Estate Tax Axed...Well...Reduced For Most. [Archive]

iGary

Jun 23, 2006, 07:45 AM

By Jonathan Weisman
Washington Post Staff Writer
Friday, June 23, 2006; Page A06

The House yesterday approved a deep, permanent tax cut on large, inherited estates that would cost the Treasury hundreds of billions of dollars, then sought to burnish its reputation for fiscal discipline by granting the president power to rescind pet projects from spending legislation.

The twin actions, cutting taxes and approving a line-item veto, came as Congress struggles to contain stubborn budget deficits. The votes also came just days after Rep. Jeff Flake (R-Ariz.) tried and failed 31 times to strike pet projects worth more than $200 million from four spending bills that passed the House easily.

The legislation, which passed 269 to 156, would exempt estates worth as much as $5 million -- $10 million for couples -- from taxation indefinitely. The tax rate on estates worth more than the exemption level up to $25 million would be set at the same tax rates that apply to capital gains -- now 15 percent but scheduled to rise to 20 percent in 2011. The tax for estates worth more than $25 million would be twice the capital gains rate. The bipartisan Joint Committee on Taxation estimated that the estate tax cut would cost the government $279 billion in revenue over the next 10 years.

nbs2

Jun 23, 2006, 08:01 AM

I can understand the estate tax decision - I mean at the most basic level it's disturbing to think that there is a death tax (and how does cryo play into all this?). I would like to know how much is pumped into the economy by those who work to hide/manipulate assets, and how spending for the rich will change.

Additionally, I would like to know when the last raise in the exemption rate was. It seems like we have more and more people dying wealthy than ever before, with general inflation and standards of living and such. Maybe 5/10 is a reasonable amount or maybe it is absurd - I don't know.

As for the line item veto, I'd love to see a comparison with the Clinton era line item and how they are squeezing this into the already established box.

EDIT: I just read the rest of the article. If it portrays the LIV properly, I like the idea. For those of yu who don't feel like hunting down the article, the POTUS will submit his rejections to Congress for a Yes/No within 45 days of signing the bill. Not a bad system, but it still puts the pork power in Congress...Ah well, I guess it is the best way to go for right now...

gauchogolfer

Jun 23, 2006, 08:02 AM

Well, I guess it's better than eliminating it entirely no matter the value of the estate, but I'd rather they kept it as it was. I'm reminded of the amendment proposed by (I think) Russ Feingold to exempt the first $100 Million from the estate tax, which was voted down by Republicans. Crazy.

iGary

Jun 23, 2006, 08:08 AM

Despite having lost two parents, I have never been in an estate tax situation, but I have always thought it was ludicrous. I mean tax has already been paid on that money/property/whatever, and most definitely, the new owner of said money and property will pay sales/property/gains tax on it anyway...

gauchogolfer

Jun 23, 2006, 08:11 AM

Applespider

Jun 23, 2006, 08:13 AM

$5 million :eek: The Brits get gouged after £250K or so

iGary

Jun 23, 2006, 08:15 AM

$5 million :eek: The Brits get gouged after £250K or so

You guys get gouged with taxes anyway. :p :D

skunk

Jun 23, 2006, 08:19 AM

You guys get gouged with taxes anyway. :p :DWell, thanks for the sympathy and understanding.

iGary

Jun 23, 2006, 08:21 AM

Well, thanks for the sympathy and understanding.

It's the only thing keeping us from seriously pursuing moving there. :o

gauchogolfer

Jun 23, 2006, 08:25 AM

Here's a quote from Bill Gates, Sr., who's an advocate of the estate tax:

“The reason the estate tax makes so much sense is that there is a direct relationship between the net worth people have when they pass on and where they live. The government that protects their business activities, the traditions that enable them to rely on certain things happening, that’s what creates capital and enables net worth to increase.”

Link to article at CBPP: http://www.cbpp.org/pubs/estatetax.htm

Thomas Veil

Jun 23, 2006, 08:36 AM

Maybe I'm too socialist on this issue, but I feel that the redistribution of wealth from super-wealthy people isn't automatically a bad thing. I understand the double-taxation argument, but I guess that for me the harm of double-taxation is offset by the good the reduction of income disparity can do.

Also, the 'double-taxation' part is a bit misleading, since quite a bit of these huge estates are built up in stocks and dividends which have unrealized capital gains, for which the estate tax is the only tax.I'm with you. What a lot of people don't realize about the estate tax is:

It only applies to amounts over $2 million.
There are certain credits which allow even portions of that money to escape taxation.
One of the GOP's favorite lies is that the estate tax hurts the "poor little farmer". In reality the estate tax specifically exempts family-owned farms.
Were the government just swimming in money, I would agree that such so-called double taxation is unnecessary. But we are in a deep, deep hole which our wonderful House is trying to dig even deeper.

So this is just another shameless effort by the Republicans to keep their rich friends happy.

Jackasses. :mad:

iGary

Jun 23, 2006, 08:39 AM

I'm with you. What a lot of people don't realize about the estate tax is:

It only applies to amounts over $2 million.
There are certain credits which allow even portions of that money to escape taxation.
One of the GOP's favorite lies is that the estate tax hurts the "poor little farmer". In reality the estate tax specifically exempts family-owned farms.
Were the government just swimming in money, I would agree that such so-called double taxation is unnecessary. But we are in a deep, deep hole which our wonderful House is trying to dig even deeper.

So this is just another shameless effort by the Republicans to keep their rich friends happy.

Jackasses. :mad:

Wouldn't it make more sense to control spending than to double tax people?

gauchogolfer

Jun 23, 2006, 08:42 AM

Wouldn't it make more sense to control spending than to double tax people?

