispensing with logic, especially where the law is concerned. That is in fact what I see too many Republicans doing.

Under our system a gift is not income. So this is not income taxes. It is, in fact, a whole separate taxation scheme.

That's actually part of the problem. That taxation scheme did get out of whack. It was a progressive scheme. However, as the credit amount increased it ceased to be progressive (in fact all gifts are taxable, but the Feds give a credit in the amount of the tax owed up to a certain point--and then there is also an annual exclusion amount for lifetime gifts).

I forget the actual numbers but, for example, the tax on $20,000 under the original code might have started at 10%, and then when the estate reached $600,000 (a huge amount in the 1920s) it was a whopping 40% or so on marginal amounts, and it topped out at a virtually confiscatory amount of 55%. While the credit increased, the tax brackets did not.

I can see how one might deem this to be out of whack. The Dems wanted to fix it, making it once more a practical tax. That, to me, seems to be perfectly reasonable.

Yes, the tax is a tax on poor planning. Yes, most people ended up paying nothing, or very little. But, outrageous estates, like that of Bill Gates, could not escape taxation which is, I think, how we ultimately want it to be. And Bill Gates came out against the elimination of the tax.

I'm sorry that your aunt's estate succombed to some taxation. I have to agree, though, that at $1.5 million you still made out fairly well. That was, no doubt, more than your aunt needed to live on and she could have avoided the tax if she chose to talk to someone like me. She chose not to, and paid the tax. I'm sorry but it's hard to have much sympathy for that. And it's hard to have any sympathy for your windfall, either.

The credit amount is about to increase, by the way, to the amount of the tax owed on $1.5 million. That might be appropriate. The nonsense foisted upon us by the Republicans is not appropriate.

Thanks for the welcome! Sorry for the typos.

[sbSeattle]

112. Read Bill Gates, Sr.'s book

I would recommend Bill Gates Sr.'s book Wealth and Our Commonwealth : Why America Should Tax Accumulated Fortunes. He is a strong supporter of the esate tax, and has spoken around the country in support of it.

The argument is basically this: accumulated wealth is not taxed, as income is. The estate tax is our one opportunity to require the small number of individuals that fall into this category to contribute. These individual have been successfull because of all of the resources available in a country like ours. Public moneys support scientific research, higher education, transportation infrastructure, clean water, healthy citizens, etc. Without these resources entrepreneurs would not be able to have the kind of success they have here.

Also, there are no (to my knowledge--see the series run by the NY Times a few years ago) examples of family farms lost because of this tax, which has been an argument on the repeal side of the issue. It affects very few people, it is our only opportunity as a society to get a fair contribution from these individuals, and, most importantly, it is painless (they are dead at that point!). It has been a while since I have followed this issue, but I believe the cut off is now at least $3 million, and is going up to $10 million soon.

I often think Republicans support the elimination of these taxes because they see themselves as "pre-rich," in other words, they hope to be that rich one day and do not want to have to give back to society if and when they get there. Let's face it, most of us will never have to worry about the estate tax. What we do need to worry about is the elimination of it.