# Inheritance Tax **URL:** \ **Category:** Great Debates\ **Created:** [February 16, 2011, 12:40am UTC](https://boards.straightdope.com/t/inheritance-tax/571519 "2011-02-16T00:40:27Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 20, 2011, 5:20pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/101 "2011-02-20T17:20:44Z")
> [@Rand\_Rover](#): > > Gonzo, would you please explain to the class the relationship between correlation and causation? Thanking you in advance. If you had been following the news the last couple weeks, you would have seen that offered as a reason for the “revolution”. I agree that eventually a huge imbalance will result in severe problems. Eventually the poor will fight against a huge confiscation of wealth . Do you remember bread lines and the great depression. Are you aware there was a huge communist and socialist movement in America at that time? It is simple. When a system rewards the few at the expense of the masses, the citizens will eventually fight. They will overthrow the leadership and the owners. America is getting more and more out of balance. The wealthy are getting their taxes cut while they decry every program that helps the needy as evil. It will not end well. The Repub house has no problems with slashing every social program while cutting taxes. The states are following suit. People are marching in Wisconsin because of the Govs. slashing and union busting. They are in the streets of an American city today. You try and figure out why they are out in the streets. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 20, 2011, 5:29pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/102 "2011-02-20T17:29:33Z")
By the way, the argument that people will not accumulate large fortunes if they have to pay an inheritance tax is stupid. They live a huge life with all the toys possible but somehow in the back of their mind, they are thinking “if I can’t pass all my money along in tact, I just won’t work anymore”. I will leave my mansion , burn my Maybach ,torch my Rolls, because my kids and grandkids won’t get it all. Of course they pass along many millions. But that just isn’t enough for them. Like Teddy Roosevelt said, huge fortunes are different. They include an impact in politics, regulation and law creation. They are not just benign piles of money. The rich will try and run the government to make them even richer. it is working quite well. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [February 20, 2011, 6:55pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/103 "2011-02-20T18:55:20Z")
> [@gonzomax](#): > > By the way, the argument that people will not accumulate large fortunes if they have to pay an inheritance tax is stupid. It’s beyond stupid, it’s demonstrably untrue. Like I said previously: history, facts, logic, none of it makes any difference anymore. The conservatives live in an alternative reality where there was never a Carnegie, or Rockefeller, or Kennedy, or Gates, or Buffet who built up fortunes while facing an estate tax. They never saw lower deficits and higher revenues with higher tax rates, or what happened when we did not have labor unions, or social security, or rural electrification. They never had Jim Crow, or lynchings, or gay bashing, or back alley abortions in their fantasy world; good manners and the market solved every problem. ETA: And kids stayed off their lawns ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 20, 2011, 10:42pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/104 "2011-02-20T22:42:35Z")
> [@RickG](#): > > This is a tale oft told, but, as far as I understand, pretty much baloney and bad economics. Small businesses and farms subject to the estate tax have a long time to pay it (something like 15 years, IIRC). Cite? ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 20, 2011, 10:44pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/105 "2011-02-20T22:44:09Z")
> [@gonzomax](#): > > By the way, the argument that people will not accumulate large fortunes if they have to pay an inheritance tax is stupid. Who made that argument? Wasn’t me. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [February 20, 2011, 11:48pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/106 "2011-02-20T23:48:56Z")
