Your sarcasm aside, it is still not double taxation. Daddy Gotrocks earns $100,000,000 over his lifetime. He’s paid taxes every step of the way. Now Junior Gotrocks gets $50,000,000 from Daddy’s will. This is income to Junior, not Daddy. Junior pays tax on this as it is fresh income to him. Daddy’s taxes don’t mean anything from Junior’s perspective- he did not pay them. Daddy paid taxes when he received the money, Junior pays taxes when he receives the money. Each pays a single, not double, tax on money received by him.
Mace, the Estate Tax only applies to really huge fortunes to begin with but more mportantly, youcan pass on your wealth to your descendants (that’s not a particularly noble thing to do with giant fortunes but you can do it). After you do that, then your heirs are going to be taxed, not you. The Estate tax is a tax on the heirs not on the dead people. Why should a bunch of greedy, parasitic offspring be allowed to receive ginormous amounts of money without paying taxes? Whatever happened to personal responsibility? Whatever happened to a work ethic?
Personall, I think there should be a cap of maybe a few million dollars on what can be passed to heirs and the rest shou;d automatically revert to the goverbnment in every case, but of course, I also think there should be a cap on personal wealth to begin with.
Nope, because a system in which wealth is only taxed when it is earned already has multiple layers of tax. Companies are taxed, and then employees’ income is taxed from that already taxed pool. That’s if the company makes a capital good. If they’re making end-user goods, then the money they used to buy the capital goods got taxed, and now they’re getting taxed on the good they’ve put the capital good into - taxed again.
Besides, it’s ridiculous to say the estate tax is a ‘double tax’ - because of things already mentioned like sales taxes and real estate taxes and licenses (really taxes) and other things. It’s more like estate taxes make money that was maybe 6 times taxed be 7 times taxed.
Not quite as pithy and dramatic that way, is it?
The salient point is really that the wealth is only being taxed once as income. It is income to the heir so it becomes another person’s wealth and that person needs to get taxed until he bleeds.
Shodan, you are only playing semantic games (as BobLibDem and Diogenes have noted).
The inheritance is income to the heir, and his moral claim to that income is less than my moral claim to income I have worked to earn.
And I think you are correct to be skeptical.
Over in this thread a poster raised the specter of the lost family farm in a debate about estate tax. So I did a little exercise to prove that this is an overblown concern:
As you might have suspected.
Why indeed?
Why should I be taxed when I earn money, when I spend the same money, and when I leave the money to my children?
It seems to me that the answer to the above would depend on what you want to achieve with your tax structure.
If you are simply trying to raise revenue for the necessary functions of government, you can tax in almost any way, provided you don’t kill the goose that lays the golden egg. If you are trying to be “fair” in how you raise that revenue, then you have to find consensus on what is “fair”, and try to implement that.
If you want to bring about social engineering with your tax structure, then you raise taxes on activities you want to discourage, and reduce or eliminate them on activities you want to encourage. Thus, if you want to encourage people to spend their money as soon as they get it, then tax investments. If you want to encourage investments at the cost of spending, then a sales tax is the way to go. If you want to discourage people from providing for their own children, then an inheritance tax will tend to push people in that direction. And, of course, if you want to encourage tax-avoidance behavior at the expense of more productive work, then you tax everything, and people spend more of their energy trying to find tax shelters and/or investing abroad.
The OP seems to be assuming that the concept of laying aside something for your family is unfair. He wants (apparently) to encourage the notion that everything you own actually belongs to the government, and should be confiscated whenever possible. He seems also to be assuming that people will work as hard or harder to support strangers, thru government-funded programs, than they will for their own children.
He seems, in other words, to be putting forth the notion that when you die, the government has a better claim to your property than your heirs.