I agree that spending control is a necessary component, but estate taxes contribute something like a trillion dollars over the next decade. That kind of income will have to come from somewhere. Should it be higher income, sales, property, or capital gains taxes instead of inheritance taxes? I'd love to see an end to $250M bridges to Nowhere, Alaska™ , but I don't think that covers it all.

mactastic

Jun 23, 2006, 08:45 AM

iGary

Jun 23, 2006, 08:51 AM

I agree that spending control is a necessary component, but estate taxes contribute something like a trillion dollars over the next decade. That kind of income will have to come from somewhere. Should it be higher income, sales, property, or capital gains taxes instead of inheritance taxes? I'd love to see an end to $250M bridges to Nowhere, Alaska™ , but I don't think that covers it all.

See that's a (no offense) problem I have with the Democratic Party. "That kind of income will have to come from somewhere." Why my pocket?

And the biggest problem I have with the Republican Party is their penchant for burying their heads in the sand and ignoring the fact that we have a major spending/deficit problem.

We pay enough god damn taxes as it is, and further burdening our citizens is not the answer (and yes, I understand this bill is more targeted at huge estates, but you get my drift).

When are our politicians going to stop yanking more and more money out of my pocket and work on real spending reform instead (both sides)?

iGary

Jun 23, 2006, 08:55 AM

Should you not get payroll taxes taken out of your paycheck because you employer has already paid tax on the money they pass on to you?

I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)

Queso

Jun 23, 2006, 08:57 AM

When are our politicians going to stop yanking more and more money out of my pocket and work on real spending reform instead (both sides)?

Unfortunately that money keeps the economy churning along so probably never. Government money doesn't just disappear, it always goes into someone's pocket, where it's taxed, and they then spend it, where it's taxed again. In the meantime lot's of people get paid and buy consumer goods/property, and the banks get rich enough off the transactions to invest in more people's lives.

Try not to get too depressed.

iGary

Jun 23, 2006, 08:59 AM

Unfortunately that money keeps the economy churning along so probably never. Government money doesn't just disappear, it always goes into someone's pocket, where it's taxed, and they then spend it, where it's taxed again. In the meantime lot's of people get paid and buy consumer goods/property, and the banks get rich enough off the transactions to invest in more people's lives.

Try not to get too depressed.

Not a real answer, but I get what you are saying.

I used to work on USCG and US Navy contracts and the waste was just...well...eye opening. And that was just one litle business that I had.

It may be an unrealistic pipe dream, but I know in my heart of hearts that if every facet of government operated at maximum efficiency with little waste, we'd be solvent.

Queso

Jun 23, 2006, 09:01 AM

Should you not get payroll taxes taken out of your paycheck because you employer has already paid tax on the money they pass on to you?
Employers don't pay tax on that money, since businesses get taxed on their profit and payroll is a cost. At least that's how it works over here (Employer National Insurance contributions excepted)

Queso

Jun 23, 2006, 09:07 AM

It may be an unrealistic pipe dream, but I know in my heart of hearts that if every facet of government operated at maximum efficiency with little waste, we'd be solvent.

It would take at least a generation to move from an economy effectively funded by Government waste to one where it was based on the spending of individuals with more in their pockets. Any quicker and you'd get an even larger rich/poor divide than the current one. The US's main problam at the moment (as in the UK) is that too much money is flooding out of the country rather than going round in the circle. As the amount of money in the circle goes down, Government gets less tax revenue from the money moving around, so taxes have to go up to maintain the level of Government spend. With the W administration's policies only increasing the amount of money leaving the USA, taxes will have to rise further in the future unless the next President can turn things around big time.

Peterkro

Jun 23, 2006, 09:11 AM

I think the taxes are a good idea(under the present system, basically I'd like to see government gone permanently) possibly the reason it starts at a lower point in Europe is we have to deal with the moronic outcome of inherited wealth.Unfortunately the real wealthy don't pay it (trusts etc etc etc ).Hey Ho.

jelloshotsrule

Jun 23, 2006, 09:41 AM

I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)

all the more reason that she should pay taxes on money she didn't really earn! ;)

blackfox

Jun 23, 2006, 09:53 AM

I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)
So what's your logic here? It's OK that you effectively are doubled-taxed on your hard work, but those who just receive an inheritance through no effort shouldn't suffer the indignity of the same?

See that's a (no offense) problem I have with the Democratic Party. "That kind of income will have to come from somewhere." Why my pocket?
Again, this is weird reasoning. If the estate tax pays into the government coffers, then it is less likely that it will come out of the average worker/taxpayers pocket.

The thing I don't get about fiscal Conservatives is they keep voting Republican, despite the fact they often have to put up with distasteful Conservative social agendas, and they keep getting screwed over.

The vast majority of Americans haven't gotten crap in the way of tax relief from the Feds under the GOP banner, and the destruction of various Social/Federal Assistance programs have put the onus on either the individual states or the individual. With the former, you often end up paying more in local taxes (property or whatnot), because the states have to balance their budgets, and the problems that pop up from lack of funding are right there in your back-yard, so they can't be ignored. If it is the latter, well then you need only take a good look at your checkbook.

**EDIT** beaten to the punch on point #1.

iGary

Jun 23, 2006, 09:56 AM

So what's your logic here? It's OK that you effectively are doubled-taxed on your hard work, but those who just receive an inheritance through no effort shouldn't suffer the indignity of the same?

I'm not double taxed on the money I earn, I don't know about you.

Again, this is weird reasoning. If the estate tax pays into the government coffers, then it is less likely that it will come out of the average worker/taxpayers pocket.

So as long as its not your money its OK? That's weird reasoning, no offense.

The thing I don't get about fiscal Conservatives is they keep voting Republican, despite the fact they often have to put up with distasteful Conservative social agendas, and they keep getting screwed over.

How do you know these people keep voting Republican?

Ugg

Jun 23, 2006, 10:07 AM

See that's a (no offense) problem I have with the Democratic Party. "That kind of income will have to come from somewhere." Why my pocket?

