Whatever. Yet if the difference is merely cosmetic, as you admit, why are your panties all in a twist about it? Is it that important to you to avoid admitting you don’t have an argument worth making?
Gawdamighty. A libertarian advocacy group concluding that a libertarian course of action is optimum, being presented by you as a factual cite. Just like citing James Brady on gun control, innit? Do you want to be taken seriously or not?
Didn’t you just acknowledge it’s a cosmetic difference only? In the very same post you’re now claiming it’s substantive. Make up your damn mind what you mean.
Etc. Typical. I already told you, when come back, bring argument.
[quote[Simply asking the same question over and over again, ain’t gonna make the answer go away.[/QUOTE]
Simply evading the questions ain’t gonna make them go away, no matter how much you pretend you’ve answered them.
Aw, shucks. I didn’t expect you to get all mushy on me!
I’ll clarify my earlier statement. I mis-spoke. I don’t hate you either. I wouldn’t want to be stuck in an elevator with you, but “hate” is too strong a word. Life’s too short for that.
There’s validity to this argument. I suspect that many people would be aware that thier $5 million is going to be cut in half with taxes upon death anyway, so they might as well spend it while they can rather than save it for heirs.
A 50% tax, no matter what it is levied against is punitive. (Interestingly, the highest bracket of the estate tax in the United States - currently 50% - is higher than all other industrialized “western-style” countries. Only Japan’s estate tax has a higher rate.) Particularly so, when it’s levied only against a vanishingly small percentage of individuals. Even more particularly so, when the manner in which it is levied encourages financial behavior which it is promoted as discouraging. But most particularly so, when the costs of collection and administration of the tax as currently levied equal (or maybe even outweigh) the proceeds of the tax. The estate tax, as currently structured, is simply a substantial penalty against your heirs for dying rich.
Well, gentlemen, I read UncleBeer’s link (the Cato policy analysis paper), and I don’t think the answer is actually that simple.
In the first place, replacing the estate tax with taxation of inheritances as ordinary income is not taxing consumption; it’s taxing income. If we really want to use tax incentives to discourage excessive spending, we’d need to institute a consumption tax. (This has been proposed by some progressive tax reformers such as Cornell economist Robert Frank, and in fact it’s what the Cato report itself is advocating.)
The argument about “dubious tax dodges” is also not very convincing, because many wealthy people use “dubious tax dodges” to evade income tax as well as estate tax. It’s not at all clear to me that compliance would be improved if we changed the basis of the tax on large inheritances.
The Cato paper’s arguments for the estate tax’s ineffectiveness focus on the loopholes in its structure. They don’t make a convincing argument why we should eliminate the tax itself rather than eliminating the loopholes.
The alleged equality of the revenues raised by the estate tax with the costs inflicted by the estate tax depends on including in the latter both public and private costs: the public costs of the revenue collection itself, and the private costs of estate planning. This is rather flimflammy, ISTM. They aren’t similarly including the private costs of tax planning when evaluating the impact of the income tax, say. (They also aren’t taking into account the economic activity generated by philanthropic/tax-free enterprises that are substantially benefited by bequests designed to avoid estate tax. They merely point out that donations to tax-free organizations don’t directly produce new tax revenues because they’re tax-free. Which is true, but not the whole story.)
In short, the “moral arguments” in the Cato paper for eliminating the estate tax are predicated on the idea that it is fundamentally immoral to tax savings or work, and that we should tax consumption instead. There are some points to be made in favor of the incentive advantages of a consumption tax, and as I said, there are several economists that support it. However, I think that ethical position isn’t an adequate argument for simply abolishing the estate tax within our current tax structure. It certainly isn’t an adequate argument for changing the tax on inheritance to a tax on income.
Matter of opinion. If that’s where you choose to draw the line between “punitive” and “acceptable”, that’s up to you. But it ain’t an objective basis for determining tax policy.
As I pointed out earlier, whatever your ethical or economic objections to the estate tax (and the economic objections, as noted above, aren’t entirely convincing), you cannot argue that it is seriously hurting the “vanishingly small percentage of individuals” who have to pay it. The richest 1% of taxpayers have been continuing to get richer at a booming rate for the past several decades.
Of all taxes currently imposed, the estate tax is having by far the least negative impact on the prosperity of its taxbase. The rich few who pay it keep getting richer anyway, and the rest of us get a nice $24 billion per year (according to the Cato report—that’s 33% more than my estimate of $18 billion in my previous post) that doesn’t have to come out of the pockets of less prosperous taxpayers or out of the Medicaid budget or whatever. Sounds to me like a win-win. I say let’s keep it.
Quod Erat Demonstrandum.UncleBeer has answered the question “who’s being punished?” His continued insistence that he has done so suggests that he is not persuaded that the arguments implying that the heirs are not being punished have rendered the question unanswered.
