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which best describes your view of the inheritance tax?

which best describes your view of the inheritance tax?


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Yeah, you sure did say the government needs money to function. You left out the part where it assumes responsibilities it is barred from and wastes money it already gets. How about you solve that before asking for more?

Perfect solution fallacy
The pipe is leaking from multiple points. We're talking about plugging a hole at point A. The leaks at points B-Z are the topic for another thread, but they can also be address concurrently. There is nothing special about inheritance dictating that we must address it last.
 
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Perfect solution fallacy
The pipe is leaking from multiple points. We're talking about plugging a hole at point A, the leaks at points B-Z are the topic for another thread.
There is no fallacy. You are arguing taking from people and possibly ruining their lives to fix problems they did not create on behalf of the people who created the problems. If you have problems with people getting an inheritance on already taxed assests just say so, don't try to justify it.
 
Life isn't fair. The employees will only loose their jobs if the new owners fire them.

there will be no "new employers"; since the tax owed would be more than they have in liquid form, they would have to break up and sell off the business in order to pay the tax bill.

Since your example is made up no one will lose any jobs, and the non existant employees have nothing to worry about.

actually my example is quite real - my uncle is the Actual American Story, no college education, built a small business up through an intensive work ethic, blood, tears, and years of living frugally and is now "worth millions of dollars", most of it in the form of the land and equipment that his contracting business uses. His daughters were young in a trailor park, now he is able to send them to college wherever they wish to go, and send them to Prom in whatever they wish to wear, an ability he worked hard for and treasures. But in order to sock-it to his daughters, others are willing to put his 50ish employees out on the street, and screw over all their daughters. Seems rather unfair to me...
 
There is no fallacy. You are arguing taking from people and possibly ruining their lives to fix problems they did not create on behalf of the people who created the problems. If you have problems with people getting an inheritance on already taxed assests just say so, don't try to justify it.

The Perfect Solution Fallacy you used says we cannot fix this one problem because there are a bunch of other problems that will go unfixed.

I am arguing that 1) we must take money to fund the government, that 2) the marginal utility of wealth decreases as it is accumulated, and thus 3) not taking money from heirs hurts the economy because we have to make up that short fall by taking more from poorer people, whose money has a much higher economy spurring velocity rate than that of the heirs.

The new fallacy that you're introducing is called Ad hominem; you are casting aspersions on my motives in order to deflect attention away from my argument.
 
The Perfect Solution Fallacy you used says we cannot fix this one problem because there are a bunch of other problems that will go unfixed.

I am arguing that 1) we must take money to fund the government, that 2) the marginal utility of wealth decreases as it is accumulated, and thus 3) not taking money from heirs hurts the economy because we have to make up that short fall by taking more from poorer people, whose money has a much higher economy spurring velocity rate than that of the heirs.

The new fallacy that you're introducing is called Ad hominem; you are casting aspersions on my motives in order to deflect attention away from my argument.
You keep repeating that and you are wrong. For it to be a fallacy there would have to be a logical disconnect, the problem IS what I have described, the fix is getting rid of the contributing agent(being unlimited access to tax dollars through force). I will go ahead and blow you off now since you would rather attack the argument with a false premise than discuss the topic.
 
I am opposed to the inheritance tax, pretty much entirely for the reasons given in the OP. I consider it a morally repugnant form of taxation and will not support it unless it includes a very high exemption and a very low rate-- and then, I still consider it to be unjustifiable.

given the massive income taxes which did not really exist when the "reason" for the death tax was created already tax the rich plenty this abomination should be abolished.

"Massive." That's funny.

btw it was never designed to raise revenue but to engage in social engineering which is really not a proper role of the federal tax system

Social engineering is a legitimate government function and the tax system is hands-down the most effective tool for fulfilling that function. It's absolutely a proper thing for the tax system to be doing. The issue is that an inheritance tax does it the wrong way, causing a lot of damage in the process.

I included 100% as an option because I've actually met people who advocate not allowing any inheritance. IMO that's a ridiculous position, but some people do support that.