And the biggest problem I have with the Republican Party is their penchant for burying their heads in the sand and ignoring the fact that we have a major spending/deficit problem.

We pay enough god damn taxes as it is, and further burdening our citizens is not the answer (and yes, I understand this bill is more targeted at huge estates, but you get my drift).

When are our politicians going to stop yanking more and more money out of my pocket and work on real spending reform instead (both sides)?

When will Republicans stop their profligate spending? There's no doubt in my mind that Republican administrations since reagan have spent the most and the majority of their "tax relief" has been geared towards the wealthy. The middle class has been ignored.

CorvusCamenarum

Jun 23, 2006, 10:09 AM

See that's a (no offense) problem I have with the Democratic Party. "That kind of income will have to come from somewhere." Why my pocket?

When are our politicians going to stop yanking more and more money out of my pocket and work on real spending reform instead (both sides)?

Because the easiest money to spend (or tax) belongs to someone else.

iGary

Jun 23, 2006, 10:10 AM

When will Republicans stop their profligate spending?

I said that...:rolleyes:

mpw

Jun 23, 2006, 10:18 AM

$5 million :eek: The Brits get gouged after £250K or so
Not all Brits, those in the UK maybe. There's no 'death tax' here, never has been and if there is ever an amendment to that situation my Dad's going to get very nervous each time I visit between the proposal and amendment!
http://upload.yo-momma.net/uploads/smilies/dogeyes.gif

I agree with iGary if I paid taxes when I earn my money why should I pay again when I die?

blackfox

Jun 23, 2006, 10:19 AM

I'm not double taxed on the money I earn, I don't know about you.
sorry, I wasn't clear. You and your employer are both taxed. The money is effectively taxed twice.

So as long as its not your money its OK? That's weird reasoning, no offense. Well no-one wants to pay taxes, but the money has to come from somewhere. Personally, I'd rather it come proportionately more from those who it hurts the least, especially if it is coming from money they haven't expended effort in earning. While not fair, it seems pragmatic. In the highest tax-brackets, even after taxes, there remains a comfortable living amount. Things get dodgier as you move down the scale.

As to whether the government should spend less, that is open to debate - I would hope they might learn to spend more wisely

How do you know these people keep voting Republican?
To the extent that they do. I'll put my broad brush away.
I just happen to think that Fiscal Conservatives get some pretty miserable choices in looking at Parties to support. Ironically, recent history suggests that Democrats are better at running a government and keeping a budget.

Still, they might have to wait for a Libertarian candidate...

jelloshotsrule

Jun 23, 2006, 10:29 AM

So as long as its not your money its OK? That's weird reasoning, no offense.

i believe he meant that if you are taxing very wealthy estates only, you aren't taking money from average (upper middle class or below) people. now obviously if you are a flat tax proponent, etc, then you wouldn't like that idea anyways. but i think it's a good idea.

also, why do people say "i pay money when i earn the money, why do i pay again when i die?" really what happens is that the person who inherits that money is taxed when they "earn" it from you... plus, you're dead. you're not actively paying tax, or doing anything else!

Queso

Jun 23, 2006, 10:32 AM

Not all Brits, those in the UK maybe. There's no 'death tax' here, never has been and if there is ever an amendment to that situation my Dad's going to get very nervous each time I visit between the proposal and amendment!

Hey mpw, just so I can further get depressed about living in Gordon Brown's wage-slave Britain, what is the current income tax rate and threshold over there?

iGary

Jun 23, 2006, 10:34 AM

Sorry, I wasn't clear. You and your employer are both taxed. The money is effectively taxed twice.

Yeah, but all money is taxed/has been taxed/will be taxed. I get the crux of what you are saying though. I guess with inheritance taxes, the money is usually being kept in the family (notice I said usually), and I feel like it should be left alone since it is somewhat of a gift in most cases. That money is going to get spent and taxed again. I suppose I'm just tired of the government having their hands in my wallet at every turn...who isn't?

Well no-one wants to pay taxes, but the money has to come from somewhere. Personally, I'd rather it come proportionately more from those who it hurts the least, especially if it is coming from money they haven't expended effort in earning. While not fair, it seems pragmatic. In the highest tax-brackets, even after taxes, there remains a comfortable living amount. Things get dodgier as you move down the scale.

As to whether the government should spend less, that is open to debate - I would hope they might learn to spend more wisely

It's not fair - the main point. I guess I just have a problem with punishing people with more money because they supposedly have it to give anyway.

Wisely is a good choice of words. :)

To the extent that they do. I'll put my broad brush away.

I'm fairly fiscally conservative, but I stopped voting Republican the last election. But you are right, I know a lot of people who continue to vote Republican thinking they wil get some miracle pie in the sky tax program. Not happening.

mpw

Jun 23, 2006, 10:37 AM

...really what happens is that the person who inherits that money is taxed when they "earn" it from you...
So when a father leaves the family home to his son, the home their family's lived in for generations and the tax is such that the son can't pay cash and has to sell the property and move that fair is it?

I see the money I earn now as money I'm earning for my family whether that be to feed them this week, send them to college in 10years or make sure they can stay in the family home once I'm dead (whether that be in 40years from old-age or on Tuesday getting hit by a bus) I don't mind my family's earnings being taxed (much) but why should our savings?

mpw

Jun 23, 2006, 10:44 AM

Hey mpw, just so I can further get depressed about living in Gordon Brown's wage-slave Britain, what is the current income tax rate and threshold over there?
It's a complicated formula but basicly you won't pay income tax on your first ~£15k then you pay on a sliding scale from ~£15k to ~£30k up to a limit of 20% and anything above roughly £30k you get 'hammered' for the full 20%

If you're taxable earnings exceed ~£500k you can negotiate with the taxman to pay a lower % too.

No inheritance tax or VAT and Social Security is ~7% capped to ~£175pm.

