Estate Taxes

[mrhnau]

In this thread there is discussion regarding Minimum Wage and a mention of Estate Tax. I was curious to see people's opinion on the Estate Tax. Do you think there should be an Estate Tax, or as some people call it, a Death Tax? If so, why? If not, then why not?

 

[michaeledward]

One relavant fact.

Why Pays an Estate Tax?

In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes.
​

For more than 99 out of 100 citizens, this discussion occurs only in the theortical arena. If you are one of those .3% of Americans who will be effected by this program, please let us know.

For the rest of us, please be congizant of the fact that government programs are not being eliminated to balance the cuts from the Estate Tax repeals. The 20 billion dollars annually being cut by repealing the estate tax are being added to our tax burden.

Source ... http://www.faireconomy.org/estatetax/ETFAQ.html

 

[evenflow1121]

In this thread there is discussion regarding Minimum Wage and a mention of Estate Tax. I was curious to see people's opinion on the Estate Tax. Do you think there should be an Estate Tax, or as some people call it, a Death Tax? If so, why? If not, then why not?

States, usually do not carry Estate Taxes what they usually have is a carry over from the federal estate tax, but they can carry them. Estate Taxes can get very nasty after your first $2 Million in cash and assets. I think it should be done away with, it is part of old english law to tax you on your way out anyways seems ridiculous. It is a stupid law, imo but it hardly affects any of us. If you do have assets within the vicinity of $2M or hell $1M even if in properties not necessarily cash, you may want to consider a an estate trust rather than a will.

 

[mrhnau]

One relavant fact.

Why Pays an Estate Tax?

In 2006, the wealthiest 0.27% of Americans are the only ones who pay estate taxes.
​

In its current form, the estate tax only affects the wealthiest 2% of all Americans.

This is directly from the IRS

More when I have time.


​

 

[elder999]

This tax, like many others, is easily avoided or minimized, even by those in the lowest 0.1% of that 3%.

 

[Phoenix44]

I wish I earned enough to pay the estate tax.

 

[michaeledward]

I wish I earned enough to pay the estate tax.

The Estate tax is not based on earnings, but rather assets. Most who are subject to this tax, need not work at all. Their wealth is inherited. Somewhere in their lineage, someone earned and acquired that wealth, but it does not need to be those who are subject to this tax.

 

[crushing]

I wish I earned enough to pay the estate tax.

I doubt you want to be in the situtation that would require you to pay the estate tax (aka the death tax).

 

[FearlessFreep]

I'm against the Estate Tax on principal without worrying about who it applies to, simply because a) what's being taxed has, at leats in theory, already been taxed and I really hate the way the government tries to double dip and get in on the action on any transaction and b) I'm against most taxes

 

[FearlessFreep]

The 20 billion dollars annually being cut by repealing the estate tax are being added to our tax burden.

No, because my taxes are not going up to offset the lost money from Estate Taxes. Either the government doesn't have the money to pay for their obligations and they cut that spending, or they borrow more to cover it (which is eventually going to come due, but that's a different issue)

It's not like the total tax revenue is established to be $X dollars so if one tax is cut for someone, it raises the rest of the tax for someone else.

 

[michaeledward]

No, because my taxes are not going up to offset the lost money from Estate Taxes. Either the government doesn't have the money to pay for their obligations and they cut that spending, or they borrow more to cover it (which is eventually going to come due, but that's a different issue)

It's not like the total tax revenue is established to be $X dollars so if one tax is cut for someone, it raises the rest of the tax for someone else.

I would encourage you to spend some time on this as a thought experiment.

You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not.

You are correct that the 'total tax revenue is not established to be 'X'. However, the total of government outlays is established yearly to b 'Y'. No matter how one devises it, X must equal Y.

If Government Spending is $100.00 annually.
Then Government Revenue must be $100.00 annually.
If the Government revenue equals only $90.00 this year, then a $10.00 Debt is carried forward (interest begins to accrue).
If the Government cuts the Estate Tax by $5.00 forever, the amount Government spends does not change.
Either Spending needs to drop to match that eliminated revenue or,
That $5.00 is distributed over the population not paying the Estate Tax.

If the Government rolls that Estate Tax deficit forward, as debt, the burden now falls on future tax payers.



One argument Conservatives have made in the past, is they are for 'smaller government', theoretically because this creates small tax burden. Under the current Congress, taxes have been cut, and the size of government (and related expenditures) has increased.

See John Dean .... Conservatives without Conscience.

 

[elder999]

The Estate tax is not based on earnings, but rather assets. Most who are subject to this tax, need not work at all. Their wealth is inherited. Somewhere in their lineage, someone earned and acquired that wealth, but it does not need to be those who are subject to this tax.