> [@](#): > > Opponents of the estate tax have not been able to produce a single case in which a family farm > had to be sold to pay the tax. In 2001, the American Farm Bureau Federation acknowledged to > the New York Times that it could not cite a single example of a farm having to be sold to pay > estate taxes, and this was before the estate tax exemption level was more than tripled and the top > rate was reduced. > 7 > • Furthermore, a Congressional Budget Office study of the estate tax exploded the myth that > small businesses and farms have to be liquidated to pay the tax. CBO found that of the very > few farms estates that would owe any tax under the 2009 parameters, all but a handful would > have sufficient liquid assets on hand (such as bank accounts, stocks, and bonds) to pay the tax > without having to touch the farm or business. > 8 > • CBO further noted that it may have overestimated the number of small businesses and farm > estates with any seeming liquidity constraints, because CBO was unable to include certain assets > held in trusts — such as life insurance trusts — in calculating the liquid assets available to > estates to help pay the tax. > 9 > And, those few small businesses and farm estates that might > conceivably face a liquidity problem would have other options available to them — such as > spreading their estate tax payments over a 14-year period — that would allow them to pay the > tax without having to sell off any of the business or farm assets. > [@Rand\_Rover](#): > > Cite? From [here](http://www.cbpp.org/files/2-23-09tax.pdf) Caution, this link brings you to the fact based universe. Read at your own risk. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 21, 2011, 12:08am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/107 "2011-02-21T00:08:44Z")
> [@sh1bu1](#): > > From [here](http://www.cbpp.org/files/2-23-09tax.pdf) Caution, this link brings you to the fact based universe. Read at your own risk. Look buddy, I simply wasn’t aware of the special rule for small businesses that gave them 15 years to pay the estate tax. And I’m sure you weren’t aware of it either until you fired up google three minutes before your post. So get off your high horse and stop accusing me of not heeding facts. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [February 21, 2011, 12:23am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/108 "2011-02-21T00:23:41Z")
> [@Rand\_Rover](#): > > Look buddy, I simply wasn’t aware of the special rule for small businesses that gave them 15 years to pay the estate tax. And I’m sure you weren’t aware of it either until you fired up google three minutes before your post. So get off your high horse and stop accusing me of not heeding facts. The lie that the estate tax causes family farms to be sold has been known for years now. If you didn’t know that then you shouldn’t be offering an opinion on the effect of the estate tax. Maybe you should have done a little Googling of your own before making the claim. Repeating the lies of Fox News is not fighting ignorance, it’s spreading it. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [February 21, 2011, 1:46am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/109 "2011-02-21T01:46:13Z")
> [@Rand\_Rover](#): > > You have such a fundamental misunderstanding of how so many things work that I find it hard to respond, but I’ll try. Taxes must be paid in cash (United States dollars, to be specific). Therefore, if someone builds a valuable privately held company and dies owing estate tax, they must raise cash to pay the estate tax, which may involve selling some of the company or levering it up. So your response makes no sense whatsoever. Please give some examples of privately held companies destroyed by the tax. We know that no one has found family farms destroyed by it. I suppose there could be a problem if a person was utterly stupid about estate planning. > [@](#): > > You’ve struck at the heart of much of the reason for support of the estate tax–pure and simple jealousy that some people are born with money while you weren’t. Well, tough titties, bub. If people were that jealous, they’d raise the rate a bit. So, you are for tax policy to give incentives to build wealth, except if the person is the child of wealth? I think we can summarize by noting that practically speaking the estate tax does no harm in creating wealth, perhaps encourages charitable giving. It does add money to government coffers, which, since that might mean it is easier to feed some poor leech on society, drives the right crazy. ---
**Author:** ![kaylasdad99](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kaylasdad99/32/3398_2.png) [@kaylasdad99](https://boards.straightdope.com/u/kaylasdad99)\ **Post date:** [February 21, 2011, 4:02am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/110 "2011-02-21T04:02:16Z")
> [@Rand\_Rover](#): > > Look buddy, I simply wasn’t aware of the special rule for small businesses that gave them 15 years to pay the estate tax. Yeah, **shibu1** , why should he be aware of that? Snowmobile salesmen don’t need to know about tax law. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 21, 2011, 4:11am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/111 "2011-02-21T04:11:49Z")
