Thread: Estate tax [W:98]

Hm, I'm hearing not very good things about the estate tax in the US.



Would anyone please advise if this is true or not? Thanks in advance.

I'm typing this out as I watch the video:

I'd like to see a higher exclusion (tentatively 2 million?) but I generally support the idea of the estate tax. Here are my reasons

a) A dead man/woman doesn't have a right to money
b) his offspring have no right to the money that he/she earned
c) As partial justification to (b): aristocracy - the continuation of a wealthy elite class through generations - is generally bad

I'd like to point out that his "earn a dollor, end up with 13 cents" scenario ignores the million dollar floor. Essentially, you subtract that million dollars and then tax it. So if I had $1,000,001.00 I'd end up with $1,000,000.13

"How much different would it be if the United States government went communist" = pure hype

I'd like to point out that a vast majority of people that own such massive businesses (significantly greater than 1 million to be severely hurt) also have accountants who help them plan for this.

Anyone who is willing to destroy everything they've created solely to not let the government get their hands on it is, in my opinion, insane.

"If you work hard and you earn your money, don't you have the right to decide what to do with it" - Is he arguing that we should totally ignore the gift tax too? The point of the gift tax is to limit the unfair influence of the wealthy (at least, that's what I've assumed the point was). And I guess this is ultimately where our opinions split. I think of the estate tax as a tax on "income" by the inheritors - which it is.

And, insofar as "not fair". It isn't fair, first of all. These inheritors have had the advantages of superior education and better social connections, and now you want to give them money that they've done nothing to get?

While the "passing down of businesses" is great sentimentally, I'm not sure I buy his argument that is "should" happen and that "everybody benefits" from a society that supports the dominance of a few wealthy families.

I'd also like to point out, as I did above, that I agree that the million-dollar-exclusion is too low, specifically because of these small businesses (esp. farmers). I'd also like to point out that if the "rich dead guy" has a spouse, it doubles.

Not at all sure where "and instead leave somebody with some money to blow"... is he supporting the estate tax on the super elite or not?

Closes argument by talking about the "average american" will "pay" is essentially a non-sequitur.

Anyway, those were my thoughts, sorry if they're incoherent. Search through the mud and see if there are any pearls

Originally Posted by Canell

Hm, I'm hearing not very good things about the estate tax in the US.



Would anyone please advise if this is true or not? Thanks in advance.

the death tax was originally designed to prevent the rich (when there was no income taxes) from accumulating too much wealth, whether or not that is a legitimate government function is something we can debate,

I want the death tax to disappear

its a tax on previously taxed income.

for example.

You earn a million dollars and after taxes and expenses you buy a piece of art

you die and your children have to pay the government money to keep that piece of property even though there was no transfer for value (i.e. income)

the death tax is not widely applied because doing so would be a death sentence for the political aspirations of those who were to expand it

it is essentially a surcharge on those who pay the highest amount of taxes already

@TurtleDude

You could have just called it the "death tax" and the rest of your arguments would have been implied. That use of emotional rhetoric is pretty well known at this point.

The sales tax is a tax on previously taxed income too. There is nothing inherently wrong with taxing money twice (unless you can come up with a valid argument?).

Originally Posted by TurtleDude

it is essentially a surcharge on those who pay the highest amount of taxes already

You do realize that the "capital gains tax" (the main tax on the income of the super wealthy) is only 15% right? How, in any sense, are they paying the highest amount in taxes?

i don't support a confiscatory rate for estate taxes. however, those in the middle and lower socioeconomic brackets face a situation that is very similar, if not more severe. if one is lucky enough to live long enough to experience slowly failing health, the estate has to be liquidated before medicaid will do anything. my own family just lost the farm that has been in our family for well over 100 years in order to pay for nursing care. medicaid paid about for a short amount of care before demanding that the farm and all possessions be sold and the proceeds given to the health care industry. i'm not complaining because i would rather have my relative alive than any amount of money. however, it was very hard to see that land go. i've actually heard people say that they hope that they would die quickly so that they could leave their kids something. that seems to be a very malignant twist on what used to be the American dream.

so, i suppose i'd be cool with letting the very wealthy pass on almost everything as long as we fix health care so that the middle class enjoys the same privilege.

Originally Posted by Helix

i don't support a confiscatory rate for estate taxes. however, those in the middle and lower socioeconomic brackets face a situation that is very similar, if not more severe. if one is lucky enough to live long enough to experience slowly failing health, the estate has to be liquidated before medicaid will do anything. my own family just lost the farm that has been in our family for well over 100 years in order to pay for nursing care. medicaid paid about for a short amount of care before demanding that the farm and all possessions be sold and the proceeds given to the health care industry. i'm not complaining because i would rather have my relative alive than any amount of money. however, it was very hard to see that land go. i've actually heard people say that they hope that they would die quickly so that they could leave their kids something. that seems to be a very malignant twist on what used to be the American dream.

so, i suppose i'd be cool with letting the very wealthy pass on almost everything as long as we fix health care so that the middle class enjoys the same privilege.