The first sentence is somewhat true, but the rest of what you've said here is somewhat prejudicial. One of the ways of avoiding some of the burden of estate tax is setting up an AB trust, and making one's heirs the beneficiaries of that trust. One of the specifications of that trust can be that one has to work or go to school to access the trust-this has been the case for me, my wife and a few other people I know who have been or will be beneficiaries of a trust. There are also several legitimate exceptions built into the estate tax for farms and businesses-traditionally inherited property, and often property where the heir is already working in the business, and needs to continue to do so: a business worth a little more than $1 million (the current maximum exempt from the estate tax) might not be worth very much in terms of income. Many restaraunts, for example, can be worth closer to $2 million in assets/value, but only supply their owners with an income of close to $100,000/year-not bad, but hardly wealthy, especially considering that a restaurant owner can easily put in 80 hr. weeks regularly.That income is effectively cut upon inheritance by the estate tax: if the business is worth $2 million, then the heir has to pay 37% of $1 million, or $370,000-this can, obviously, be crippling and unjust.

 

[michaeledward]

Elder999, those arguments are true, on paper.

But, the reality of the Estate Tax, is that for years people have been looking for small businessmen and farmers that were hurt by the Estate tax, and they are not to be found. The Estate Tax affects the very wealthy, not the run-of-the-mill mom and pop shop.

We are familiar with the Oracle of Omaha's recent donation to the Bill and Melinda Gates Foundation. For decades, Mr. Buffet has refused to even speak with any charities. A few weeks back, he gave 37 Billion dollars to a charitable organization. This, of course, takes those billions out of the 'Estate Tax' category, doesn't it?

What would happen, if that tax incentive to donate to charitable organizations was removed? Might some charitable giving be reduced?

Instead, that wealth would pass unhindered to the progeny of those who created the wealth (Paris Hilton). That way lies 'Oligarchy'.

 

[elder999]

Elder999, those arguments are true, on paper.
.

Those arguments could be true for my children, Michael-and, the fact is, I mostly agree with you, and said so: the estate tax won't effect Bill Gates' heirs in the least, not only because they could afford to pay it in its entirety and still have more money than God, but because he has likely structured things so that this tax is minimized-although he may be planning on pulling a Buffet himself.

I guess it was the "most who are subject to this tax need not work at all" that tweaked me-you'd be surprised at how many people who inherit wealth are obligated to work-and how many of us view work as a necessity rather than a burden, trust structure notwithstanding.

 

[michaeledward]

Those arguments could be true for my children, Michael-and, the fact is, I mostly agree with you, and said so: the estate tax won't effect Bill Gates' heirs in the least, not only because they could afford to pay it in its entirety and still have more money than God, but because he has likely structured things so that this tax is minimized-although he may be planning on pulling a Buffet himself.

I guess it was the "most who are subject to this tax need not work at all" that tweaked me-you'd be surprised at how many people who inherit wealth are obligated to work-and how many of us view work as a necessity rather than a burden, trust structure notwithstanding.

Certainly, my words, although chosen carefully, can tweak any of us who have to work each week to pay the rent or mortgage. I think I saw a headline on Slate earlier today that said 'Nepotism really does run American Companies'.

But, really, Steve Forbes does not need to run a magazine, or for President, or do anything. His grandfather, or great grandfather made a mint, and Mr. Forbes can live off of it.

Paris Hilton ... has she done anything for society, other than that night vison film?

If the estate tax is affecting resturants, then modify the law to exempt those small businesses. But be careful not to create loopholes for Mr. Trump or Ms. Hilton.

Recently, I have begun to gain a different understanding of the phrase "Let them eat cake" ... from the French Revolution. I never quite understood that phrase to represent the 'out-of-touchness' of the monarchy.

It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.

 

[elder999]

It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.

Well, I'm not a "working slob," and, while far from the Steve Forbes, David Watson, Bill Ford, or Paris Hilton category, I probably am someone of whom you'd say "...doesn't need to work at the lab, or teach school or anything," if you were aware of simply the value of my over several generations old inheritance. Much as the likes of Paris Hilton are simply offensive-the "idle rich"- there are others who are quite productive-both on their own merits and as a product of that inheritance. Again, I largely agree with you, though-their is no real need to cut the Estate Tax, as it is, largely affordable and avoidable, with a few minor exceptions.

 

[crushing]

It seems to me, we working slobs who argue against the Estate Tax (or throw around the phrase Death Tax), are those who bought into the 'Let them eat cake' worldview - believing in our wealthy society there are none that go without because that is the only way they can go.

Perhaps those 'slobs' with whom you disagree don't understand why there is a different set of rules. Yes, this is a case where there is actually a different set of rules.

Also, just because one doesn't benefit from the estate tax, doesn't mean they don't see a problem with having two sets of rules, even if the one set of rules is to the detriment of the very wealthy.

I used the phrase 'Death Tax' in my previous post to help jokingly impress upon Phoenix44 the situation required to pay the Estate Tax (are there situations where a death isn't part of the Estate Tax?).

Best Regards,
a slob

 

[Don Roley]

Paris Hilton ... has she done anything for society, other than that night vison film?

And who are you to determine what her parents can and can't give to her?

I see this in a lot of arguments about this matter. People take some rich slob that has inherited their wealth and let loose with barely concealed envy of their wealth and greed to get their hands on it.