Which, I suspect, underlies a good deal of this apparent unwillingness to admit that an inheritance tax is “really” a tax. He feels, it would seem, that people have no right in law to deed any of their property above a certain level to their children - that it really belongs to the government, and for the government to confiscate it is not “really” a tax, but the government simply claiming what really belonged to them all along, but which they generously allow the poor sap to believe actually belonged to him until he was safely dead and unable to assert his rights of ownership. And then they simply step in, and overrule the wishes of the person who earned the money, and grab the estate for themselves.
I, on the other hand, disbelieve in this assumption. I feel taxes are a necessary evil, and should be strictly limited to the amount needed to fulfill the necessary functions of the government. I especially disagree that it is either necessary or desirable for the government to use inheritance taxes as a method of social leveling.
If I lived in the days of Robin Hood, in other words, I would work to have to have him hunted down and hung as a public nuisance. And I see no reason why a government who wishes to live by the same rule has any more legitimate reasons for their actions than he did.
I fully agree that taxes are necessary. I can even be led to agree that those who can best afford it should pay a proportionately larger share of the revenue of the government. But the notion that taxes ought to be raised on a certain class of people, for no other reason than that they have “too much”, I find both evil and counter-productive. The politics of envy are a particularly obnoxious blight on the body politic.
No one is doing me an injury by owning more than I do. Nor do I have the right to be aggrieved if my neighbor inherits from his father, and I have no part in the money. It’s not mine. Nor is it the government’s. If the government can convince me that they need the money for what I consider a legitimate use, fine. But “a legitimate use” does not include the fact that lots of bureaucrats can’t stand the notion that the family fortune has been around for a couple of generations, and Uncle Sam still doesn’t have it all.
Regards,
Shodan
YOU aren’t taxed when you leave money to your children. Your children are taxed when they receive it. Why should inherited money be tax free and earned money taxed?
Where are you getting this idea? The heirs are getting more than the government. Do you think their tax rate will be > 50%? This talk of “government has a better claim to your property” is utter hogwash.
There must have been a great deal on straw. The notion that people get taxed on money they receive is not unfair.
Wow! Look at all the straw men! (Nobody light a match!)
Thanks for your restatement/mis-statement of my position, Shodan, but all I’ve said is that an heir who receives his inheritance should be taxed on that (unearned) income if I am going to be taxed for my (hard-earned) income. Fair is fair.
And I’ve also pointed out that Bush’s trial balloon proposals (elimination of capital gains tax, tax on interest and tax on dividends), if passed, would make the life of someone who inherits his wealth and then lives on investments tax-free from beginning to end, shifting the entire tax burden of the nation onto the backs of people who work for a living. People who work to earn their money get taxed. People who have their money handed to them do not. Not my idea of a just system.
The original NYT article from 2001 is in their pay archives.
spoke-, well spoken; keep up the good work.
It’s the same money.
Joe pays income tax when he earns the money. Then he dies. The money is then taxed again.
And the idea that I am not being taxed when the government takes money away from my estate - before any of my children receive any of it - is simply ridiculous. By the same logic, I am not being taxed with a sales tax either. They aren’t taxing me, they are taxing the price of whatever I buy.
If you want to play word games like that, feel free, but you haven’t said anything meaningful.
Read the OP again. The suggestion is being made that family fortunes should be taxed so that they do not persist across generations.
Or re-read your own suggestion that only the first $50,000 of an estate should be tax-free. Then consider that the largest single asset in most estates consists of the family home.
How many homes in the US are worth less than $50,000?
And, unfortunately, your definition of “fair” means taxing money when it is earned, and then again when it is inherited - i.e., double taxation.
I will leave you and BobLibDem to fight it out between you whether an inheritance tax is a tax on heirs, or not. I agree with you that it is, he disagrees. See what you can do about explaining it, would you?
Regards,
Shodan
It’s not the same money. Once wealth is transferred it becomes different wealth. Wealth is defined by ownership.
[QUOTE=Shodan]
And, unfortunately, your definition of “fair” means taxing money when it is earned, and then again when it is inherited - i.e., double taxation./QUOTE]
Semantic games again.