> [@sh1bu1](#): > > The lie that the estate tax causes family farms to be sold has been known for years now. If you didn’t know that then you shouldn’t be offering an opinion on the effect of the estate tax. Maybe you should have done a little Googling of your own before making the claim. Repeating the lies of Fox News is not fighting ignorance, it’s spreading it. Where did I repeat the lie that the estate tax causes family farms to be sold? You seem very convinced that I repeated that lie–let’s see a quote. Or don’t post a quote of me saying that and show yourself to be a moron, your choice. ---
**Author:** ![BobLibDem](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/boblibdem/32/3149_2.png) [@BobLibDem](https://boards.straightdope.com/u/BobLibDem)\ **Post date:** [February 21, 2011, 4:19am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/112 "2011-02-21T04:19:37Z")
Republicans keep looking for victims of the estate tax. They have trouble finding any, most notably [ater Hurricane Katrina.](http://www.time.com/time/nation/article/0,8599,1106213,00.html) ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 21, 2011, 4:20am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/113 "2011-02-21T04:20:45Z")
> [@sh1bu1](#): > > The lie that the estate tax causes family farms to be sold has been known for years now. If you didn’t know that then you shouldn’t be offering an opinion on the effect of the estate tax. Maybe you should have done a little Googling of your own before making the claim. Repeating the lies of Fox News is not fighting ignorance, it’s spreading it. If they have a lot of kids, the property is often sold so it can be distributed among the heirs. I suppose a righty could say that is an example. But many don’t want to run a farm once they leave. They just want their share of the estate. There are lots of reasons a farm would be sold after the owner dies. Not the inheritance tax though. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 21, 2011, 4:23am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/114 "2011-02-21T04:23:06Z")
> [@gonzomax](#): > > If they have a lot of kids, the property is often sold so it can be distributed among the heirs. I suppose a righty could say that is an example. But many don’t want to run a farm once they leave. They just want their share of the estate. There are lots of reasons a farm would be sold after the owner dies. Not the inheritance tax though. That’s actually a good example of why it’s difficult to determine if there were any family farms or small businesses that were sold because of the estate tax–they may have been sold for other reasons. ---
**Author:** ![fumster](https://avatars.discourse-cdn.com/v4/letter/f/e9c0ed/32.png) [@fumster](https://boards.straightdope.com/u/fumster)\ **Post date:** [February 21, 2011, 5:12am UTC](https://boards.straightdope.com/t/inheritance-tax/571519/115 "2011-02-21T05:12:48Z")
> [@Rand\_Rover](#): > > Where did I repeat the lie that the estate tax causes family farms to be sold? You seem very convinced that I repeated that lie–let’s see a quote. Or don’t post a quote of me saying that and show yourself to be a moron, your choice. How about this? > [@](#): > > You have such a fundamental misunderstanding of how so many things work that I find it hard to respond, but I’ll try. Taxes must be paid in cash (United States dollars, to be specific). Therefore, if someone builds a valuable privately held company and dies owing estate tax, they must raise cash to pay the estate tax, which may involve selling some of the company or levering it up. ---
**Author:** ![Rand\_Rover](https://avatars.discourse-cdn.com/v4/letter/r/db5fbb/32.png) [@Rand\_Rover](https://boards.straightdope.com/u/Rand_Rover)\ **Post date:** [February 21, 2011, 3:35pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/116 "2011-02-21T15:35:37Z")
> [@sh1bu1](#): > > How about this? You fail. I didn’t say there what you are saying I said. ---
