Southern Style-
You looking for a little free estate planning, Mr Ga-- I mean, Southern Style? 
Sorry, but the details of financing the tax payment are between the IRS and the Gates estate. I’m quite confident they could figure a way to work it out.
Plus, you’re assuming that there has been zero estate planning, and I’m quite certain that you-- I mean, Mr. Gates, has prepared himself for the possibility of just such a plane crash.
A. The 706 does not have it’s own taxpayer identification number unless a separate entity is created by an attorney. Many estates forgo this additional expense and spend a year as ‘Estate of XX’ and go into whatever Trust has been arranged through the will.
B. Agreed.
C. The estate pays taxes on the (usually) increased value of all the assets. If the taxpayers basis exceeds the $675,000 exemption, they are paying a higher income tax rate on the money they have basis on a second time. That is a bit clearer than my early hogwash.
Ooops, delete the word immediate… I need to proof read myself better. 
JAG
I wasn’t around then, well, not voting anyway, but it couldn’t possibly be worse of an administrative nightmare than the current system. Now, instead of just transferring the basis, you have to get the basis, have everything appraised as of the date of death, often a month or more after the date of death, Then spend a year running up attorney and accounting fees before filing the damned return to send half of everything to the IRS, then discovering that there aren’t enough liquid assets so you have to sell, taking up more time and figuring the capital gains and losses based upon the appraised value basis at the date of death and the actual sale value.
Cantrip
I would not agree that all taxation is redistribution of wealth. The government needs X trillion dollars to operate, some necessary programs, some welfare aka “redistribution of wealth” programs. Taxes are the revenue sources to feed those expenditures. The wealthiest people already pay higher percentages on all of their money while the poorest pay lower percentages on some of their money. I just fail to get the justification of punishing people for dying rich.
That said, I agree, it should not be repealed without an opposite source to replace the tax revenue… i.e. increased capital tax rate or a new increased maximum income tax rate.
me
Cantrip
Damn, I hate when people know what they are talking about… 
Sidenote:
I think with the [pun]right[/pun] Justices in place, the estate tax will not be covered by the 16th amendment. What are your thoughts on that scenario Cantrip? I suppose there are many other taxes that have nothing to do with income, but the 16th came as a result of protest against a national income tax. I’m not sure if that is relevant or not.
More Republican trickery!
Now they’re trying to gum up this thread with a debate over tax code minutae!
I’ve heard of lulling the voters to sleep, but debating them to sleep is a whole new approach!
I will not be (yawn) dissuaded! I will continue to (yawn) battle the Republican propagandists…
Will…keep…fighting…
…Must…stay…awake…ZZZZZZZZZZZZZ
JAG replied to jshore: *capital gains is taxed at a lower rate than other forms of income. (I’ve noticed this now that I’ve moved money from CDs into mutual funds…Why the government would reward me to earn capital gains from mutual funds more than they reward me for earning interest in the bank, I’m not sure. I know the bank is less risky, but I am already taking a “hit” in terms of lower rates of return!)
Well, you hit it on the nose. The government is providing an incentive for you to invest your savings in other companies in hopes of spurring economic growth. The entire tax code is full of exceptions and deductions for behavior that the U.S. government wants us to value. There are even bigger breaks for investing in minority companies, computer start-up companies and entrepreneur companies. There are exceptions to capital gains tax if you do steps A,B,C and D. It’s all about the government’s attempts to get us to invest how they think we should invest and about special interest groups buying their exceptions through political donations.
it [the estate tax] also provides them with an incentive to give some of it to charity in order to avoid the tax. And, it is not clear if the tax (which is, after all, only 55% at the highest marginal rate) would not provide an incentive for these people to work harder, as I noted previously, since, e.g., if they want think $4 million is a necessary nest-egg to leave to their kids they now need to save up somewhere around $6 million.
