“It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more in proportion.” ~Adam Smith (thought he was a hero of conservatives everywhere)
You do know that if you die and your estate is valued at 5,000,001, it will owe (IIRC) .45 in estate taxes? The first $5M is tax free, the tax is only applied on the amount over $5M. That wouldn’t exact mean you get slammed.
I doubt he knows it. It really seems like the vast majority of people who get upset about this are horribly misinformed by right-wing lies.
I had a couple free minutes:
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This is easy-peasy to solve, actually. One (giant, completely understated for political reasons) benefit the estate tax grants is the cost-basis step up. When an asset is transferred, its full value is taxed, but the cost basis of that asset to the inheritor is its current value, not its value at purchase. If we tax all income transfers the same way, all we would have to do is eliminate the cost-basis step up. Thus, you get transferred the $5 million house, but you only pay taxes on its appreciation when you sell it.
As long as the kids want to own the family farm, instead of hock it, they won’t pay taxes (other than property tax, which they would have had to pay anyway).
Yeah, I’m not against the idea. I’m just saying that the Republicans would throw the mother-of-all-hysterical-tantrums if it were proposed.
Governing in America requires dealing with the reality that the current crop of Republicans are essentially screaming at everything.
If person A works for 40 years and makes $100K a year, they pay $40K (or so) of taxes a year for all the services, defense of the country, etc. they make use of.
Suppose person B gets a $5M inheritance, sticks it all in the bank and pulls out $100K a year, make use of the exact same services, defense of the country, etc. that person A got.
In the U.S. are their tax burdens comparable?
HA!
Sweet! I’m going to think of this picture whenever a Republican gets unreasonably angry at something.
Nice picture.
Most people really don’t get the whole marginal tax thing. It really wouldn’t be fair if I paid 35% tax on ALL my income - but I only pay that on the dollars over $373,650. The 373,649th dollar is taxed at 33%. My 68,000th dollar is only being taxed 15%. Same as any other 68,000th dollar. And just like everyone else my 16,750th dollar isn’t taxed at all (or anyone else who earns a 16,750th dollar).
I’m not sure what you’re thinking of. The lowest tax bracket, 10%, applies to the range of $0-$8,375. There is no tax bracket with a rate of 0%.
He may be thinking of the personal deduction. Last I checked it was 11,400 for a married couple. If you make less than that your income is considered 0 and you pay an effective rate of 0%.
I think the reason most people don’t get the whole marginal tax thing is that it serves Republican ends for people to confuse effective tax rates with marginal tax rates. So you certainly won’t see any Republican elected officials correcting misguided constituents, and you will occasionally see such elected officials making the same error, through either stupidity or malice.
Married filing jointly. Sorry. Everyone else who is married filing jointly who makes 16,750th dollar. And your right, the 10%.
(Isn’t everyone else married filing jointly? 
)
The person with the $5m would pay income tax on the income generated by the $5m (Federal taxes of 15% on capital gains and dividends, regular income tax rates on interest, plus state taxes in most states - that would be an additional 6% in Georgia, for example).
He would not pay any tax on $100k just for withdrawing it from savings. Does any country tax that? Similarly, the worker does not pay any extra tax on any money saved and then withdrawn later.
If talking about “tax burden”, then there are other taxes to consider. Both people would pay property taxes in proportion to the value of their house (and some other property, e.g. boats, in some states) and sales taxes (in most states) in proportion to their expenditure on goods.
Overall, I would expect the person with $5m to pay more tax because of tax on the investment income.
You are correct in your assumption, more ignorance fought. As for the misinformed part, not true. Just so far out of reach I never worried about researching it.
Really? I wouldn’t. Taxes on investment income are very low compared to taxes on wage income.
Beyond which, investments compound earnings. If I buy a capital asset that increase in value 4% a year I do not pay taxes on the gain until I sell it. Compare that to a working stiff putting money into a bank account that pays 4% per year. He has to pay taxes on those earning every year so the compounded gain is drastically lower then the investor.
Not only that, people don’t get the whole revenue vs income thing other. “Well my brother’s garage earned $1M last year and he sure ain’t rich”. Sure they collected $1M from customers, but they paid wages, rent, bought supplies, etc. Most small businesses have fairly small incomes. If you have a small business that produces a $1M income then you are doing really well and you should just shut the fuck up.
Tell me where YOU bank? :eek: 
Ok, suppose he’s an idiot and sticks it under a mattress.
He inherits the $5M, lazes away the days, never working, lives for the same amount of time as the working stiff who got his money as income, spends exactly the same amount of money each year, consumes exactly the same services, takes advantage of the defense department defending the country, etc.
Are their tax burdens comparable?
I don’t think we should treat the inherited income any different from the earned income. (If anything, we should value the earned income higher, since the working stiff contributes a benefit to society.)
Out of curiosity, isn’t most, if not all, of the “inheritance” already taxed previously? (i.e property tax, income tax, etc.) I realized there may be 401k’s and other saving vehicles that haven’t been taxed yet - due to not being drawn from, for example - but wouldn’t most of the deceased’s property/wealth have already been taxed?