But the fact is that as a parent I want to make my kids lives as wonderful as I can. Every cent I earn I want to pass along to them. I am a man of simple means and wants. Anything I do to make myself more than just average would be to pass along to my kids in some way.

But then somebody comes along and takes one or two examples out of the millions of people that inherit something from their parents and determines that their judgement on their charecter is more important than the fact that I earned the freaking money and will do with it as I damn well please!!!

That is the sort of laws I want. I want laws that will allow me to use the money I earn with the sweat of my labor and skill as I please. If I want to give it to my kids, what kind of elitism does it take to say that I can't because my choices are wrong? Heck, if I don't have kids and want to spend it on stupid things, what is it anyone else's place to say that I can't?

I pay taxes on what I earn. After I pay that, I should be able to spend it or give it without any more expense. If I use it all in a liquor store I will only sales tax, if any. But if I want to leave it to my kids without some complicated scheme, I will get taxed again. That is wrong in principle on so many levels. That is why I oppose any law that punishes me from giving money to my kids.

And if anyone does not like the idea that I give it to my kids, or even to Paris Hilton if I so choose, then I would remind them that it is not any concern of theirs what the hell I do with the money I earn.

 

[michaeledward]

Every cent I earn I want to pass along to them.

While I haven't checked, I believe there are places in the world where you can do just that. Generally, there is an accompanying title with this ability ... things like 'Lord', 'Duke', and 'Prince'.

My country was established in a manner in which each generation is able to undertake efforts for itself, and to step away from the inherited positions within society. While this ideal is never going to be reached, we have put in place, mechanisms to prevent the creation of a stratified, oligarchy.

In my country, if you are a man of modest needs and wants, you can pass every cent you earn to your progeny. Enjoy.

 

[FearlessFreep]

You have tried to brush off the entire discussion by telling us 'Deficit Spending is a different issue' ... which it is not.

Not intending to 'brush it off', because it is a complicated issue but not really material to the Estate Tax and so should be looked at seperately.

You're 'thought experiment' is extremele simplistic and leaves a lot of possibilities out.



If Government Spending is $100.00 annually.
Then Government Revenue must be $100.00 annually.

Nope, doesn't happen for the govt, doesn't happen for the citizens. The difference between income and spending is either 'savings' or 'debt', depending on what direction it goes, and eventually that debt has to be paid off. Only difference is that the gogt doesn't (yet) have creditors knocking of the door demanding payment. However,the govt doesn't really follow a pattern that how much they spend matches how much is collected in taxes

If the Government revenue equals only $90.00 this year, then a $10.00 Debt is carried forward (interest begins to accrue).

True. Like using your credit card to buy more this month then you earned, it carries forward until next month.


If the Government cuts the Estate Tax by $5.00 forever, the amount Government spends does not change.
Either Spending needs to drop to match that eliminated revenue or,
That $5.00 is distributed over the population not paying the Estate Tax.


And this is the part that is simplistic and wrong.

Neither revenue nor spending are constant from year to year. Spending changes from year to year by quite a lot, and in theory there is nothing stopping the govt from cutting there spending to $90 (hey, it has happened, stranger things have...) But the big variable is revenue. Tax Revenue varies from year to year based on population, health of t he economy, changes in tax law, etc... (and at least one school of thought that if each person's tax contribution as a percentage of ther income goes down, then that allows more money to be put into the economy directly by the people, which has the effect of increasing the total tax revenue)

You want X + Y = C where C s a constant so that if X changes, then Y must change in the opposite direction to match. The problem is that C is not a constant, and Y varies as well, independently from both X and C.



In my country, if you are a man of modest needs and wants, you can pass every cent you earn to your progeny. Enjoy.

Don't descriminate. Why should it matter if you are 'of modest' means? The last thing I want is for the govt to try to determine if I am 'of modest means' or not. (For the record, I am the single income earner in my family of eight, and I currently make $75K a year; well above poor, far from rich) I'm not going to look at you differently simply because you are poor; neither will I hold it against you if you are rich As an aside, why do we have sympathy for people born in poverty but disdain for people born to wealth?...far as I know neither had much choice in the matter. I'm not going to sit back and tell someone "hey, I think you can afford to pay more so I htink you 'deserve'to pay more" Who am I to say? And what happens when someone looks at me with the same mentality? There seems to be a mentality that "It' ok to treat one group of people different, [because they can deal with it anyway so who cares]" Why? I guess it's easy to not consider if something is 'right' or not if the people who we are being unfair to can 'afford' it. As an abstraction, if I give you a buck, why should the govt. insist on a piece of the action?

I guess it seems to me like the govt looks around for more inventive places to grab some money from, people who have money are an easy target. Just 'cause you have money doesn't mean I'm okay with the government deciding they can take it from you.

The Estate Tax is pretty silly because it's a tax on money that's already been taxed. (I earned $1M, I pay income tax...I invest it and make $1.5M, I pay capital gains tax, I give you $1.5M, you have to pay Estate Tax...how many times is the govt. going to grab a piece of the action? Especially if you take whatever is left of that $1.5M and buy a house...and pay sales tax...and continue to pay property tax every year)