The Soviet Union originally had a 100% inheritance tax. That lasted for four years before Communist revolutionaries realized how magnificently ****ing stupid an idea it was.
 
The wealth should be taxed when earned (with a flat tax, btw). Taxing it again (double taxation) when the owner decides to give it to his/her beloved people is a crime! End of story.
 
You keep repeating that and you are wrong. For it to be a fallacy there would have to be a logical disconnect, the problem IS what I have described, the fix is getting rid of the contributing agent(being unlimited access to tax dollars through force). I will go ahead and blow you off now since you would rather attack the argument with a false premise than discuss the topic.

LA, you are correct that the pipe is leaking from points B-Z. ****loads of tax dollars are hemorrhaging out of those holes and the whole thing is an egregious atrocity that needs to be rectified. However, there is no reason why we can't fix the leak at point A while simultaneously fixing the leaks at points B-Z. If you feel the need to further discuss the leaks at points B-Z, please go start another thread since this one is specifically about the leak at point A.


Regarding the topic at hand:
Premise 0)
  • You've gotten every budget cut you could ever hope for and as a result, taxes have already been cut across the board in equal percentages. (Kudos to you for starting another thread and being so damned eloquent in it that you convinced everyone to do whatever the **** it is you want us to do.)
  • We have returned to this thread and are now discussing where the government ought to get the funding to do those things and why we think taking money from those places will result in the greatest economic good for our country.

Premise 1) The government needs money to function and that money comes from taxes.

Premise 2) The government should try to minimize damage to the economy caused by taxes.

Premise 3) Money in the hands of poorer people spurs the economy more than money in the hands of richer people because of the diminishing marginal utility of wealth and the fact that poorer people's money has a much higher velocity rate than richer people's money.

Conclusion A) Eliminating and/or reducing the inheritance tax (whatever percentage we have left after performing your fantasy budget cuts) results in shifting the tax burden from the richer heirs onto the poorer workers, hurting the economy because of Premise 3.
 
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so the income of the heirs rather than the size of the estate is what matters to you?

and would you have all gifts taxed the same way?

Yes. Gifts, inheritance, income, capital gains, I think it should all be taxed the same way. I don't see a need for having all these special cases. They're basically all the same thing (money passing from one person to another) just for different reasons.

I'm a big fan of simplifying tax laws as much as possible.
 
Premise 3) Money in the hands of poorer people spurs the economy more than money in the hands of richer people because of the diminishing marginal utility of wealth and the fact that poorer people's money has a much higher velocity rate than richer people's money.

Premise 3 is an excellent argument in favor of the progressive income tax, which you know I support, but it doesn't justify an inheritance tax. The amount of revenue that you can generate via this method of taxation is simply not enough to justify the harm that it causes to small businesses, whom it unduly burdens. When the Waltons have to pay a death tax, they sell a few million dollars' worth of stock and nobody loses their job; when the owners of a family-owned ranch have to pay a death tax, they have to sell the whole goddamned thing. If you're worried about unduly burdening the middle class, you need to understand that this kind of tax hurts them most of all, and it hurts them more than any other kind of tax. This is the tax that kills small businesses and thwarts upward mobility in this country.

It isn't enough that the death tax is dead. Its head needs to be cut off, its mouth stuffed with garlic, and it needs to be buried at the crossroads.
 
We have been through this and I have told you that is not my view about a parent and a child and his oatmeal. Why do you dishonestly keep beating that same phony drum?
Well, I'm exploring your argument to StillBallin that whenever wealth moves from one person to the next, it is considered income. If you remember, he argued thusly:
I fail to see the relevance of this statement. Giving someone else a gift, a simple transfer of money/wealth from one individual to another for no goods bought and no services rendered is not income. That's what I'm arguing. And I personally believe that only income should be taxable.

You, on the other hand, argued against this position, defining income as "money or wealth being acquired by a person that they did not previously have as their own."

