Freedom2:
Never did get to the second part, didja? And when, exactly, was the last time you liked paying your taxes? I can’t recall a single time I ever liked paying mine.
Freedom:
As long as the government spends more than it taxes, it won’t be acquiring assets. Furthermore, I’ve never heard of taxes being paid “in kind”; typically wealthy estates have to undergo a process of liquidation in order to pay their taxes.
OP:
Here’s some data from the Statistical Abstract of the United States:
1996 estimated Taxes:
Individual Income …631 Billion
Corporate Income …167 Billion
Estate and Gift …16 Billion or 1.3% of the total.
You could increase estate taxes threefold and they still wouldn’t come within an order of magnitude of replacing the individual income tax.
Still, I agree with Andrew Carnegie that estate taxes are one of the fairer ways of funding government services. Whether they should be confiscatory is another issue.
jshore, 
Freedom2, flowbark is right - the government won’t take payment in kind. You can beg, borrow, steal or sell assets, but it’s cash on the barrelhead for tax payments. And frankly I’d think you’d want it this way - assuming a binary choice, isn’t it better for the government to get cash and go away rather than for it to get, say, a building and all of a sudden become a landlord?
I don’t believe that there’s anything inherently wrong with an estate or inheritance tax. No, it’s not a double tax. Generally, the estate tax captures previously untaxed investment gains, NOT previously taxed income that’s been saved. Sure, the rates are higher, but it’s one way of keeping the government funded without having to raise other rates. (Yeah, I know, this assumes that the government should remain funded.)
Frankly, I can see GWB lowering the top marginal rate to something like 40%, increasing the unified credit and paying for the whole kit and kaboodle (sp?) with elimination of valuation discounts, which will appease the Dems. And while I haven’t done the number crunching, I remember reading somewhere that a combo of two or three of these proposals would have the net effect of raising the amount of money collected, or at least keeping it constant.
As for the OP, I think a confiscatory system wouldn’t work for a few reasons. First, it would never, ever pass. I mean, people whose entire net worth will never even approach $675,000 are whining that the estate tax is unfair and penalizes small businesses and family farms. As I said before, that’s bullshit, but you don’t see a groundswell of public opinion that the estate tax has to be increased. So on a practical level, forget about it.
Second, people would find ways around it. I mean, if anything I owned at my death were going to be taxed, I would just hire my kids and pay them 1 million a day, or whatever was necessary. Let them declare it as income; I won't even claim a deduction. Under your plan, they're still ahead .60 on the dollar. And I came up with that after thinking about it for all of 15 seconds – there are plenty of people smarter than I (well, OK, maybe only Cecil and a couple others) who will come up with all sorts of creative schemes. And you know what? Most people will support those schemes, because this country was not built on a socialist base, and people are uncomfortable thinking (hoping) that it could happen to them.
Third, hi, Opal.
Finally, pantom’s point is valid. The government provides all sorts of services, obvious and not, that help people to create their wealth. Antitrust laws allow competition except for operating systems. 
Despite the sarcasm they generate, warning labels and other government-mandated stuff (the technical term) can serve to insulate industry from suit, shifting the risk of loss to the distributor, retailer or consumer. Delaware corporate law has allowed lots of people to form corporations cheaply and to insulate themselves from their own failures. Recently, the invention of the limited liability company has streamlined the ways people do business. The Uniform Commercial Code has made it possible to rely on a uniform set of laws whether doing business in New York or Nome. Airline regulation, postal regulations, even OSHA and the NRLB - all have contributed to an environment in which we have low unemployment even in the longest economic expansion in history. In other words, the government, and specific departments and people in the government, have all contributed to the entrepreneur’s ability to implement his or her idea and to benefit from it. So the payment of tax is repayment for these services (and the others that pantom mentioned, and those s/he didn’t), with the inheritance tax being just one more way for the government to get some recompense.
I read a story in Analog where the inheritence tax was raised to 100% - you could pass on a few possessions, if they were under a certain monetary value, but other than that the government got everything when you died. In the story the rich people reacted by emigrating.
