Irrelevant? Then your point is moot. Again, the inheritance tax does nothing to limit the power and privilege of inherited wealth. And, of course government wants the money and this is the sole reason for its existence due to points one and two.
Well, I’ll happily admit that whether or not it actually works as a limitter in it’s current form is debatable. But the moral argument for it’s existance does exists. Perhaps you don’t even see it as a danger, and if you’re starting from the position that ‘the government is stealing people’s money’ I’m not sure we’d ever come to agreement on that issue. I think you’d have trouble arguing that there isn’t an entrenched, moneyed, powerful elite in the US though.
Your argument that:
Simply sounds like a platitude to appease the poor while the rich buy up all the best resources. It’s possible for everyone to get wealthier at the same time but inevitably wealth flows towards the already rich, as money grants the power to make or bend the rules. Recessions can be even worse for wealth imbalance, the current one is a prime example of the rich making out like bandits while the rest of the population gets poorer.
Taxation is an important method of balancing this flow, and inheritance tax is IMO one of the most fair since it doesn’t penalize the person who actually made the money, whilst encouraging his/her heirs to be productive members of society.
Let’s say I have a pipeline company. My business is that I own pipelines and transport oil from one place to another. I purchase the oil from the producer and then sell it to a refiner. I pay $85 a barrel for the oil and then sell it to the refiner for $85.50 making $0.50 for every barrel I transport. I transport 10 million barrels a year doing this. My revenue is $855,000,000 a year, my expense is $850,000,000 a year, and my income before taxes is $5,000,000. Do you seriously think I should pay $299,250,000 in taxes (35% of my revenue) instead of $1,750,000 (35% of my profit)?
Obviously, if the tax was on my revenue, the pipeline business in that form would never exist. I would have to mark up the price I sell the oil at to $131.27 from $85.50 just to make the same after tax profit. Obviously the refiner would not pay an additional $457,700,000 a year to buy the product, they would simply build their own pipeline and completely eliminate my industry.
Nitpick - Unless something has changed, Google is incorporated in Delaware.
http://investor.google.com/corporate/certificate-of-incorporation.html
I think you need to re-read what I said. I said:
“You wouldn’t take home less than if you hadn’t gotten a pay raise or COLA. If you get more money, you have to pay taxes on it.”
Yes, your COLA/Pay raise may, in some circumstances, not truly increase your theoretical purchasing power, but that doesn’t mean it’s bad. You act as if getting a raise is a curse because you couldn’t reap the full intended benefits. Aside from the fact you made a few generous (faulty) assumptions to try to prove your point, you have not even addressed what I said. For example:
So while these numbers aren’t technically indexed, they do change based on inflation. The likelihood that inflation would be 2%, but that the tax brackets would not change is very unlikely.
Now we are starting to get to the root of your beliefs. This is social justice for you and whether or not it has the intended effect is irrelevant. What many here fail to realize is that members of society do not necessarily stay in the same income classification over the course of their lives. Your post is the perfect example of poisonous class warfare that assumes that some do not have enough because others have too much. This is a simplistic belief that promotes socialism and numerous failed government interventions.
Oh, and taxation is a method of extracting wealth from the populace in order to run the necessary components of government. Not, as you say, to balance the flow of wealth.
Is that some Holy Text that you have not yet offered? It is Written, somewhere, that taxation is for these purposes alone, and that using that method for other purposes is heresy?
You may have heard of that text called the Constitution?
I think the issue with taxes is the ability for corporations to use deductions in the same way that you and I do. Two years ago, I lost $450 dollars in the stock market out of an initial investment of $500. I was very surprised to learn that I was able to deduct dollar-for-dollar my loss in 2008. It’s my understanding that corporations can do this as well but for other things like donations. This doesn’t sit well with me. I think corporations should be given a flat tax on generated revenue with no opportunities to modify that amount.
- Honesty
Hey, wait a minute. There’s a voice of sanity and reason, with some basic analysis to back it up.
I didn’t think those things were allowed in SDMB posts on taxation.
Thanks for the post, LonghornDave.
No of course not. You should totally avoid all taxes. You owe nothing to America and you surely don’t use any services provided. Then many major corporations completely avoid taxes and get millions of dollars in tax payer money back. Why not ,if you can get away with it.
Some financial institutions have bought sewer systems of foreign cities . They get to write of the depreciation. Nothing wrong with that. That is not tax evasion. That is good business.
Why is that evil? I wish more people had a basic understanding of what money actually is and how and why it works. What’s the alternative? People should just perform their labor out of the goodness of their hearts?
Actually I’m attempting to distinguish between whether the policy has a valid goal beyond raising funds and whether or not the current implementation of that policy is effective in achieving that goal. Given the increasing concentration of US wealth in the top few percent of the population I would concede that currently it doesn’t seem to work, or is at least inadequate. I don’t understand what social mobility has to do with a debate on inheritance tax.