This may be true, but it wasn’t what I asked. If your goal is to give your children all your money as an inheritance, how would a tax encourage you to spend your money frivilously rather than continue to will it to your heirs?
Kimstu, thank you for a substantive response. The arguments you raise are, I am happy to admit freely, valid criticisms of both my position and the Cato study. You are one of the most consistently honest and thoughtful partcipants in the dialogue on these boards - no matter which forum you are posting in. I admire your objectivity greatly.
Because you know that great portion of it is gonna be taken away - you can’t give all your money to your children. This removes, at least part of, the incentive to save.
Kimstu, as you may recall, I am a big fan of yours as well. What do you make of the claim that 50% of an estate (see e.g. UncleBeer) will be taken by the estate tax? Sites debunking the myths about the estate tax often claim that the rate is actually far lower.
Well, 50% is technically incorrect if one considers the entire estate, including all gifts a decedent may make during his lifetime to his heirs. 50% is the top marginal rate on the remainder of an estate, after gifts made to the heirs prior to the decedent’s passing. Throughout your life, you may give—tax-free—to your kids $11,000/yr and up to $1.5M at any time as a lump sum. If you gift a kids with $1.5M, this is then counted as that initial untaxable deduction; you don’t get another $1.5M deduction at the time of your death. These numbers can be doubled by claiming the gifts are from a pair of spouses. (it is precisely these mechanisms which can encourage the behavior of your heirs which Elvis has claimed should be discouraged. For instance, if your parents set aside $2M at your birth, and contribute an additional $22,000/yr to a trust fund, with a modest 7% annualized rate of return, you would have tens of millions of dollars waiting for you when you turn 21. None of this money, under the current system, would have been subject to taxation.) Once these set asides are considered, the total average tax rate on the remaining estate could very well effectively yield only 17%.
Wrong, bucko. The 7% rate of yearly income gets taxed each year in a trust fund on the trust’s income tax return form 1041. Only IRAs and simillar retirement devices are allowed to accumulate income tax free.
And UncleBeer, I read the Cato link too, but that wasn’t the link either you and I referenced in the post you refered to. Arguing by misdirection it is called. Punitive, my ass.
He has identified persons, but he has not established that they are in fact being punished, rather than simply less rewarded (and for what?) than they might have hoped to be.
Inheriting the property and wealth of your parents isn’t a “reward”, it’s a fundamental right. What’s the point of working hard and accumulating assets if you can’t pass them along to your children and family? This has been going on since humans first had posessions back in the cave.
Og my father.
Mammoth trample Og.
Me take Og’s furs and spears.
This is the key difference in thought between liberals that tend to be for the death tax and conservatives who tend to be against it. You see it as unfair, lucky, and as a reward to inherit money from your parents. We see it as a fundamental right that has always existed. Taxing this is like taxing marriage or taxing children. It’s the government interfering with a basic right that has always existed.
So you oppose taxation of all kinds, do you? What’s “the point of working hard” etc. if you and your family can’t keep all of it, huh?
There are no arguments you’ve presented that don’t apply equally to any other form of taxation. Get over it.
BTW, it isn’t the “death tax”, that’s GOP talking-points spin. The estate tax isn’t on death, or the dead, but on estates and their inheritors. You’ve even acknowledged as much.
Coming from you, that is the funniest statement I’ve seen on the thread thus far.
As for the Cato cite, there is a kernal of truth to it, especially when you start transferring money early on in a child’s life tax-free to avoid having that amount taxed later on. That becomes a disincentive to the child to work for their own welfare, so they do become that “parasite” that so many of you want to tax the hell out of. If there was no estate tax, then the need to set up trust accounts is removed and the disincentive to work is removed, and the child is more likely to work for their own welfare, but may inherit later on when the work habits have already been established in their adult life. Of course, each family situation is different and YMMV, but I think the children are better off knowing that there is no money sitting in an account with their name on it, early on life and they become mini-Paris’s.
[anecdote]
As for myself, I am in this situation. My step-father retired from Optometry and I know that he is well off because he also is an extraordinary self-made stock analyst/trader. At least I did learn from him his work ethic (thank God that’s not taxable!) and made a business for myself. I did this because I was/am not counting on him to give me a heap of gift money for his own tax advantage. If he does happen to have a large estate, so be it, but I am not counting on any inheritance coming my way…I actually hope he spends it on my mom and himself. I learned as a teenager that work is what it’s gonna take to be successful, not just outliving him and expect a generous estate. I on the other hand, have started trust accounts for my kids because of the estate tax itself. My reasoning is because housing and college education is a far bigger concern than it was 35 years ago when my stepdad faced the same choices. So I thought that setting up these accounts was a good idea, until my 17 year old got a hold of an account statement with his name on it. :eek:
[/anecdote]
