Estate Tax Axed...Well...Reduced For Most.

Discussion in 'Politics, Religion, Social Issues' started by iGary, Jun 23, 2006.

  1. iGary Guest

    iGary

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    #1
    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.
     
  2. nbs2 macrumors 68030

    nbs2

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    #2
    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...
     
  3. gauchogolfer macrumors 603

    gauchogolfer

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    #3
    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.
     
  4. iGary thread starter Guest

    iGary

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    #4
    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...
     
  5. gauchogolfer macrumors 603

    gauchogolfer

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    #5
    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.
     
  6. Applespider macrumors G4

    Applespider

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    #6
    $5 million :eek: The Brits get gouged after £250K or so
     
  7. iGary thread starter Guest

    iGary

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    #7
    You guys get gouged with taxes anyway. :p :D
     
  8. skunk macrumors G4

    skunk

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    #8
    Well, thanks for the sympathy and understanding.
     
  9. iGary thread starter Guest

    iGary

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    #9
    It's the only thing keeping us from seriously pursuing moving there. :eek:
     
  10. gauchogolfer macrumors 603

    gauchogolfer

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    #10
    Here's a quote from Bill Gates, Sr., who's an advocate of the estate tax:

    Link to article at CBPP: http://www.cbpp.org/pubs/estatetax.htm
     
  11. Thomas Veil macrumors 68020

    Thomas Veil

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    #11
    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:
     
  12. iGary thread starter Guest

    iGary

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    #12
    Wouldn't it make more sense to control spending than to double tax people?
     
  13. gauchogolfer macrumors 603

    gauchogolfer

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    #13
    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.
     
  14. mactastic macrumors 68040

    mactastic

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    #14
    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. ;)
     
  15. iGary thread starter Guest

    iGary

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    #15
    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)?
     
  16. iGary thread starter Guest

    iGary

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    #16
    I worked for those. Most people receiving inheritances didn't (paris Hilton, for example. :p)
     
  17. Queso macrumors G4

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    #17
    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.
     
  18. iGary thread starter Guest

    iGary

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    #18
    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.
     
  19. Queso macrumors G4

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    #19
    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)
     
  20. Queso macrumors G4

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    #20
    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.
     
  21. Peterkro macrumors 68020

    Peterkro

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    #21
    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.
     
  22. jelloshotsrule macrumors G3

    jelloshotsrule

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    #22
    all the more reason that she should pay taxes on money she didn't really earn! ;)
     
  23. blackfox macrumors 65816

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    #23
    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?


    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.
     
  24. iGary thread starter Guest

    iGary

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    #24
    I'm not double taxed on the money I earn, I don't know about you.

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

    How do you know these people keep voting Republican?
     
  25. Ugg macrumors 68000

    Ugg

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    #25
    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.
     

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