I have to second that part about people having a lot more money than expected when they die. My grandfather was a plumber all his life, lived frugally (had a double-wide on his own land), never owned a new car…we knew he had some land here and there, but everyone was surprised when we found out he was worth $1.6 million when he died. If you live a long life and invest and save a portion of your income the whole time, by the time you die you can have a lot accumulated.
You were not talking about the objective act of actually paying the taxes, you wanted to control how people FELT about paying taxes.
Big difference.
That’s because you didn’t see it happen. There was no virtuous nature described, implied, or anything in my comment about him. It was to point out that the benefits I got from him being wealthy far outweighed what his dollars could do.
Perhaps the issue of what money actually does in a society seems to be lacking. It is spent. The end. If you give a person on welfare a sack of fifties, it will get spent. If you give Bill Gates a sack of 50’s, it will get spent.
The difference lies in what that spending is used for. Bill Gates, for example, might make more improvements on windows, pay programmers better, start a school based on windows programming. You know, something productive. You know, so more money can be created.
I am sometimes one to argue that the market is virtuous, but I don’t feel that that is necessary here. I hardly think, had I ten billion dollars, that I could build a tv, a computer, a gas range, a car, or any of the other things we get out of other people being rich. So, again, they can keep their money: I’ll take their product.
Hate to break it to you, but the money going to that person on welfare doesn’t just vanish into thin air! What do you think that person does with it? They go down to the corner drug store and buy food or booze…or whatever…And, then, what does the storekeeper do? He buys a new computer system for the store. And, then the money goes back to Bill Gates and he can use it for all those wonderful virtuous purposes you talked about above! And we’ve even helped a poor person get food or booze in the process. Not bad, eh?!?
jsore, I got to hand it to you. Compassion truly is motivating.
People spending money does indeed increase the market. Obviously. My point was not that people on welfare don’t spend their money correctly, but that they are only spending their money. Of course consumers indirectly provide the means for growth.
My point was in the benefits I reap from Bill Gates as opposed to the benefits I reap from everyone else. Yes, without consumers there would be no Bill Gates. Without Bill Gates there would be no consumers. What a symbiotic relationship.
The benefit one gets out of bland consumers is maintenance. The benefit one gets out of a Bill Gates is progression. Being the kind of guy who likes new technologies and the luxuries they afford him, it is not suprising that I like the entrepenuer over the status-quo consumer. I will not say one can live without the other. I will say that what I get out of the businessman is far more than I get out of the status-quo consumer. It is not risky to buy a new toaster at $20. So what if it doesn’t work? It is risky to start up a toaster factory. The gains to be had are much higher, and so that person will most likely make more money.
For taking that risk, making that money, and providing a product that people want (otherwise he’d be out of business, yeah?) we make higher tax brackets. I find it a little more than offensive, but it is practical.
The wealthy don’t owe us anything. We didn’t have to buy their products. We chose to. And that got them rich. Now we want our money back, but also want to keep the product? I’ve never seen this called compassion before.
IIRC, the estate tax was originally enacted not as a tool for generating revenue, but because some politicians didn’t like the idea of people passing large sums of money from generation to generation.
Taking legitimately gained wealth from people just because you think they have too much reeks of Communist tendencies, and it’s wrong no matter how rich the people in question are. Rich people are people too, and they have the same rights as the rest of us.
Yes, probably true in a rough sense. Although my phrasing would be different because if they were trying to keep people from passing on large sums of money from generation to generation, they certainly did one hell of a shitty job of it! I would say that they decided that if people are going to be passing on huge sums of money from generation to generation, then society should have a “cut” of it, i.e., to turn some fraction of it back to the society at large. This is particularly true, by the way, for capital gains income in the estate, which has not previously been taxed.
Well, you are looking at entirely from the point of view of the dead person (who is now resting comfortably and peacefully underground and really not worrying that much about taxes anymore). From the point-of-view of the living and a society that professes to claim that everyone should have equal opportunity, it is damn hard to justify having such unequal opportunities as even exist today because of the luck of who your parents are!