First, it is not the government’s place to decide whether I give to charity.*
Golly, JAG, what a volte-face! You just finished explaining to jshore that different kinds of investments are taxed at different rates in order to provide incentives “for behavior that the US government wants us to value.” But now when it’s pointed out that the estate tax provides an incentive for donating to charity, all of a sudden it’s inappropriate for the government to be providing incentives?! Why is it wrong for the government to “want us to value” donating to charities, which serve many useful social functions and ease the burden of social expenditures for the government, but perfectly fine for the government to “want us to value” investing savings in non-bank companies “in hopes of spurring economic growth”?
*There are already tons of incentives for charitable contributions in the tax code. *
And this is another one, and a very nice one too in my opinion, as it only affects the behavior of those best able to give.
By the way, when you said in a later post that “the rich pay higher rates on all their money”, what did you mean? As jshore has pointed out before, you only pay a higher income tax rate on the portion of income in excess of the maximum of the lower bracket.
Agreed. So what? As spoke- said, the transfer of wealth is being taxed (estate and gift taxes are, after all, called “transfer taxes”), not the decedent or his estate - it’s administratively easier to collect from one entity than from 10 beneficiaries.
Would that it were. I’ll try to answer the point I think you were trying to make. If fair market value of assets at date of death exceeds $675,000, a tax is paid. Say an estate is worth exactly $675,000 at date of death, all Microsoft stock. That stock is turned over to the heirs. There is no income tax. There is no capital gains tax if they sell, as long as Microsoft is selling at the same price. If they sell at a loss, they get a capital loss. If they sell at a gain, they still do better than if they took the decedent’s basis. It seems to me you’re conflating the various taxes (earned income, unearned income (capital gains) and estate/gift).
I hope you don’t really believe this. Let’s look at basis. Let’s say my parents have purchased and sold lots of stock over the years, not necessarily on a FIFO basis. Who the hell knows what their basis in stock they bought in 1958 is? Different shares of AT&T purchased in 1958 have different bases. Now they die. I sell the stock and owe capital gains tax. How do I figure out how much? If you think lawyers and accountants run up fees now, you ain’t seen nuthin’ yet. B-b-b-baby, you ain’t seen n-n-n-nuthin’ yet. As I said, everyone finally agreed that it would be worse than the current system.
Under the current system, you find out value on date of death. How? Look at the Wall Street Journal for the day in question, or go on line, or hire someone to do it if it’s really a lot of work. Hard to value assets - get an appraiser. Everything is very neat - the value on one day is the basis going forward.
As to the necessity of a sale - you know, there are lots of ways this can be addressed. If it’s just stock, sell it, rail about death and taxes and get on with your life. If you own a business like a farm, or a store, you can pay in installments. (You also get an additional deduction, sheltering $1.3 million in value from estate tax.) It really isn’t that bad. There, there.
Ah, but it is. With income tax, the government is redistributing my value-added earnings to the defense industry. Or the road-building industry. Or poor people. With Social Security, it’s distributing my hard-earned dollars to old geezers who didn’t work half as hard, even if they had to walk five miles a day in the snow to school uphill both ways. It’s somewhat a matter of semantics. You say “some necessary programs, some welfare programs”. My feeling is that welfare programs are a fundamental role of government and are at least as necessary as defense, roads, aerospace, etc. You disagree. No problem, but not a reason to eliminate estate tax as opposed to any other tax.
That’s called “progressivity”, and it’s the cornerstone of the voluntary tax system and, by world and historical standards, the low levels of taxation in the U.S. If the system weren’t progressive, it wouldn’t be fair (or wouldn’t be perceived as being fair), and hence voluntary compliance would go the way of the dodo. I don’t view estate taxation as “punishment” for dying rich, I view it as those who are able funding the government’s functions.