IJ Reilly

Jun 23, 2006, 10:45 AM

Passing along wealth and privilege to people who did nothing to earn it -- what could be more American?

Obligatory...

:rolleyes:

Queso

Jun 23, 2006, 10:46 AM

It's a complicated formula but basicly you won't pay income tax on your first ~£15k then you pay on a sliding scale from ~£15k to ~£30k up to a limit of 20% and anything above roughly £30k you get 'hammered' for the full 20%

If you're taxable earnings exceed ~£500k you can negotiate with the taxman to pay a lower % too.

No inheritance tax or VAT and Social Security is ~7% capped to ~£175pm.

Thanks, even though I think I'm about to cry :(

iGary

Jun 23, 2006, 10:50 AM

Passing along wealth and privilege to people who did nothing to earn it -- what could be more American? :rolleyes:

That's an awfully broad statement, IJ. ;)

Come on - Lets say you have an Uncle who decided you were the person he wanted to leave his money to - would you be happy to give 50% to the government?

I don't know, just feels like a lot of wealth-hating going around here. :o

mpw

Jun 23, 2006, 10:55 AM

...I don't know, just feels like a lot of wealth-hating going around here. :o
Not me, I loves me some wealth. I love that if I were wealthy I could die knowing my kids would be OK 'cause I'd done a good job of providing for them as a parent.

iGary

Jun 23, 2006, 10:57 AM

Not me, I loves me some wealth. I love that if I were wealthy I could die knowing my kids would be OK 'cause I'd done a good job of providing for them as a parent.

Adopt me? :D

jelloshotsrule

Jun 23, 2006, 10:58 AM

That's an awfully broad statement, IJ. ;)

Come on - Lets say you have an Uncle who decided you were the person he wanted to leave his money to - would you be happy to give 50% to the government?

I don't know, just feels like a lot of wealth-hating going around here. :o

no, of course i wouldn't be happy, but if it's a boatload of cash (ie, enough to get taxed), then i would be able to deal with it. i don't like paying taxes on my pittance of an income now, either, but i like driving on decent roads (could argue that the beltway is not even "decent" ;)), having police and fire services, and other various social services, so i deal with it.

mpw- i am no tax expert, but i would imagine that if the home is worth under a certain amount of money (2 million's been thrown out there, but may be different for property?), then you don't have to pay. and as it is, i'm not sure how turning over property works... so that's not an example i can really respond to. but either way, when the kid gets the house, if they can't afford to pay property taxes and such, they'll have to sell (or rent it, or whatever they have to do to come up with the money for taxes).. that would happen to whoever got the house. i don't think that's terribly unfair, just because they happened to be given the house by a family member.

Deepdale

Jun 23, 2006, 11:41 AM

Out of approximately 2.5 million expected deaths this year, 12,600 estates are expected to incur an estate tax liability. Such a miniscule percentage is hardly akin to levying this tax on the majority of decedents.

With dwindling federal revenues, the options are not hard to figure out. The income tax rates affecting all of us will need to be raised or the national debt transferred onto the shoulders of generations to follow will become even more staggering, with inevitable and significant economic repurcussions.

As mentioned earlier, the father of Bill Gates steadfastly opposes a repeal of the estate tax. Interestingly enough, another recognizable family name with vast wealth - Mars - favors its demise. No real surprise that a family that made its mark in the candy business would be seeking a typically sweet deal right down to the bitter end.

leekohler

Jun 23, 2006, 11:52 AM

The 'double taxation' thing is a complete red herring. Money is taxed when it changes possession. Should you not get payroll taxes taken out of your paycheck because you employer has already paid tax on the money they pass on to you? Should your grocer not have to pay taxes because you have already paid taxes on the money you transfer to them?

Then why is it suddenly 'double taxation' when you pay taxes on money your parents transfer to you?

As for the exemption, 5/10 million is probably reasonable, it will keep the estate tax from biting too many people, but it is one of those things (like the limits for the AMT) where the goalposts have to be moved every few years or inflation starts to turn it from something that affects a very few to something that affects more than it was intended to.

Oh, and it's not the 'death tax'. It's correct name is the 'Paris Hilton' tax. ;)

I always was under the impression that the estate tax (I refuse to use the misleading, ridiculous neocon term "death tax") was put in place to keep all the money from staying in the same families indefinitely. I always thought it was there to level the playing field. I see nothing wrong with it at all. We'll all end up with more George Bushes now. The rich will now be able to pass their wealth to their spoiled, idiotic offspring who did nothing to deserve it and have no sense of the worth of a dollar.

zimv20

Jun 23, 2006, 11:53 AM

for those opposed to inheritence taxes....

currently, individuals may gift each other $10k tax-free / year, including parents to children. is that a reasonable limit while alive?

iGary

Jun 23, 2006, 11:58 AM

I always was under the impression that the estate tax (I refuse to use the misleading, ridiculous neocon term "death tax") was put in place to keep all the money staying in the same families indefinitely. I always thought it was there to level the playing field. I see nothing wrong with it at all. We'll all end up with more George Bushes now. The rich will now be able to pass their wealth to their spoiled, idiotic offspring who did nothing to deserve it and have no sense of the worth of a dollar.

Boy, you don't hate anyone. :rolleyes:

leekohler

Jun 23, 2006, 12:00 PM

Boy, you don't hate anyone. :rolleyes:

You know what iGary? Think about it- do you really think it's a good idea for multi-millionaires to keep passing the same wealth down generation to generation? Really? Paris Hilton comes to mind as a fine example for keeping the estate tax. If you wanna call that hate, fine. BTW- I like Paris Hilton. ;)

iGary

Jun 23, 2006, 12:05 PM

You know what iGary? Think about it- do you really think it's a good idea for multi-millionaires to keep passing the same wealth down generation to generation? Really? Paris Hilton comes to mind as a fine example for keeping the estate tax.