After some exploration, you have clarified your stance to exclude money or wealth acquired by a minor child. So my first question is, Why? The child is receiving wealth they previously did not own, so, per your definition, they have received income, so why wouldn't we consider this income per your definition.

To further explore this line, what if I give my adult child a few hundred bucks to take his wife out to dinner. He would be receiving wealth he did not previously have, so I'm guessing that this would also be considered taxable income per your rule?

Again, I am exploring your definition of income because I believe your definition is entirely too broad. It would seem to classify too much as income. I agree with StillBallin that a simple transfer of wealth from one individual to another is not income and should not be taxed. This would include wealth transferred from a parent to a minor child, and from a parent to an adult child.
 
Premise 3 is an excellent argument in favor of the progressive income tax

hmmm..

...Sacrifice theory and the marginal utility of money

...Sacrifice theory is perhaps the most historically prominent and persistent argument in favor of progressive taxation. Stated simply, the theory posits that the fairest tax is one that extracts from each taxpayer an equal or proportionate “sacrifice.” The theory rejects the quid-pro-quo notion that taxes are remitted in return for government benefits and instead treats taxes simply as a burden that must be shared in the most equitable way. Sacrifice theory is dependent upon the economic principle that holds there is a marginal-utility curve for money to the effect that the more money one earns, the less utility (or satisfaction) will be derived from the last dollar earned. Thus, if you plot a chart in which the vertical axis is units of marginal utility a person gets from money, and the horizontal axis is the amount of money the person earns, the curve will eventually have a downward slope. A downward slope indicates, for example, that an incremental $1,000 has greater utility to a person earning $10,000 a year than it has to someone earning $100,000.

The economic principle of marginal utility on which sacrifice theory depends is sound. However, there are several difficulties with the sacrifice theory itself that render it untenable as an argument for progression.

First, the basic premise of sacrifice theory is conceptually flawed. The notion that taxes are simply a burden that must be tolerated rather than a payment for benefits raises the question: Why would the citizens of a democracy vote to impose taxes on themselves if they did not expect benefits in return? And if the government does provide benefits (which of course it does), why would the payment of taxes be considered a sacrifice rather than a fair payment for value received?...

Second, the validity of the theory depends on more than just the existence of a downward sloping marginal-utility curve. For progression to be justified under a theory of equal sacrifice, the curve must not only decline, but decline more rapidly than income rises. In the view of British economist Arthur Pigou and others, there is no way to prove this is true:

All that the law of diminishing utility asserts is that the last ₤1 of a ₤1000 income carries less satisfaction than the last ₤1 of a ₤100 income does. From this datum it cannot be inferred that, in order to secure equal sacrifice . . . taxation must be progressive. In order to prove that the principle of equal sacrifice necessarily involves progression we should need to know that the last ₤10 of a ₤1000 income carries less satisfaction than the last ₤1 of a ₤100 income; and this the law of diminishing utility does not assert.


Seligman credits the Dutch economist A.J. Cohen-Stuart with debunking the notion that there is a universal marginal-utility curve that dictates progression. Here Seligman summarizes Cohen-Stuart: “It is perfectly possible . . . to construct tables [curves] which lead not to progression, but to proportion and even to regression.”*

Third, the sacrifice argument for progression is dependent upon the additional assumption that the marginal-utility curves of all persons are essentially the same. While it is well accepted that marginal-utility curves will eventually slope downward, it is by no means true that all curves have the same slope. In fact, in comparing the marginal-utility curves of Tom, Dick, and Harry Class, there are any number of reasons why Harry’s marginal utility curve might decline less steeply than Tom’s and Dick’s. Imagine, for example, that Harry has a learning-disabled son who needs costly special education, or that Harry’s wife has an illness that requires expensive medication not covered by insurance.... Seligman calls this the “very core objection” to sacrifice theory:

The imposition of “equal sacrifices” on all taxpayers must always remain an ideal impossible of actual realization. Sacrifice denotes something psychical; something psychological . . . Two men may have the same income, which they may value at very different rates. The one may be a bachelor, the other a man with a large family dependent upon him; the one may be well, the other ill . . . the one may earn his income, the other may receive it as a gift . . . The attempt to ascertain a
mathematical scale of progression, so as to avoid a charge of arbitrariness, is foredoomed to failure...


