Estate tax unfair?

[ACPS65]

Would restoring the estate tax be unfair? I've heard taking money that a person has already paid taxes on, and then taxing it again, when they die is the premise. How would it create jobs as I've seen it suggested it might on this forum?

Need some talking points, thanks.

[nothingshocksmeanymore]

1. When they die it becomes INCOME for another person who has not paid

taxes on that income.You pay taxes for a new car and when you sell it pay taxes on the INCOME from the sale.

[Frodo]

14. No you don't

You only pay taxes on the sale of a car if you sold it for more than you paid for it (with adjustments).

Unless you're talking collectible antique cars... that doesn't happen.

[gWbush is Mabus]

2. IMO

estate tax prevents...slows down...hereditary priveledge
ie: royalty

such that a stupid idiot can become rich and president because of the wealth accumulated by distant relatives



the talking point about it destoying small businesses and farms to be passed down is bullshit, as only the _extremely_ wealthy face a significant tax.

[xray s]

3. I don't see what the big deal is taxing dead people

Hell, they are dead! You can't take it with you.

By taxing dead people, the rest of us who are alive pay less.

Makes sense to me.

[Warren Stuart]

4. Only to the very wealthy and their spoiled offspring

The Democrats tried to raise the limitfrom (I believe) $600,000 to 4 million. This was blocked by the Republicans, who need the phoney "save the farm" rhetoric in order to push their "Death Tax" nonsense.

From a free enterprise, capitalistic point of view, it is very fair. It allows the cream to rise to the top and punishes the lazy and slothful. No wonder the Republicans are against it.

[xray s]

10. Bush's plan is actually an accounting nightmare

Most people don't know that under the current law assets are 'stepped up' to current value. That means you do not have to pay captial gains tax on estate assests that normally would be due at time of sale, and don't have to go through the process of trying to figure the capital gains out (which could be quite a challenge, depending on the record keeping and complexity of the estate).

The new Bush law eventually eliminates the estate tax, but subjects the estate to capital gains tax. That should keep accountants and lawyers employed and executors pulling the hair out of their heads.

Just leave the thing alone, set an appropriate estate level before the estate tax takes effect, and get on with life.

It never ceases to amaze me how Republicans shamelessly try to appeal to the sin of greed.

[aquart]

5. The estate tax is a necessary preventive.

It prevents wealth from accumulating in a few worthless hands which have never had a callous from actual work.

It recycles the wealth of the nation through necessary government programs. Like feeding and educating our children, building bridges and maintaining roads, inspecting our food and making sure our prescription drugs don't kill us, testing our steel to make sure our buildings don't collapse so a greedy bastard can make a little extra profit.

Where would the money be if it were not taxed? How many mansions can anyone buy? How much caviar can anyone eat?

Let's see: Foundations dedicated to the overthrow of democratic institutions? The buying of elections, the bribing of elected representatives? Funding the murder of dissidents? Electrified fences to prevent the angry peasants from overrunning the estate?

Money inherited is money unearned. It creates a society of elite individuals who contribute nothing but believe they are entitled to everything. Take it all? No. Never. But tax the hell out of it to remind these selfish heirs that they OWE something to this nation? Oh my, yes.

It's not like any one of them will ever fight in one of their wars. Or lose an arm in an industrial accident. Or work two jobs just to be able to pay rent and utilities. So in what way are they entitled to money that was accumulated because of a weighted and inherently unfair system? The children of the CEO inherit billions because the workers were paid $5 a day in India? And Americans lost their jobs to make that possible? Basically, that's allowing them to profit from a crime.

[54anickel]

6. Here's a link. Some responsible wealthy folks think the tax is good.

http://www.responsiblewealth.org/

[pop goes the weasel]

Inherited wealth is unfair

The estate tax reduces the unfair advantage of inheritance. You want a talking point? Just point to Paris Hilton. Does she really deserve to sit on top of a fortune? In the theoretical world where all wealth is redistributed equally, does anyone think that she would rise to the top through her own effort? How is it fair that she stands to inherit millions?