I think people have a right to do whatever they want with their money as long as they earned it legally and did not infringe on anyone else's rights to get it...and no, Paris Hilton is an extreme example.

I have a few friends who are beneficiaries to large estates and they are fine, upstanding wonderful people that are very productive members of society. Why should they be punished for keeping their family's money in the family?

I don't want to live in a country who's government is always looking to "level the playing field"and unfairly take more of my money just because I have been more succesful in life and have more money than others. Now if the government wants to tax me on what I spend, versus what I earn, than I have no issue with that - that'f fair.

But seriously, read what you said. It's just filled with I hate rich people verbage, Lee - no offense.

Peterkro

Jun 23, 2006, 12:10 PM

Boy, you don't hate anyone. :rolleyes:

The US is not old enough to have the concentration of wealth that say the UK has,those families of what is called the "aristocracy" wealth has it's origins in the robber barons of the middle ages and are in general a disgrace to the human race.NZ has relatively recently changed it's inheritance laws and is heading down the wealth concentrated in a few families hands road,as undoubtedly is the US.The saying is "behind every great fortune is a great crime" do you want that to continue?

leekohler

Jun 23, 2006, 12:10 PM

I think people have a right to do whatever they want with their money as long as they earned it legally and did not infringe on anyone else's rights to get it...and no, Paris Hilton is an extreme example.

I have a few friends who are beneficiaries to large estates and they are fine, upstanding wonderful people that are very productive members of society. Why should they be punished for keeping their family's money in the family?

I don't want to live in a country who's government is always looking to "level the playing field"and unfairly take more of my money just because I have been more succesful in life and have more money than others. Now if the government wants to tax me on what I spend, versus what I earn, than I have no issue with that - that'f fair.

But seriously, read what you said. It's just filled with I hate rich people verbage, Lee - no offense.

Oh please! I have plenty of friends who are quite well off, thank you. If I hated them, I'd tell them. ;) And the estate tax hardly left any of your friends destitute, now did it? I see nothing wrong with the estate tax. It was put there for a reason and a damn good one IMO. How can democracy truly exist when all the power rests in only certain people's hands? iGary, I don't get you man.

zimv20

Jun 23, 2006, 12:19 PM

I have a few friends who are beneficiaries to large estates and they are fine, upstanding wonderful people that are very productive members of society. Why should they be punished for keeping their family's money in the family?
it's not punishment, it's income. all income is taxed, period.

tell me if this example (http://en.wikipedia.org/wiki/Estate_tax) indicates too high a tax:

For example, assume an estate of $3.5 million in 2006. There are two beneficiaries who will each receive equal shares of the estate. The maximum allowable credit is $2 million for that year, so the taxable value is therefore $1.5 million. Since it is 2006, the tax rate on that $1.5 million is 46%, so the total taxes paid would be $690,000. Each beneficiary will receive $1,000,000 of untaxed inheritance and $405,000 from the taxable portion of their inheritance for a total of $1,405,000. This means that they would have paid (or, more precisely, the estate would have paid) a taxable rate of 19.7%.

19.7% is way lower than income tax would be for nearly $2 million.

iGary

Jun 23, 2006, 12:21 PM

Oh please! I have plenty of friends who are quite well off, thank you.

I never said you didn't...?

And the estate tax hardly left any of your friends destitute, now did it? I see nothing wrong with the estate tax. It was put there for a reason and a damn good one IMO.

That reasoning was "well they have more money, they can afford it." That's not online with words like "fair." I am not saying that people with money shouldn't pay more in taxes, but do they have to have nearly all of it taken away before someone complains about it?

The inheritance tax rate over $1 million is almost half, Lee - HALF. Just because the money gets transfered, Uncle Sam gets half, just..because? And while $1 million may seem like a lot, suppose my dad left me his house and his assets - half gone. Period. Do not pass go. How is that "fair?"

How can democracy truly exist when all the power rests in only certain people's hands?

Are you saying everyone should be the same, Lee?

iGary, I don't get you man.

Why, because I am gay and I still choose to have some conservative beliefs? Am I supposed to trade those in when I get my gay card? :p

iGary

Jun 23, 2006, 12:22 PM

it's not punishment, it's income. all income is taxed, period

Then all family gifts should be taxed, too, right?

jelloshotsrule

Jun 23, 2006, 12:24 PM

it's not punishment, it's income. all income is taxed, period.

tell me if this example (http://en.wikipedia.org/wiki/Estate_tax) indicates too high a tax:

19.7% is way lower than income tax would be for nearly $2 million.

thanks for that info.

do you know how the estate tax works for property (like houses, etc)? would you get taxed on the value? or what

jelloshotsrule

Jun 23, 2006, 12:24 PM

Then all family gifts should be taxed, too, right?

it is, above a certain amount ($10k/year as zimv said). whether or not you report it is a separate issue. ;)

Peterkro

Jun 23, 2006, 12:30 PM

Then all family gifts should be taxed, too, right?

All family gifts above a certain amount are taxed,the reason if they weren't it would be one of the more obvious loopholes in inheritance tax.

scem0

Jun 23, 2006, 12:31 PM

Well no-one wants to pay taxes, but the money has to come from somewhere. Personally, I'd rather it come proportionately more from those who it hurts the least, especially if it is coming from money they haven't expended effort in earning. While not fair, it seems pragmatic. In the highest tax-brackets, even after taxes, there remains a comfortable living amount. Things get dodgier as you move down the scale.

I think you said it well blackfox. This isn't about hating the rich or not being successful. It's about pragmatism. It's not 'punishment'.

I agree, iGary, we need to seriously work at wiser spending on a federal level. But we're not spending wisely now, if we weren't so badly in debt as a country the opinions in this thread very well might change. Similarly, if we had an administration that wasn't spending without second thought, people might be more understanding of an estate tax reduction.