This inability to prove the sameness of the marginal-utility curves of different people troubled Blum and Kalven to the point that they dismissed sacrifice theory as a theory on which to base a fair tax system:

The error lies in trying to translate money, which can be measured in definite units, into corresponding units of satisfaction or well-being. In the end satisfaction in the sense of happiness defies quantification. Utility is a meaningful concept; units of utility are not. It is in the face of this difficulty that, even waiving all other objections, the whole elaborate analysis of progression in terms of sacrifice and utility doctrine finally collapses

...

which you know I support, but it doesn't justify an inheritance tax. The amount of revenue that you can generate via this method of taxation is simply not enough to justify the harm that it causes to small businesses, whom it unduly burdens.

that is true. The cost of collecting the estate tax is roughly analogous to the amount of revenue it generates, making the tax itself a wash. and for that we destroy small business.

When the Waltons have to pay a death tax, they sell a few million dollars' worth of stock and nobody loses their job; when the owners of a family-owned ranch have to pay a death tax, they have to sell the whole goddamned thing. If you're worried about unduly burdening the middle class, you need to understand that this kind of tax hurts them most of all, and it hurts them more than any other kind of tax. This is the tax that kills small businesses and thwarts upward mobility in this country.

bingo and precisely. yet folks always feel the need to bring up Paris Hilton.

the class warriors always aim at the wealthy... but hit the middle and lower income classes.

It isn't enough that the death tax is dead. Its head needs to be cut off, its mouth stuffed with garlic, and it needs to be buried at the crossroads.

:thumbs:
 
You are attempting to place me in a straight jacket. Sorry - but it does not fit.

What you are trying to do is to take my basic idea - taxing money that a person gets - and find loopholes like the oatmeal situation - which then you can apply to attempt to make my idea look bad. You take a basic idea about taxation and attempt to take something said in a discussion and apply it as a hard and fast rule playing GOTCHA which is silly. Your entire scenario about taxing oatmeal is simply absurd and nobody is contemplating such nonsense.

The facts are obvious to anyone trying to approach this topic honestly without the GOTCHA mentality that you are exhibiting.

We should abolish the inheritance tax and simply tax transfers of estates as normal income.
If you want to argue about gifts - there are already laws and rules that cover that sort of thing. They would cover your example.
 
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well, if it was just money, then it would be less of an issue - you are attempting to tax inherited wealth.
 
You are attempting to place me in a straight jacket. Sorry - but it does not fit.

What you are trying to do is to take my basic idea - taxing money that a person gets - and find loopholes like the oatmeal situation - which then you can apply to attempt to make my idea look bad. You take a basic idea about taxation and attempt to take something said in a discussion and apply it as a hard and fast rule playing GOTCHA which is silly. Your entire scenario about taxing oatmeal is simply absurd and nobody is contemplating such nonsense.

The facts are obvious to anyone trying to approach this topic honestly without the GOTCHA mentality that you are exhibiting.

We should abolish the inheritance tax and simply tax transfers of estates as normal income.
If you want to argue about gifts - there are already laws and rules that cover that sort of thing. They would cover your example.
I'm not trying to play gotcha, but am trying to fully understand your ideas on what constitutes income. I'm happy to hear that your general idea is not as hard and fast as I originally thought, and that you would not consider certain kinds of wealth transfers to be taxable income. (Such as the income a child receives from a parent.)

I still agree with StillBallin that simple transfers of wealth are not income, as they are not accounted for in GDP. Thus my position would be that gifts and inheritances should not constitute taxable income.
 
There is an old expression that one cannot see the forest for the trees. When I see the labored mental processes that some are putting themselves through to show problems with estate taxes - invoking the memories of relatives who could not manage a business and pay their tax - and other such examples, the expression is crystal clear.