**Author:** ![Max\_Torque](https://avatars.discourse-cdn.com/v4/letter/m/e9bcb4/32.png) [@Max\_Torque](https://boards.straightdope.com/u/Max_Torque)\ **Post date:** [February 22, 2011, 4:06pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/117 "2011-02-22T16:06:41Z")
> [@Rand\_Rover](#): > > What type of evidence would you accept? > > This is why theprinciple of the thing matters for these types of policy decisions–there’s no way to construct a US w/o the estate tax and see what would happen. Find a few examples of people who decided they’d rather make less money than pay estate tax. Let’s say George Jefferson is the sole owner of a dry cleaning business that’s valued at $4.5 million. He calculates that, by opening a few new locations, he could raise the value of his business to $6 million. However, that would mean he’d have to pay estate tax when he passes the business on to his son, Lionel. That tax would reduce the gift from $6 million to $5.65 million, were his estate to be taxed at the top rate of 35%. Rather than pay that tax, George decides not to expand his business and stay at $4.5 million. See if you can find a couple like that. Also, every now and then when these threads pop up, I dig out the post I made back in 2002, when I did some calculations based on the tax as it was in 1999: > [@](#): > > In 1999, only two percent of estates were “over the limit” and paid taxes. Of the estate tax collected that year, more than half of the total tax was paid by just 3,050 families. Raw numbers are in this Excel spreadsheet from the IRS[dead link removed]. The net estate tax is in column E on lines 280-282; the 3,050 families with gross estates of more than $5 million paid $12,214,413,000 in taxes, out of a total of $22,920,156,000 collected. > > By contrast, in the same year there were 49,898 people who paid tax with estates under $1 million. They paid a total of $803,997,000, for an average of about $16,000 of estate tax per family. That ain’t too bad at all, considering their estates were at least $600,000 in size to begin with. And by 2006 on the current schedule, estates of this size will pay no tax at all. In short, the estate tax only truly affects a tiny fraction of American families, the very super-wealthiest. If you oppose it, you are simply being their tool and buying their snake oil. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 22, 2011, 5:13pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/118 "2011-02-22T17:13:58Z")
The super rich are like Ghadaffy, and Mubarak. Trust them, little one, they will take good care of you. They are benign overlords who just think prosperity should flow down to the little people after the rich take their fair share. They are talented, smart people and deserve first crack. You know they love you. In the 1970s the super rich Hunt brothers tried to corner the silver market. They came close. If they succeeded I am sure some of you believe they had the best interests of America in mind. We all would have benefited from their trickle down. I however had money invested in silver. Once they were exposed, I lost 2/3 rds of it. ---
**Author:** ![Baal\_Houtham](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/baal_houtham/32/13604_2.png) [@Baal\_Houtham](https://boards.straightdope.com/u/Baal_Houtham)\ **Post date:** [February 22, 2011, 5:44pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/119 "2011-02-22T17:44:31Z")
> [@kaylasdad99](#): > > Yeah, **shibu1** , why should he be aware of that? Snowmobile salesmen don’t need to know about tax law. Made me smile. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [February 24, 2011, 4:19pm UTC](https://boards.straightdope.com/t/inheritance-tax/571519/120 "2011-02-24T16:19:17Z")
> [@JohnT](#): > > Not too sure what you meant by that, but in the US spouses usually don’t have to pay inheritance tax on assets left to one spouse when the other dies. > > [Estate tax in the United States - Wikipedia](http://en.wikipedia.org/wiki/Estate_tax_in_the_United_States) On a quick skim of that article, I got the impression it referred to _property_ (e.g. houses) vs. all assets - but I admit I may have missed something. When we set up our wills, we were advised to use a trust structure. Let’s say the exempt amount is 1 million and I leave a total of 4 million to my spouse. That 3 million gets taxed. My spouse also has 4 million of his own. When he dies, he’s got something like 8 million. 3 of which have already been taxed (ok, it’s 3 million less the original tax but we’re keeping things simple), so… 1 million is left to the kids free and clear, and the other 7 gets taxed. With a trust, my spouse gets his million free and clear. Plus his own 4 million. The other 3 (less taxes) is put into a trust - which he can draw upon during his lifetime. When he dies, the trust goes to whomever we designate as the secondary beneficiary(ies). It’s already been taxed, and it isn’t re-taxed because it wasn’t owned directly by my spouse. Then his own 5 million (the million he got from me, plus his own 4 mil) goes to the kids… 1 million free and clear, 4 million taxed. So here, we’re taxing a total of 7 million. If we didn’t have the trust, we’d tax 3 million PLUS 7 million. [Previous page](https://boards.straightdope.com/t/inheritance-tax/571519.md?page=5) [Next page](https://boards.straightdope.com/t/inheritance-tax/571519.md?page=7)