But, unfortunately, federal leadership is sorely inadequate at this time. We need the estate tax. And I'm of the belief that we need it in any case, possibly reduced, but I don't think there's a question about it given the debt we are in.

e

zimv20

Jun 23, 2006, 12:33 PM

do you know how the estate tax works for property (like houses, etc)? would you get taxed on the value? or what
yes, i believe all items of value are included in the calculation, though i don't know to what extent debt (credit card, mortgage) is debited. i think life insurance is included in there, too, but i may be wrong there.

i believe this is from where the "family farm" argument came. i.e. the taxable portion of the estate could be larger than the cash from the estate, therefore property must be sold off in order to pay the taxes.

i'd be interested in knowing who does all the valuation.

leekohler

Jun 23, 2006, 12:36 PM

I never said you didn't...?

That reasoning was "well they have more money, they can afford it." That's not online with words like "fair." I am not saying that people with money shouldn't pay more in taxes, but do they have to have nearly all of it taken away before someone complains about it?

The inheritance tax rate over $1 million is almost half, Lee - HALF. Just because the money gets transfered, Uncle Sam gets half, just..because? And while $1 million may seem like a lot, suppose my dad left me his house and his assets - half gone. Period. Do not pass go. How is that "fair?"

I explained this before. It's not about being fair, it's about balance within society.

Are you saying everyone should be the same, Lee?

No- everyone should have the same opportunities. There is a finite amount of cash available. Everyone should have a chance to make money. I don't think a select few should possess it all just because they were born into it.

Why, because I am gay and I still choose to have some conservative beliefs? Am I supposed to trade those in when I get my gay card? :p

WTF? What does that have to do with this conversation? Never once did I bring that up. But I have to say, iGary. I've never heard you sound more Limbaugh-esque than in this thread. :)

iGary

Jun 23, 2006, 12:37 PM

Look, I'm not trying to be obtuse about this, I guess the fact that I have to write a check for many thousands of dollars every quarter straight to the Federal government makes me, perhaps, a bit overly sensitive to what gets taken from us. (I never really noticed it much until I was self employed and actually have to pay the taxes out of my checking account - it is so easy to forget it when it automatically gets taken out.)

That said, I don't think there should be zero taxes on inheritance, but by the time you combine the ~20% Federal Inheritance Tax with the Local taxes you will likely pay (at least here in Maryland), you are likely looking at nearly half being gone...just gone...and I think that is unfair, personally, even if it is a large estate.

Let me assure you, that estate has paid on the order of many times more tax than you and I ever will before it was put up for inheritance.

That's all I have to say really - I can appreciate everyone's views, and there have been some good ones expressed here. :)

Thomas Veil

Jun 23, 2006, 12:37 PM

Wouldn't it make more sense to control spending than to double tax people?What I was talking about was the debt that already exists.

I'm sure you are making a valid point, but it just doesn't make sense to remove or lessen a big source of revenue when the current government is spending money like drunken sailors. Yeah, I wanna stop them from spending, but I'm not likely to, nor does lowering the estate tax help resolve the debt we already have.

zimv20

Jun 23, 2006, 12:38 PM

it is, above a certain amount ($10k/year as zimv said).
i've always been a bit troubled by the distinction between "living inheritence" and "death inheritence."

for example, on august 1st a mother who's worth $100k gives her daughter $50k, $40k of which is taxable. on august 2nd, the mother dies from a simultaneous lightning and shark attack.

the remaining $50k estate is granted to the daughter, who pays zero taxes on that amount.

it seems odd to me that the life status of the mother demands such different tax amounts. anyone else?

iGary

Jun 23, 2006, 12:40 PM

I explained this before. It's not about being fair, it's about balance within society.

One last thing - sorry.

Why should I pay more just because I am more succesful than the next guy - why should everyone be the same? Would you give away 25% more of your income next year just so everyone would be the same? I'm sorry, I just don't like this "everyone should be the same" thing. It's just too socialist for me. :o

And sorry if I am sounding like Rush. I just hate giving away my hard earned money. ;)

zimv20

Jun 23, 2006, 12:41 PM

I never really noticed it much until I was self employed
a-HA! :-)

that's a separate issue, and i think we'll agree on the outrageousness of taxes for the self-employed. that needs to be fixed directly. i guess i'd hoped the "pro-business" GOP would have done something about that now, but i guess they're not interested in the little guy.

iGary

Jun 23, 2006, 12:43 PM

a-HA! :-)

that's a separate issue, and i think we'll agree on the outrageousness of taxes for the self-employed. that needs to be fixed directly. i guess i'd hoped the "pro-business" GOP would have done something about that now, but i guess they're not interested in the little guy.

Well not only the additional 7.5% I have to eat every year, but also the fact that I SEE what I am actually making - I actually have it for a while and see the numbers reflect in my account...when it is taken out automatically, you alomsot feel like its not there to begin with. :D

And for anyone that wants to paint me as a neocon, I am pro choice, pro national health care and a registered Independent. ;) :)

leekohler

Jun 23, 2006, 12:45 PM

One last thing - sorry.

Why should I pay more just because I am more succesful than the next guy - why should everyone be the same? Would you give away 25% more of your income next year just so everyone would be the same? I'm sorry, I just don't like this "everyone should be the same" thing. It's just too socialist for me. :o

And sorry if I am sounding like Rush. I just hate giving away my hard earned money. ;)

Ugh, how do I make this clear? I do not see how any society is served by allowing all the wealth to stay in the same hands generation after generation. iGary, if the estate tax is completely dismantled, I guarantee you that will happen. I don't see preventing that as socialism, I see that as smart. And I hardly see how this makes everyone the same. If it did, we all would be. It's hardly as if people can't become rich if they so choose.

scem0

Jun 23, 2006, 12:46 PM

Why should I pay more just because I am more succesful than the next guy - why should everyone be the same? Would you give away 25% more of your income next year just so everyone would be the same?

