Really?!
So if I win the lottery for $2,000,000 and pay taxes on it and drop dead the next day, then it is now $1,200,000 that was never taxed and the guv’ment gets more?
From the point of view of your heir, yes, of course. It’s not your money any more. You’re dead.
That’s correct. But only $200K of it would be subject to Estate Tax.
Actually, in 2010, none of it would be taxable. In 2011, everything after the first Mil will be taxable. After that, we’ll see. The current resolution in the Senate is to raise the exemption to $5M with a 35% tax on everything after that.
It’ll be interesting to see if the death rate among the ultra rich will be statistically higher than usual this year. :dubious:
Are small businesses considered to be part of an estate? If so, then setting an inheritance tax this low will radically change the practice of long-held family owned businesses. Give your kid a business worth $5 million, and he’s got to instantly come up with 55% of 4 million dollars, or over a million bucks in tax. Not many businesses can survive a hit of 25% of their net worth and keep on rolling. It would probably have to be sold to avoid the tax penalty.
How about residences? If you leave your low income daughter your 1.5 million dollar house as her inheritance, is she going to have to cough up a quarter-million dollar tax bill? 1.5 million dollars isn’t that much house in New York City or San Fransisco.
There are a number of provisions that cover family businesses. Among these are an additional exemption to the size of an estate to which the tax applies, a discount for minority ownership (i.e., if you and your two brothers all got a share, its worth less because none of you own more than 50%), and the ability to pay off estate taxes over a period of years. But why bother with facts when you can rant about people needing to sell the family business?
A few years ago the Pubs were demagoguing about the effect on family farms. The problem was, they couldn’t find one single example of a family farm having to be sold on account of estate taxes. That didn’t stop them from spreading the story however.
Before you go on and on about hypothetical widows having to sell the family china to pay taxes on the family farm do a little research. Took me 30 seconds with Google. If you listen to conservative politicians and Fox News, chances are that 95% of what you hear about the estate tax is lies.
The only real problem with estate taxes is when the exemptions don’t keep up with inflation.
Rant? I asked an honest question. Your bias is showing.
Dude, I didn’t do any ranting. Honest.
Really? That’s the only problem? It sounds like you already admitted that someone might get hit with enough taxes that they have to go on the installment plan to pay them off. I’ll bet that would sound very much like a problem to them.
Your mileage obviously does vary then. I think things either belong to you or they don’t, and it’s none of the government’s business who is most deserving of them.
And I accept that taxation is a fact of life, it’s just that my starting point is the money essentially belongs to the owner. There’s no category of personal belongings whose essence makes it more the government’s or someone else more “deserving” of it. I am continually amazed at the mindset on this board that suggests otherwise, that the objective is, naturally, to continually expand the tax base. That leads to debates like these–which is best, most moral; should it be estate tax?; how do we soak the rich?; how do we deal with capital gains?; etc., etc. All of it accepting as a given that we need to find more and more ways to get more taxes, and more and more accepting of the notion that this is “the government’s money,” and that the owner of said cash doesn’t need or deserve it. My jaw drops when I see statements offered, apparently without sarcasm or irony, that someone is wealthy only because the government made it so or permitted it. It’s appalling, frankly. Apparently we owe everything to the beneficent state, and everyone just needs to shut the fuck up and stop whining.
So, again, in answer to the incredulously offered question, “So, you think someone should be able to give money to his kids, and the government doesn’t get to take anything?,” my answer is, no, I find nothing at all odd about that, and it seems a completely satisfactory outcome. If we must tax it, let’s figure out the least overbearing way to assign an overall tax burden. But, no, I do not start from the premise that we get to decide who most deserves their own money. 55% (or 90%, 100%, as suggested here) are ludicrous numbers in any context, for any tier of wealth or earnings, IMO.
Thanks, I just did that. I think I beat your record. Because within 15 seconds, I had This Document from a little organization called the Congressional Budget Office.
Do you think the CBO can do better than that? Because that document says that if the estate tax was 1.5 million dollars, then in 2000, of 33,605 estates that filed in that value range, 13,771 would have owed estate taxes, and of those, 740 would not have enough liquid assets to pay the tax. This was at a tax rate of 43%.
So, we can guess that lowering the ceiling to 1 million from 1.5, and increasing the tax rate from 43% to 55%, would significantly increase the number of estates that would not be able to pay the tax out of liquid assets.