The heir did nothing to earn his inheritance. I worked to earn my income. Which should be taxed?
Semantic games again.
The heir did nothing to earn his inheritance. I worked to earn my income. Which should be taxed?
This is a strawman. We are not saying that the estate taxes should be raised (or, more accurately, not abolished) because these people have too much. We are saying that it is necessary because we know that we need to fund the government through taxes and this tax happens to be structured in a way that does it with very little pain to everyone and it taxes money for which the receiver (the heir) has very little moral claim. Thus, if anything, one should be raising these taxes to avoid having to raise taxes on earned income. Instead, we are going in exactly the other direction.
And, as has been noted in this thread, our society has been structured in recent years so that an ever larger fraction of the fruits of our society are accumulating to a small minority of people at the top, with only a little bit “trickling down” to the rest. So, it seems to me (and apparently to >20% of the tenured faculty at Harvard Business School) that we should be concerned about this growing inequality and, at the very least, we should not be reforming our tax policy in ways that simply excerbate it.
Why on earth would you be hunting someone who took from the abusive tax collector and gave back to the rightful owner?
You should, according to your logic.
That is, you should be taxed when you earn it, and taxed again when you try to leave it to your heirs.
Don’t be absurd, the OP is saying exactly that.
And you say the same thing in the same paragraph where you deny saying it:
Here is the basis for the absurdity of the contentions of this thread. You are alleging that people have “very little moral claim” to money that they have earned, and on which they have already been taxed. Your assumption is that people ought to be deprived of the right to leave money to their families. You are presuming a governmental right to say, “You can have this money for now. The instant you are safely dead and unable to defend yourself, notwithstanding the fact that you have already been taxed on it, we will grab another slice. You’re dead and can’t object, so your desire to take care of your own family is trumped by our desire to grab what you earned.”
You are simply denying the moral claim of people to keep what they earned, and dispose of it to their families. Instead, you substitute the notion that government always should grab whatever they can.
Anything else would be “unfair”. :rolleyes:
Regards,
Shodan
Shodan, What part of “the tax is on the heir” do you not understand?
Both sides are right.
No, I’m not being cowardly. You are both right.
Shodan is correct: what distinguishes a free government from one that isn’t, on the economic side, is more than anything else a recognition that what one has earned belongs to you, and that you have a perfect right to give it to whomever you please upon your demise, or during your life.
OTOH, jshore et alia are correct that the current inheritance tax is simply not onerous. The old limit before which taxes would apply was 650,000; the new limit is 1 million, if I remember correctly. In neither case is either the family farm or the typical home of the typical homeowner in danger.
The limits do have to be set high for inheritance taxes because of the high prices assets command, because they represent the accumulated toil of a lifetime, so that if your objective is simply to raise money for the government without causing damage to the economy the limits have to be high enough to prevent effective confiscation of economic assets.
OTOH, it’s also true that in order to keep the economy rolling along, you want to minimize the class of people who depend entirely on their inheritance to get by. But far more important is the enforcement of the principle that what’s yours is yours, not that what’s the government’s is the government’s and what’s yours is negotiable. There’s no quicker way to poverty and dictatorship than to try to set up a society where you kill the incentive for long-term investment by setting up the principle that the government can come in and take what’s yours away whenever they feel like it, and kill the idea of freedom by making it a principle of your society that the government has first claim on everything.
I am alleging that the heirs have very little moral claim to the money. The one who is leaving the money has some moral claim to it…But, it is not money that this person made all by themselves on a desert island; it is money that they made within our society and society can have some claim on it too. Besides which, you can’t take money with you to the grave. There ain’t “Stop-And-Shops” in heaven or hell.
Look, noone wants to pay more taxes than they have to. Everyone wants a free ride. But, what this really comes down to is the best way to run our society. We have shared obligations that must be paid for and taxing the estate of the very wealthy is one of the most painless and least harmful ways to meet some of this obligation.