Because it's pragmatic. Because we are in debt. Because we don't want to live in an aristocracy. There are lots of reasons.

e

jelloshotsrule

Jun 23, 2006, 12:48 PM

It's just too socialist for me. :o

i guess that's exactly why i have no problem with this tax. ;)

Thanatoast

Jun 23, 2006, 12:56 PM

The estate tax was created in order to forestall the creation of a moneyed aristocracy in the US.

The government at the time saw the likes of Morgan and Rockefeller gaining huge amounts of cash and power and came to the conclusion that if all that money was passed on generation to generation, eventually most of the wealth of the country would be concentrated in a very few hands. Since they didn't want a few wealthy families acting as a defacto royalty, they introduced the estate tax in order to pinch the potential for abuse.

Our current Republican leadership however, follows the "I've got mine" philosophy. And they are pushing the nation towards a "I've got yours, too" philosophy. As we've all seen since 9-11, concentration of power is bad.

So sorry, I'm not going to lose much sleep over those poor dead millionares who only leave $2.5 million to their heirs instead of $5 million.

iGary

Jun 23, 2006, 12:59 PM

i guess that's exactly why i have no problem with this tax. ;)

You probably would if it was your money. :p ;)

leekohler

Jun 23, 2006, 01:01 PM

jelloshotsrule

Jun 23, 2006, 01:02 PM

You probably would if it was your money. :p ;)

well a selfish part of me wishes i paid lower taxes (even though i pay relatively little, every bit counts on my low income), sure. but like i've said, i accept all the social/community based uses of my taxes, and would ultimately be ok paying more. and there are certainly plenty of wealthy people who are ok with paying high taxes, and i'd imagine i would be too if i were wealthy. there comes a point where the money is all just extra, and once i'm swimming in gold coins, does it matter if i can't also wipe my arse with money too?? :eek:

iGary

Jun 23, 2006, 01:02 PM

I've been saying this over and over in this this thread today. Thanks for the historical reference. There is a reason for this people!

No you haven't, Lee. :rolleyes:

He said it without all the I hate rich people references. :p

jelloshotsrule

Jun 23, 2006, 01:04 PM

No you haven't, Lee. :rolleyes:

He said it without all the I hate rich people references. :p

ahh, just saw your edit as i went to reply. i certainly don't want to get in the middle of you two's bickering, but from post 64...

I do not see how any society is served by allowing all the wealth to stay in the same hands generation after generation.

ps. can we get someone banned? please? i love the drama and only have 3 more hours of work to kill on this friday afternoon! :p

leekohler

Jun 23, 2006, 01:09 PM

No you haven't, Lee. :rolleyes:

He said it without all the I hate rich people references. :p

iGary- again, I don't hate nor did I say I hated rich people. And yes I did state what Thanatoast did several times minus the historical reference. It's always been there to keep all the cash from staying in the same hands. Did I or did I not say that?

Deepdale

Jun 23, 2006, 01:12 PM

ps. can we get someone banned? please? i love the drama and only have 3 more hours of work to kill on this friday afternoon! :p

I hope all this estate tax bickering does not result in an untimely death. :)

Peterkro

Jun 23, 2006, 01:13 PM

A easily obtained example of the problem of would be the Kennedy family in the US,do you honestly believe that Joe Kennedy earned that wealth by hard work? People who work hard don't accumulate the amounts of money we're talking about here,it always involves a scam.As IJ said I guess it's "the American way"

scem0

Jun 23, 2006, 01:16 PM

ps. can we get someone banned? please? i love the drama and only have 3 more hours of work to kill on this friday afternoon! :p

Don't encourage them :D. Lee gets worked up enough as is.... iGary is on enough meds to where he doesn't have to worry about getting worked up ;).

:D

e

jelloshotsrule

Jun 23, 2006, 01:16 PM

I hope all this estate tax bickering does not result in an untimely death. :)

hahahah

but c'mon, it'd make the time pass much more quickly for me! luckily i've still got an hour of lunch to kill. ;)

iGary

Jun 23, 2006, 01:17 PM

iGary- again, I don't hate nor did I say I hated rich people. And yes I did state what Thanatoast did several times minus the historical reference. It's always been there to keep all the cash from staying in the same hands. Did I or did I not say that?

You never said anything about an aristocracy or offered any historical perspective, no.

Something about Paris Hilton and leveling the playing field.

Look I don't want to argue with you - if you think people should just have their money taken away so that money doesn't "stay in the same hands," then we will never agree on this subject. Best to agree to disagree. :)

iGary

Jun 23, 2006, 01:18 PM

Don't encourage them :D. Lee gets worked up enough as is.... iGary is on enough meds to where he doesn't have to worry about getting worked up ;).

:D

e

LOL!!

(Does make note that he hasn't been on any drugs for six weeks. :eek: )

jelloshotsrule

Jun 23, 2006, 01:20 PM

LOL!!

(Does make note that he hasn't been on any drugs for six weeks. :eek: )

hmm, is that going to change? that may make for a less than ideal DC picnic! ;)

do you disagree with taxing "gifts" also? personally, if i were receiving a $10k gift, i'd piss my pants (i do that alot...) and then live it up spending whatever is left after taxes!

Deepdale

Jun 23, 2006, 01:20 PM

i've still got an hour of lunch to kill. ;)

An hour to kill ... this thread is a bonanza for punsters. In the words of Jesse Jackson, "Keep hope alive."

scem0

Jun 23, 2006, 01:20 PM

LOL!!

(Does make note that he hasn't been on any drugs for six weeks. :eek: )

whatever, neocon! ;) :D :p.

e

leekohler

Jun 23, 2006, 01:37 PM

You never said anything about an aristocracy or offered any historical perspective, no.

Something about Paris Hilton and leveling the playing field.