So…you are against the estate tax because why should we punish the wealthy and isn’t it a disincentive for them, but you’d eliminate it by raising the maximum income tax rate? Do you see the illogic of that trade-off? As between income tax rates and estate tax rates, don’t you think the majority of people who earn their wealth are much more likely to adjust their behavior if income tax rates change than if estate tax rates do? Why work harder when I am only getting 30 cents on my marginal dollar earned? Most people don’t conform their behavior to what happens when they die, but to what happens while they’re alive.
See Article I, Section 8. I don’t see that the 16th Amendment has anything to do with the estate tax, although I freely admit that I have never even looked at this issue before.
I think that with George Bush as President, estate tax repeal, a true windfall to the wealthy (those who need a windfall least), is much more likely than with Al Gore.
spoke-
LMAO
Sorry for yet another OP theft.
Do middle/lower class do better under Reps or Dems…
The Reagan era is a bad time to base it on because of the double digit inflation. Now that Greenspan (God of the financial industry) is soundly on his throne, (all though he is rumored to be looking for a retirement date, yikes!) I don’t think you will see that kind of inflation again.
Considering that domestic economic policy is a completely different animal than it was 20 years ago, it is hard not to say, we just don’t know.
The Democratic Party has always said we are for the poor, Republicans are for the rich. Well, since only 1% or 5% of the country is rich, that obviously can’t be true. Democrats don’t have perpetually bleeding hearts and Republicans don’t have hearts of stone. Republican economic policy is to encourage investment. That used to eliminate the lower class, but today, anybody can play the market. Democrat economic policy seems to lean towards a need to redistribute the wealth, which IMO discourages capitalism.
I doubt that Democrats really feel that the rich are evil, though some on these boards openly profess such feelings, but I believe your middle-of-the-road Democrat is going to agree that the rich deserve to be rich, we shouldn’t take their toys away out of envy. It goes to reason that most Republicans are NOT rich. The basic differences are how the government sets taxation policies, since that is about the only influence that the government has over the economy.
I don’t believe that by giving the poor back their 15% that they might pay in income taxes you are going to redistribute the wealth so that is a fallacy. Minimum wage seldom applies to anyone in a career, but that can certainly move all lower wages up. There is a Republican bill on the Hill now to raise the minimum wage by a dollar next year… Clinton plans to veto it. So it isn’t always about what is right, it is about who gets the credit too.
I reiterate my earlier point. I don’t think it matters so much who is in the White House. What will matter more is who is in Congress and who is in Alan Greenspan’s chair.
Remember, Reagan had a Democratic Congress all 8 years. He could not have passed a single bill without their signing off on it first. Now, under a Republican Congress for the first time in decades, according to some earlier listed site, the poor are better off than they were in the early 80s for the first time. So consider that as well.
But again, I don’t think any of that matters nearly as much as how the domestic and global economies are doing.
Originally posted by Kimstu
buzzer eeeeeeeeeekkk
Sorry, try again behind curtain number 2. There is a phase out of deductions, starting at around $100,000 per year so the rich pay more across the board. Maybe it’s semantics, but if the rich could take their deductions and exemptions, the lower rate would barely be paid.
Exception K-1s, yummmmy
[failed humor]BTW… the part about the government’s place and charity was supposed to be a joke based on exactly what you pointed out. Sorry I forgot my or [sarcasm] [/failed humor]
Last post on the estate tax thing, since it really is a hijack on the OP and I know we will never agree on it.
That is exactly my concern. What you take home determines how you live. I know what my net check is going to be every pay period and I live accordingly. BTW…I’m not advocating 70% income tax rates, although if you take 39% +7.65% + 5-10% for state, it won’t take much to get there. On the flip side, does a tax cut make me work less? I think not.
Anyway, the estate tax is a blindside tax. It sneaks up on the middle class and forces rich people like Jack Kent Cooke to sell the stadium he built just to pay taxes. I just think it is extremely unfair and comes across as stick-it-to-the-rich-cause-we-can-policy that I deem anti-capitalist and pro-communism. But that is my sharply tilted opinion on estate taxes, the one issue that I admit being devastatingly right on. Pun definately intended.