The CBO also attempts to describe the possible negative effects of the estate tax. They admit that the economic research into the behavior of entrepreneurs is still not conclusive. However, this is what they say could be a problem:
So, we don’t really know the effect on behavior from this standpoint. However, the CBO has worse news:
So, it would appear that this statement…
…is completely wrong. It turns out that the tax will leave hundreds to thousands of people with tax bills they can’t afford to pay, and will reduce entrepreneurial effort because of the taxation effect, and may potentially damage business investment and wealth-creating activity.
Maybe you shouldn’t be so quick to assume that it’s the other side which doesn’t have the facts. Speaking of which… I would like a cite for this statement:
Because the CBO says this:
Small businesses fare somewhat better, because they tend to have more liquid assets than farms. But the CBO still says that up to 5% may have had liquidity problems as a result of the tax, meaning that they had to sell either business assets or personal residences to pay their taxes. The CBO report is rather vague on the exact numbers, but seems to assume that it’s very likely that a fairly large number of people (hundreds to thousands), had to sell off business assets or their home in order to pay the estate taxes.
Gee, I hope that didn’t sound too much like a rant.
Of course not. Her direct salary, like yours, was earned, and the interest on it (and interest on that interest) was unearned. Is that as difficult a concept for you as it is for magellan01??
Why would they? What did they ever do to earn it or otherwise deserve it?
Why wouldn’t you want your children to learn about self-discipline, goal-setting, determination, and the pride of accomplishment that comes from making their own way in the world? Why would you actually want them to become lazy, useless shits driven by little more than a sense of entitlement? I just don’t get it.
That’s pretty funny. How, exactly, would you like the tax money used? Just curious. Or is it just a character-building exercise?
No disagreement from me. I think omnibus bills are an abomination. However, I do think that the mess is a result of equally incompetent democratic and republican leadership.
No, I ask if you would be willing to pay a 60% MARGINAL tax, not 60% tax. Think about how much the guy working for minimum wage could use it, not to mention a staving Haitian.
Close. In fact, in 2007, the top 1 percent of tax returns paid 40% of all federal individual income taxes and earned 23% of adjusted gross income, and the top 10% pay about 71% and earned 48% of adjusted gross income. To me this just points out the amount of unharvested income at lower levels.
My point is that almost everyone seems to believe that taxes should only be paid by those who make more than they do. You appears to fit into this category. There is almost always someone poorer than you who needs the money more than you. Almost everyone in America is rich compared to Malawi. Why aren’t you willing to help with your money?
Once again, in principle: 1) I agree with progressive income taxes and 2) i agree with estate taxes.
Haha, I guess you do not run a small business. My net income (revenue minus expenses) is my income, at least according to the 1040 that I fill out. Do you know something I don’t know?
Wiki: Net income is equal to the income that a firm has after subtracting costs and expenses from the total revenue.
Agreed. However, most people opposed to the “Death Tax” have no clue what the works basis, estate tax, capital gains, etc. mean, so they should be excused.
Just like I excuse they typical collectivist who does not understand the work “profit” because they have never run a business, or typically even worked in a real job (i.e. management or above).
Both groups are just being manipulated by their leaders.
Pay down the fucking debt.
While you are correct on the rest, I am going to give you a 50% on this. I assure you that a generation skipping trust can partially avoid estate taxes, and they are other trust and business structures that can reduce estate taxes well below there intended levels.
No point in collecting taxes out the wazoo to pay down the debt as long as both parties are determined to just create more. I will agree to higher taxes when it is attached to a constitutional amendment requiring a balanced budget.
One thing that is interesting to observe in political discussions is how hard the partisans on both side declare they are as pure as driven snow, while the other side is the source of all evil. However, American gets the government it deserves, which consist of politicians grabbing money wherever they can and handing it out like candy to those who support them. They only person in congress that does not is Ron Paul, and unfortunately he is half-crazy. Gold Standard? What is wrong with you?
I refuse to willingly participate unless the dual premise is “don’t add to the fucking debt.”
So, no entitlements for the tax dollars, is that your premise? Just debt reduction? Just so I understand. I’m trying to understand whose character needs building by depriving them of funds and whose spirit is edified by the virtuous addition of some coin. It’s hard to understand the boundary. And, perhaps you’re not drawing one at all, not if taxes are to eliminate debt. But that was the notion I originally responded to.
Hey, I said it first. Couldn’t you just have the common human decency to just agree with me, thereby building up my fragile ego?