Look I don't want to argue with you - if you think people should just have their money taken away so that money doesn't "stay in the same hands," then we will never agree on this subject. Best to agree to disagree. :)

I acknowledged that I mentioned no historical perspective. However, Thanatoast's post states essentially what I said. The government was preventing all the money from staying in the hands of a few. How is that different from what I said in essence? And may I assume that you are for an American aristocracy then? Do you disagree with what Thanatoast stated in his post?

And iGary- no one is taking ALL of someone's money. Stop acting as if the government is leaving people destitute.

pseudobrit

Jun 23, 2006, 05:10 PM

I would reckon that the dead don't give a fiddler's fart about what's happened to their money.

This tax cut isn't conservative. It's regressive. These worthless ****ers in the House should get on a time-travelling boat and head back to England circa 1653.

They should call this the Defense of Landed Gentry Act.

Sedulous

Jun 23, 2006, 06:51 PM

I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)

Yes, living trusts are amazingly effective ways around paying taxes.

solvs

Jun 23, 2006, 07:43 PM

Seems to me what we're arguing about is just how much the government should take and off of what. Those who make more should have to pay more in taxes. Just a sliding scale thing. Those who receive over a certain amount of money from a relative should have to pay some tax on it. Maybe 50% of a house that has appreciated over the years is a bit much, but I don't think 20% of $3 million is a bad thing. Sure the government could spend less, or at least more wisely, but they don't. The money's got to come from somewhere, and whether it's Paris Hilton or someone who uses their trust fund to save the poor, they themselves didn't earn that money, and it isn't exactly a gift. Think of it like property or a vehicle, which are taxed when they change hands. The money is being transferred to someone else, the government gets their cut. But if it's under a certain amount, I don't see why they can't just use the sliding scale or not tax it at all.

The fact that some of the money may go to social services provided by the government instead of a keeping a wealthy family wealthy is irrelevant.

IJ Reilly

Jun 23, 2006, 07:59 PM

leekohler

Jun 23, 2006, 08:39 PM

Happiness has nothing to do with it. I've never met anyone who is happy to pay taxes. But unhappiness paying taxes on money somebody else earned -- isn't that taking the concept a bit far?

Some of us are more interested in a meritocracy, some more interested in preserving privilege. That much I know. At this point, I'm more curious to know how the latter instead of the former became the overriding American value.

You hit the nail on the head, IJ.

skunk

Jun 23, 2006, 08:40 PM

CorvusCamenarum

Jun 23, 2006, 09:23 PM

Has it changed at all? I've the distinct impression that the US ruling class has always fostered the myth of a meritocracy to deflect any meaningful assault on their privilege. Very successfully, too.

No, it hasn't. If memory serves, the original qualification for being able to vote in this country was whether or not you were an adult male and owned property over a set value. The meritocracy idea came from the notion that [virtually] anyone could get their foot in the door, so to speak, by virtue of their own endeavours. That idea is still alive and well today, as there are ample examples of people who started out with nothing and worked their way up.

mactastic

Jun 26, 2006, 12:47 PM

I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)
Oh, so we should eliminate the capital gains tax since you didn't work for your investment income?
Employers don't pay tax on that money, since businesses get taxed on their profit and payroll is a cost. At least that's how it works over here (Employer National Insurance contributions excepted)
And dead people don't pay taxes on their inheritance money. :confused:
So when a father leaves the family home to his son, the home their family's lived in for generations and the tax is such that the son can't pay cash and has to sell the property and move that fair is it?

I see the money I earn now as money I'm earning for my family whether that be to feed them this week, send them to college in 10years or make sure they can stay in the family home once I'm dead (whether that be in 40years from old-age or on Tuesday getting hit by a bus) I don't mind my family's earnings being taxed (much) but why should our savings?
How about a little personal responsibility here? With proper estate planning, you should lose nothing.

Just out of curiousity, does your version of "fair" extend to someone who can't afford health care? If a son gets sick, should said son be forced to give up the home his father willed him (and was smart enough to plan for so it wasn't taken by the estate tax) because he can't afford to pay for medical care? Is that "fair" by your definition?
Boy, you don't hate anyone. :rolleyes:
Boy, you don't hate paying your fair share. :rolleyes:
I think people have a right to do whatever they want with their money as long as they earned it legally and did not infringe on anyone else's rights to get it...and no, Paris Hilton is an extreme example.

I have a few friends who are beneficiaries to large estates and they are fine, upstanding wonderful people that are very productive members of society. Why should they be punished for keeping their family's money in the family?
Red herring. No one here is arguing that people don't have a right to do whatever they want with their money. Paris Hilton may be an extreme example, but so is the 'family farmer who loses the family farm', right? We wouldn't want people putting up extreme examples to make a point now, would we?

And again we come back to your obvious hatred of taxes. You seem to view them as a 'punishment'. That view is very backwards, considering you are 'punished' daily with the fruits of that money. You complain about Lee hating on rich people, then you come off with your own hatred of the tax collector.
I am not saying that people with money shouldn't pay more in taxes, but do they have to have nearly all of it taken away before someone complains about it?
Talk about an extreme example! Who's had nearly all their money taken away? Please give us an example of this kind of thing.

The inheritance tax rate over $1 million is almost half, Lee - HALF. Just because the money gets transfered, Uncle Sam gets half, just..because? And while $1 million may seem like a lot, suppose my dad left me his house and his assets - half gone. Period. Do not pass go. How is that "fair?"
Again with conservatives and their notions of "fair"! Who told you the world was fair?

And please... if your dad left you his house and assets, you are perfectly safe (meaning UNTAXED) for the first $2 million! And with proper estate planning (again, with the personal responsibility thing: why should the government be responsible for making sure you plan properly?) you should not lose the house.

...

I note that conservatives have used the phrase "fair" to describe how they think taxes should affect them. Liberals have used that phrase to describe how it should affect society.