What does health care in the middle class have to do with "letting the wealthy pass on almost everything"?

Originally Posted by evangambit

What does health care in the middle class have to do with "letting the wealthy pass on almost everything"?

because our employer-based, largely for-profit health care system ensures that much of the middle class will not be able to do the same unless they are "lucky" enough to die quickly.

I don't support the death tax at any income level.

Originally Posted by evangambit

I'm typing this out as I watch the video:

I'd like to see a higher exclusion (tentatively 2 million?) but I generally support the idea of the estate tax.

Thank you for conceding the existence of inflation. To be truly fair you should have it at about $25 million (a rough estimate of what a million in 1920 to today's money.

Here are my reasons

a) A dead man/woman doesn't have a right to money

Perhaps not but while they were living they had a right to determine what will be done with it within limits determined by probate law.

b) his offspring have no right to the money that he/she earned

This is a point of disagreement. Within the US probate law says otherwise.

c) As partial justification to (b): aristocracy - the continuation of a wealthy elite class through generations - is generally bad

Less so than you think trust fund babies tend to blow off the money. Only those who are in a business tend not to do so.

I'd like to point out that his "earn a dollor, end up with 13 cents" scenario ignores the million dollar floor. Essentially, you subtract that million dollars and then tax it. So if I had $1,000,001.00 I'd end up with $1,000,000.13

Perhaps so but I would have to look it up to see if the first million is deducted or not ( the website is going down for maintenance soon)

"How much different would it be if the United States government went communist" = pure hype

I believe I will call it a point in comparison.

I'd like to point out that a vast majority of people that own such massive businesses (significantly greater than 1 million to be severely hurt) also have accountants who help them plan for this.

Sorry no business has liquid assets of 67% avail just to pay off the government inheritance taxes (and are only available for that and not for expansion of or improvment for the business.

Anyone who is willing to destroy everything they've created solely to not let the government get their hands on it is, in my opinion, insane.

No the rational response to a very high estate tax is to spend it all to the $1 million floor than have it go to the government.

"If you work hard and you earn your money, don't you have the right to decide what to do with it" - Is he arguing that we should totally ignore the gift tax too? The point of the gift tax is to limit the unfair influence of the wealthy (at least, that's what I've assumed the point was). And I guess this is ultimately where our opinions split. I think of the estate tax as a tax on "income" by the inheritors - which it is.

As far as I'm concerned as long as gifting it is not used fraudulently there should be no tax on it.

And, insofar as "not fair". It isn't fair, first of all. These inheritors have had the advantages of superior education and better social connections, and now you want to give them money that they've done nothing to get?

And taking the bulk of it away from them including requiring any business that may have to be liquidated is fair then?

While the "passing down of businesses" is great sentimentally, I'm not sure I buy his argument that is "should" happen and that "everybody benefits" from a society that supports the dominance of a few wealthy families.

We are not talking about the dominance of a few wealthy families we are talking about middle class professionals and small to medium business owners. The truly wealthy will always be able to hide the bulk of their wealth including the inheritance ( munisable bonds are not taxable for example). The estate tax only punishes the merely wealthy.

I'd also like to point out, as I did above, that I agree that the million-dollar-exclusion is too low, specifically because of these small businesses (esp. farmers). I'd also like to point out that if the "rich dead guy" has a spouse, it doubles.

Then it should be $25 million which was the equilivent value of 1 million when the income tax started.

Not at all sure where "and instead leave somebody with some money to blow"... is he supporting the estate tax on the super elite or not?

He is saying the government would destroy the buissness and other capital assets and would just leave some cash one can take over an existing business it is something else to start a new one.

Closes argument by talking about the "average american" will "pay" is essentially a non-sequitur.

They will pay if their job is lost if the business is shut down. Ultimately we will all pay if corporations own all the businesses, farms and perhaps even homes. I really want to avoid that one.

Anyway, those were my thoughts, sorry if they're incoherent. Search through the mud and see if there are any pearls

Not incoherent but not thought thru I think.

Originally Posted by tessaesque

I don't support the death tax at any income level.

From an ideological viewpoint, I don't support income tax or any other type of taxes. No one likes taxes, but we have to have them.

It's much more logical to levy a tax on income that one didn't earn (capital gains, inheritance, windfalls), than to have a tax on money that one earned from work. The death tax is the lessor of evils.