The fact is this and it must be dealt with: Most people in this country make their money from working for it. Their income comes in the form of wages... salary ... a paycheck. And on that income they pay a tax which can be as high as 35%. That is the rule for the vast vast majority of people in America. These are the hard working people that keep America going and are the backbone of society.

Then we have a much smaller group who make their money from their investments -capital gains. For the most part, they are a different group of people who have lots of extra income that they do not need for food or shelter or housing or clothing or medical expenses or anything else associated with the daily struggle just to keep body and soul together. They take this extra money and invest in and then pay 15% on the income derived from those investments. For a variety of reasons, political, economic and social - the government extends them a discriminatory and preferential tax rate of 15%.

Then we have people who, through the good fortune of the lottery of birth, were born into a family of means and wealth and at some point they inherit a large amount of money. For a variety of reasons political, economic and social - they get healthy exemptions against paying any tax on it for the first 5 million dollars. In addition, one can use the assistance of professionals to lower the expected tax bill of 35% upon the remaining portion. Some even point out that more is spent fighting to lower the actual tax paid than is collected.

What we end up with is an American society where the vast majority of people are paying taxes on their source of money while others are earning far more and paying far less of a percentage on their source of money.

TAX FAIRNESS. That is the issue which angers so many Americans.

When we see the details of a Mitt Romney - to use the obvious example in the news - it angers people because they view it as a violation of basic justice.

And all the individual stories about hard working uncles do not speak to the dissatisfaction that Americans have about this lack of basic justice when it comes to discriminatory government laws favoring one source of money over others.
 
Then we have people who, through the good fortune of the lottery of birth, were born into a family of means and wealth and at some point they inherit a large amount of money.
I can't look at a parent giving to his child in the same way as a salary income or dividend income. I can't see classifying wealth given by one's parent as taxable income. Parents give to their children all the time. Call me crazy, but I just don't see it as a taxable event.
 
Premise 3 is an excellent argument in favor of the progressive income tax, which you know I support, but it doesn't justify an inheritance tax. The amount of revenue that you can generate via this method of taxation is simply not enough to justify the harm that it causes to small businesses, whom it unduly burdens. When the Waltons have to pay a death tax, they sell a few million dollars' worth of stock and nobody loses their job; when the owners of a family-owned ranch have to pay a death tax, they have to sell the whole goddamned thing. If you're worried about unduly burdening the middle class, you need to understand that this kind of tax hurts them most of all, and it hurts them more than any other kind of tax. This is the tax that kills small businesses and thwarts upward mobility in this country.

It isn't enough that the death tax is dead. Its head needs to be cut off, its mouth stuffed with garlic, and it needs to be buried at the crossroads.

But if it's fulfilling its purpose with the Waltons, why do we need to send it to its Final Death when an exemption for small businesses would suffice?
 

Missed the mark on that one. He isn't arguing marginal utility to the taxpayer-- that the rich guy won't miss his last dollar as much-- but rather fluidity: the more money a person receives, the smaller a proportion of his money he is going to spend, because your economic demands don't rise in proportion to your income. You take the poor man's last dollar, it's the same as taking almost that whole dollar directly out of the till of the local pub-- who would have also paid taxes on it-- while when you take the rich man's last dollar, you're taking it out from under his mattress where it would have been eaten by rats.

Rich people have rats under their beds too, right?

And that's why he's arguing for the death tax. Basically, he's arguing that taking what's left of the dead guy's money out from under his mattress and putting it all under someone else's mattress isn't very helpful, while taking the dead guy's money and spending it on all the stupid **** poor people buy helps create jobs in the all-important stupid **** industry.

Of course, he's still overlooking the fact that the death tax has a ridiculous amount of overhead, so it's more like taking the dead guy's money and setting it on fire, with the government picking up the tab for the accelerant.

But if it's fulfilling its purpose with the Waltons, why do we need to send it to its Final Death when an exemption for small businesses would suffice?