And you seem to assume that people having unfettered wealth has absolutely no impact on other people. Neither statement is correct, in a world with limited resources wealth can be created for all but it is possible for an over-concentration of wealth at the top of society to hurt everyone else.
Your accusations of class-warfare simply illustrate that you have little sense of proportion. The use of the tax code as a method for promoting behaviour that is healthy to society is hardly class-warfare. You cannot say that and then argue for a low capital gains tax to promote investment for instance.
The use of socialism as a dirty world is also interesting. Are you a Libertarian that believes in a dog-eat-dog society without any social welfare or government support for the poor? No? Then you’re a socialist, though clearly we disagree about the scope of government social intervention. And if you waste all your invective on moderates like myself you won’t have any left for the real Socialists (like we have in Europe). People who are proud to believe in class-warfare and the complete redistribution of wealth.
I’m not Amercian so I’m not a well versed on the Constitution as most people around here, but I can’t find anything that backs this up at all. You are of course entitled to your opinion.
I would also be interested to know why you think that inheritance tax is opposed to American principles? Personally I would think that a 100% tax on inherited wealth would be more aligned to promoting individual responsibility and a meritocracy than a 0% rate, and I’m curious why you disagree with this.
Then his estate paid no taxes. Even if the estate tax weren’t on hiatus at the moment, his estate would fall well below the exemption line. In 2009, the estate exemption was $3.5 million. That means a person who died in 2009 and left an estate worth less than $3.5 million paid no tax. Too many people don’t know about the exemption, and think that estate taxes affect everyone, rather than just the crazy-wealthy. Also, unless you’re single for life or handle your estate very poorly, your exemption is essentially doubled, since you and your spouse can maximize your exemptions and pass on $7 million tax-free (actually, last I heard the 2011 exemption is expected to be $5 million per individual, so that’d be $10 million per couple).
I’ve been arguing on this board about estate taxes for almost a decade. The last time I looked up the numbers for one year, half of the total estate tax revenue collected came from just 3,050 families. Estates between $675K and $1 million ($675K was the exemption amount at that time) each paid, on average, around $28K in tax. That doesn’t seem too onerous a burden for a $1 million estate. The tax is designed to disproportionately affect the very wealthy, because without it wealth accumulates in this small number of extremely wealthy families and just stays there.
So, the estate tax didn’t discourage him from becoming wealthy? Good. I don’t know of anyone who chose not to become wealthy rather than pay estate taxes. So, there’s the challenge to the anti-estate-tax folks: show me where the estate tax has become a disincentive to becoming wealthy.
You have stated that the moral argument for the inheritance tax is to limit the power and privilege of inherited wealth. Then you state that it does not have this effect but is still good because it raises funds. Therefore it is just another “tax the rich” scheme. They have too much so we should take some for whatever reason we please. That is class warfare.
Social status is not fixed from birth so there is no permanent “rich” class or a permanent “poor” class who need the money. Yet, this is the way many people describe the rich and the poor in order to foment class warfare. That was my point.
Do you think that extracting some of that wealth for government use will help those who are “injured” by our current concentration of wealth? If so, please explain to me how everyone is injured by the current concentration of wealth and how the inheritance tax will correct this problem.
I’m not sure what you are trying to say here. What activity are you trying to promote by having an inheritance tax? Less rich people?
Socialism is a dirty word. Thinking so does not make one a Libertarian who does not believe in any government support. Certainly you understand the difference between Socialism and having social programs inside a largely Capitalist system.
Well then, you understand very little about this country and our principles. I’ll refer to some old, dead white guys for a better explanation:
“To take from one, because it is thought his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers, have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to everyone the free exercise of his industry and the fruits acquired by it.” — Thomas Jefferson, letter to Joseph Milligan, April 6, 1816
“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.” — Thomas Jefferson, First Inaugural Address, March 4, 1801
“Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.” — Thomas Jefferson
“With respect to the two words ‘general welfare,’ I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators.” — James Madison in a letter to James Robertson
“I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.” — James Madison, 4 Annals of Congress 179, 1794
“[T]he government of the United States is a definite government, confined to specified objects. It is not like the state governments, whose powers are more general. Charity is no part of the legislative duty of the government.” — James Madison
“When the people find that they can vote themselves money, that will herald the end of the republic.” — Benjamin Franklin
The financial experts and corporations have found there are no barriers to stop them from helping themselves to the tax trough. It looks like it may well be the end of the Republic. But it will not have anything to do with Obamacare.
I looked around for my enemies only to find they are already here. They run the place.The politicians work for them.
I again have to point to the excellent post made by LonghornDave that illustrates why taxing a business based solely on its revenue is flatly insane.
You would bankrupt virtually all businesses. Any company that had a couple of learn years - which is most of them - would be doomed.
That’s right and you would likely end up with something that looks a lot like the estate tax. You can craft all sorts of tax provisions but having an exclusion amount works pretty well.