In fact, the current system is a compromise between these two points of view, although biased pretty strongly toward the view of the older generation passing on the wealth.
Right, I forgot. They make their money in a vacuum. And the money they are getting to keep is apparently not reward enough? They have to be able to keep every cent of it?
One thing I am learning about this message board is that, although we live on the same planet, we truly seem to inhabit different worlds. In the world where I live, the more coercive force in my daily life is the power of the corporations…whether it is expressed through the monster SUVs that I am subsidizing as they barrel down the road, spewing exhaust at me while I am on my bike (or in my subcompact), OR whether it is the corporate-dominated media and advertising culture trying to influence my every decision. And, sure, in some fucking perfect world, I could use any word processing program I want (and I do use TeX to type up most of my own stuff), but if I want to read what others send me, I gotta have WORD.
So, while the corporate world is causing me major headaches and endangering my life, the government is just making me give them a cut of the money I make…which is more than enough to live comfortably on…Big deal!!! And, in return, it gives me nice things like roads to drive on (which I still wish were less crowded with the fucking SUVs), police to protect me, … And, occasionally, it might make a few rules I don’t like. Maybe I want to go down the highway a little faster than they think is best for the safety of all concerned. And, maybe, it gives some of “my” money to someone who is just being slothful. But, you know, I can live with that.
Clearly, this is not the world that you inhabit. And, I guess as long as we inhabit different worlds, there is just no way we are going to agree!
Well, I doubt we live in different worlds
- Roads? Cars? No need for either of them without businessmen.
- Supermarkets? Refrigeration? Needed som go-get-'em businessman.
- Bikes? See 1
- The world at large? See 1
The government is there to provide stability. Everyone benefits from stability. Businessmen use that stability to provide products and services we want to buy.
“Here you go, Mr. Businessman. Here’s $20 for my shiny new toaster. At the end of the year be sure to pay back $5 of it, k?”
AND you pay taxes on the taoster itself for sales tax!
Bottom line, you think they make to much money don’t buy that product for that price. Instead, we opt to raise taxation and force it from them at the end of a gun.
If the world was filled with only consumers, we’d have a whole lot of angry shoppers. Hell, shoppers are angry, anyway, because they want more for less. And we want to cut more profits from businessmen? Sorry. Maybe we do live on different planets
On the other hand, if the world was filled with only entrepenuers? Well we sure would have a fine home theater system!
And cheap, too!
Now, I’m not some crazy libertarian who thinks the government can survive off voluntary donation (I always laugh at this one) but it can do a hell of a lot better than it is now for less money.
Has anyone other than the OP supported this concept? No? What are you, chicken? Well, I’ll respond anyway, you may still be reading.
The question is not: do the dead people “deserve” to decide what happens to their money. The question is: how can we as a society arrange the transfer of wealth between generations for the greatest social good with the fewest social harms.
If we decide to confiscate all wealth at death, we are going to create some very perverse incentives. Rich people will leave the country. Companies will move their headquarters to more friendly countries. Capital will flow out of the US. Tax dodges will spring up like mad, because in the past there was an upper limit on how much you should spend to avoid taxation, which was the amount of taxation. If it costs you $2.00 to avoid a $1.00 tax, you pay the tax. If there is no incentive to pay the tax, there is no limit to the amount of ingenuity and waste possible to avoid the tax…if you waste millions passing on a few thousand it becomes worth it under the new tax scheme.
Basically, there will be no incentive for the few businesses that would be left in the US to have clear ownership. It would make secrecy over who owns what asset imperative if you wanted to pass on anything. So, not only does actually collecting the inheritance tax become very difficult, but so does simply collecting ordinary income tax.
And you’d have to disallow gifts, since I can just GIVE stuff away while I’m alive…or use my money to set up a foundation to take care of my kids. How can you stop people from giving money away, or setting up non-profits? If I give money to a non-profit do they have to give it to the government when I die? If not, I can ask them to send a check to my kids every month as a condition of my endowment. How about universities? How can you have permanent organizations under the theory that everything I donated to them goes to the government after I die? And if you don’t follow that theory, how do you stop the very rich from creating such institutions for the benefit of their chosen heirs?