The estate tax is merely a way to make sure that wealthy people leave a large chuck of change to the beneficiary that contributed the most to their success--the government. The heirs should shut up and show some gratitude. Most people don't leave behind any estate beyond a few items that can be carried in a plastic bag and maybe one old house.

[RobertSeattle]

9. Or Osama Bin Laden...

(Inherited something like 200 Million when Dad died)

[DODI]

7. A web site to check out:

responsiblewealth.org

Bill Gates' father is very active in keeping the estate tax alive. He was great on Bill Moyers a while ago. Check out the web site. I think the Gates have some money.

[papau]

8. Most money is taxed many times - income tax, sales tax, etc- this just

recovers the unpaid capital gains tax. Indeed the rich requested the estate tax as they felt that they should not be expected to keep lifetime records so as to pay the standard change of ownership capital gains tax.

Now Bush wants the rich to totally escape the capital gains tax we the non-rich pay.

And the media lets him get away with calling it a Death Tax.

The DEM SHOULD AGREE TO END THE DEATH TAX AS LONG AS THE FIT INCLUDES THE USUAL CAPITAL GAINS TAX ON ALL ITEMS THAT CHANGE OWNERSHIP AT DEATH.

Then watch how fast this topic dies! But the above should be a good line for the 04 election.

:-)

[ACPS65]

11. What about

those who would say it should become assets instead of income?

[GordonOKC]

12. Often tax has not been paid.

First lets get one issue out of the way. There is an exemption of $1,500,000.00 before estate tax is paid (effective 1-1-2004 which will increases each year). It seems to me that often those cheering for the elimination of the so called "death tax" are more likely than not excluded in paying any estate tax to begin with; they just don't know the facts. A fact which those with sizeable estates don't want the masses to know.

Secondly, it is reasonable to point out that often a large portion of an estate has had no income taxes paid because the increase in value of the estate has grown through the years tax free. Example would be the purchase of stocks over a number of years. Lets say for this example the deceased had invested $300,000.00 over a period of their lifetime with after tax dollars (income they paid tax on). At the time the person dies lets assume the portfolio is valued at $3 million. The net increase $2.7 million had NO income tax paid. Same example would apply to a ranch, personal business, real estate, collectables, etc.

Here the $2.7 million minus $1.5 million exemption will have a taxable estate of $1.3 million. which would be taxed if the table I checked is correct at 45%.

I hope this helps.

[Lefty48197]

20. Good points

http://www.premack.com/columns/2004/2004-01-13.htm

This link backs up your point about the 1.5M exemption. It also points out that you can use the exemption twice. i.e. when both of the spouses die, thus exempting the first 3 million from the federal estate tax.
Here's a pretty good question: What percentage of estates in America are valued at over 3 million dollars?

[seasat]

13. Some of the inherited estate may not be taxed even once.

The type of options that are recieved by most higher level exectutives is taxed as income based on the difference between the option price and the actual market price at the time when he exercises the option. The income tax along with any appropriate capital gains taxes is only due when the stock is sold with these type of options. If the executive holds the stock and passes to an heir, income tax is never collected on that stock. It is a great way to avoid taxes and pass major buck to your heirs. There may be a mechanism for collecting this lost income tax but noone has been able to point it out to me.

[many a good man]

15. Let's tax wealth instead of income

I've never heard this idea kicked around before. Bernie Sanders says the richest 1% own 95% of the country's wealth. What percent tax on wealth would bring in the equivalent amount as the current slew of taxes on income? 1%? 5%?

Don't some countries tax wealth at certain intervals? I seem to remember hearing a proposal for a 1% tax on income once every 10 years.