Because, basically, it's impossible to set the exemption high enough not to screw over family-owned businesses or the tax rate high enough that it actually affects the Waltons. It is not possible to make this tax function the way that it is intended to, and no matter what you do with it, the benefit never outweighs the harm. It's just bad policy.
 
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Let us take three examples.

case #1 George Brown. Works as a record producer and has risen up in the ranks due to hard work and his own talent. He made an income of $800,000.00 in 2011. His tax rate is 35%. Without any deductions, his tax bill is $280,000.00 in federal income tax.

case #2 is Susan Green. She does not work at a job. She has a portfolio of investments and lives off that income. In 2011, she earned an income of $800,000.00 in long term capital gains. Her tax rate is 15%. Without any deductions, her tax bill is $120,000.00 in federal income tax.

case #3 is Tom Wallace. He did not work in 2011. He did inherit $800,000.00 from his father who died leaving him the money. Because of the 5 million dollar exemption, his tax rate on the $800,000.00 is zero percent. His tax bill is nothing - zero dollars in federal income tax.

So we have three Americans all who placed $800,000.00 into their pockets in 2011.
One paid $280,000.-- in federal tax upon that sum.
Another paid $120,000.00 in federal tax upon that sum.
A third paid $0.00 in federal tax upon that sum.

Now explain to me, why the American people - the vast vast majority of which get their money from wages and salary, should support this sort of system which discriminates among sources of money and applies discriminatory rates to them?
 
Let us take three examples.

case #1 George Brown. Works as a record producer and has risen up in the ranks due to hard work and his own talent. He made an income of $800,000.00 in 2011. His tax rate is 35%. Without any deductions, his tax bill is $280,000.00 in federal income tax.

case #2 is Susan Green. She does not work at a job. She has a portfolio of investments and lives off that income. In 2011, she earned an income of $800,000.00 in long term capital gains. Her tax rate is 15%. Without any deductions, her tax bill is $120,000.00 in federal income tax.

case #3 is Tom Wallace. He did not work in 2011. He did inherit $800,000.00 from his father who died leaving him the money. Because of the 5 million dollar exemption, his tax rate on the $800,000.00 is zero percent. His tax bill is nothing - zero dollars in federal income tax.

So we have three Americans all who placed $800,000.00 into their pockets in 2011.
One paid $280,000.-- in federal tax upon that sum.
Another paid $120,000.00 in federal tax upon that sum.
A third paid $0.00 in federal tax upon that sum.

Now explain to me, why the American people - the vast vast majority of which get their money from wages and salary, should support this sort of system which discriminates among sources of money and applies discriminatory rates to them?
I support it because I feel that once a parent has earned his money it doesn't matter to whom he gives it. He has paid taxes on his earnings and may give those earnings to whomever he wishes. Giving it to a spouse or children should not be considered giving them income, in my opinion. That's how I justify it.
 
I support it because I feel that once a parent has earned his money it doesn't matter to whom he gives it. He has paid taxes on his earnings and may give those earnings to whomever he wishes. Giving it to a spouse or children should not be considered giving them income, in my opinion. That's how I justify it.

What you have done is given us your personal opinion about it based on your ideological beliefs. And Centinel, lets face it, your ideological beliefs about politics are certainly NOT those of the average American. I am not knocking you for that or ripping on you for that. Its just reality. And even then you only spoke to the inheritance aspect and ignored the capital gains aspect.

So why should the average American, who makes their money through salary and wages, support such a system knowing full well that they are taxed in ways that make them the losers in this system because they earn their money through work and labor?

Explain to George Brown why he should support a system that demands he pay $280,000.00 on the same amount of money that Susan Green only pays $120,000.00 or Tom Wallace pays nothing at all on the exact same amount going into his pocket.
 
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A dollar should be taxed only once: when it's spent.
 
A dollar should be taxed only once: when it's spent.

While you may indeed be more that willing to allow political ideology to trump your own practical economic situation, I doubt that the vast majority of Americans are.
 
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