And then we have the situations where people own things jointly, like in a marriage. If my wife and I own a house together and I die, that means the goverment gets half the equity in the house. She’d have to sell the house to pay the government the value of my half of the house. Or perhaps you think that would be unfair, I can leave stuff to my WIFE, just not my KIDS. Well, what happens then? We’re going to find all KINDS of creative divorces and marriages happening so that people can transfer wealth, i.e. I divorce my wife, marry the neighbor’s daughter, divorce her, she marries my son. Result: my son gets my stuff.
Oh, so you make a law that I can’t put my property in my spouse’s name? Then you’ve basically outlawed the concept of marriage.
The point is that we can’t just look at a policy proposal in a vacuum and ask if it has good or bad intentions. We have to look at what would actually happen if the policy were implemented. And implementing this 100% inheritance tax policy would be a disaster of unintended consequences.
aynrandlover, methinks you miss my point. I don’t argue that businessmen and entrepeneurs are needed in a society. What I am trying to say is that in our current society where the various powers are in some sort of constant balance, I find the power of corporate America more oppressive than the power of the government in my daily life. That doesn’t mean that we should get rid of all corporations, but it does mean that that particular sector of society, IMHO, has too much power at the moment.
And, as I have told you before, if you believe that the power to make purchasing decisions offsets or negates the power that corporations have over you, then great. But, it sure doesn’t for me. I gave, as an example, the fact that other people buy SUVs which I subsidize by my lower quality of life as a result of this. Another example I gave is the way that companies like Microsoft can make us dependent on products we don’t really want to use because lots of other people are using them. (And, you complain about democratic government dictating your choices?) A third example I gave is a corporate media and advertising culture which permeates our everyday lives and limits the viewpoints and knowledge that we have easy access to (although I feel I have to a large part been able to negate this personally…Definitely takes a lot of effort though).
I don’t really want to argue, just debate
Well, when you use netscape or buy a mac you get a little frustrated at some compatability issues, possibly. You feel that they are just better, so you support them. However, pretend (I don’t know how you feel about this) that you like drugs. Like, uh, LSD. Non-addictive. No harm to the body (and this is supported by evidence, I’ve researched drugs like a fiend…legalize!!..but no hijacks, I swear). The government doesn’t like that. You go to jail. What, you aren’t choosing to go to jail? Here’s a gun at your head. Down motherf**ker!! Hands on your head!
OK, little hyperbole there…
Nah. Its a principle thing.
Another example I gave is the way that companies like Microsoft can make us dependent on products we don’t really want to use because lots of other people are using them.
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Whoa! Who doesn’t want to use it? Microsoft was a come-from-behind company after many failed attempts. You don’t get rich on accident, and I’ve yet to meet a person who was coerced into purchaseing a microsoft product. Now its a different issue. Much like deregulating phone companies and power companies after the government endorsed monopoly (just to get the infrastructure built on private dollars) we are doing the same thing in “trust-busting” a non-monopoly.
Now, Who is ol’ Billy gonna give his money to? Anyone he wants. Its his money. What’s it matter if he is dead or not? He earned it, its his, and he can give it to who he wants.
I basically agree with you on the drug issue, BTW, although since I haven’t partaken myself, I haven’t had firsthand experience of the government abuse of power there.
You and I must travel in very different circles. I am not sure if I’ve met a person who wasn’t coerced into buying/using a Microsoft product. That is what I think is so ironic about the whole thing … This is a man who has become the richest person in the history of the world and he is selling stuff that a lot of people think is crap! And, yet, they often feel like they have to buy it. I held out much longer than most with only a UNIX box at work, but eventually, I was forced to get a PC processer inside of it so that I could communicate with the rest of the company / world. At least, I only have to deal with Windows in one window on my UNIX box…Outside of that one window, it acts like a real computer!