[DFLer4edu]

17. Here is a wealth breakdown of the country

http://www.ufenet.org/research/wealth_charts.html
It is pretty sick. The top 1% controls more than the bottom 90%! It's just sick!
The debate isn't about the poor or the middle class or the upper middle class or the upper class, it is about the super-duper-positively loaded-couldn't spend all their money if they tried, rich. Evidence of that would come from one of my favorite parts of "Lies and the Lying Liars who tell them" by Franken on pages 301 and 302(paraphrased below).
When the senate debated the estate tax, Russ Feingold offered an amendment to the estate tax bill that would exempt the first $100 million of a couples net worth before a penny of estate tax wee paid. It got shot down 48-51! So much for the small business and family farmer!

[ACPS65]

16. Two things:

1) In chasing "fair", doesn't this mute ambition and creation?

2) Isn't fair the domain of philosophy, and wealth the world of reality?

[DFLer4edu]

18. Reality

What you are talking about (the estate tax) does not mute ambition and creation because the person we are taxing is already dead! A real estate tax would limit the influence of old money and encourage philanthropic giving. Fair is in the domain of philosophy and wealth in the world of reality, however there is no reason why we can't give reality an injection of justice. The top 1% controls more than the bottom 90%. I'd say our country needs an injection of justice. http://www.ufenet.org/research/wealth_charts.html

[unblock]

19. money is ALWAYS taxed when transferred from one person to another

if i just GIVE you $1,000,000, it gets taxed. only the first $10,000 is exempted from the gift tax.

but if i give you $1,000,000 and i'm dead, then the estate tax kicks in. so removing the estate tax is basically the equivalent of putting a loophole into the gift tax. it's a way to transfer wealth without getting taxed.


it's really a tax on golden-boy trust funds. rich brats who have everything handed to them on a silver platter. now they want to avoid paying taxes on the silver platter.

[stevebreeze]

21. how about this possible scenario?

A child works in his parents business, pays taxes on income. A different child who never does a days work in his or her life receives the business on a silver platter tax free. How is this fair?

Why should income from wealth be taxed at a lesser rate then income from work?

[BrokenSegue]

22. The death tax is nothing more than an extra tax on the wealthy

The poor rarely have large inheritences to be taxed into oblivion
It's fair to tax the rich as many times as we want.

[papau]

23. it's not an extra tax - it replaces the cap gains tax they avoided

but then - why should the very rich pay a cap gains tax like the middle class pays?

[BrokenSegue]

25. Correct me if i'm wrong

The rich are supposed to pay capital gains, whether or not they do. The law doesn't say, except rich people they don't have to pay.

Remember if the inheiriters want that invested money they will have to pay capital gains. I see no avoidance there.

[German-Lefty]

24. One more point

Point out that middle class families are going to have to pay the taxes the rich are being exempted from. When Mr. Billionaire passes on his estate without having to pay his 500 million in taxes, each average American pays 2$ (just divide).

[Cary]

26. Actually, the estate tax is a tax on poor planning.

As an estate planning attorney I can set someone up so that, unless they have hundreds of millions, their estate will not have to pay any tax.

The estate and gift taxes are not income taxes. This is a whole separate scheme that, in fairness, became a bit dysfunctional. I don't think it ever collected much by way of revenue.

However there were links from the Feds to the states, making most state's estate and gift tax schemes somewhat uniform. Those states are now "uncoupling" from the federal estate taxes and, as we know, they are starved for revenue. So the states are stepping right in.

The elimination of the stepped up basis, in favor of a carryover basis, is not only going to be an accounting nightmare (it didn't work the last time they tried to enact it), it means that the average person is now going to be taxed when the average person was not taxed, at all, under the prior scheme.

They've also made the tax code to be no longer a "uniform scheme", with taxes being the same regardless whether it would be a lifetime gift or a post mortem gift. This is atrocious, if you ask me.

I can't decide if the shifting of the tax burden from the wealthy, to the rest of us is the worst part, or whether the negative effect on charitable giving will be the worst part. You choose. But the previous tax scheme held strong incentives to make planned gifts to charities. I forget the estimates of the losses to charities as a result of this, but they're huge.

So, in typical Puke fashion, they benefit the extremely wealthy to the detriment of the rest of us. Cute, huh?