I would want a vibrant estate tax even if we had no need for the income.
I was trying to address the notion (which for some reason is popular in evangelical circles these days) that wealth was a virtue or the result of virtue.
Fifth amendment
“Onerous” is the point at which the person on whom it falls decides that it’s worth his while to circumvent it.
My point is that while the free market is pretty good at creating wealth, it is not particularly good at allocating it.
Even the most conservative economists agree that unions and the labor movement are what improved working conditions. Union participation might be low now but it used to be much higher. When union participation was higher, so was working class and middle class wealth. I have owned union shops and non-union shops and frankly it wasn’t the union that drove my production overseas. It was a $5/day wage versus a $5/hour wage (the miniimum wage was lower then). Or are you saying that getting rid of unions will somehow make $$7.25/hour worker here in the US competitive with a better skilled higher quality $10/day worker in China?
Its not jealousy or envy. Why would you think it is? I think that dynastic accumulations of wealth are bad for our society. DO you really not understand that point?
How?
Hrmm, OK ignorance fought. I guess we’ve gone too far, we no longer offer the most economic and social mobility in the world… but we did once.
No, they wouldn’t. Because the schemes to go around that tax would cost more than 5%.
Policy implications
Our Russian results have several important policy implications. The adoption of a flat rate income tax is not generally expected to lead to significant increases in tax revenues because labour supplies are believed to be fairly inelastic. However, if an economy is plagued by ubiquitous tax evasion, as was the case in Russia, then a flat rate income tax reform may lead to substantial revenue gains via increased voluntary compliance.
No. You can get around it through ALL kinds of methods. Talk to any CPA who specializes in this. It will only cost you a couple hundred bucks and you will be amazed at the variety of schemes that exist.
So it only costs two hundred bucks to avoid paying your taxes. And nobody pays their taxes if it’s cheaper to avoid paying them.
So you must believe nobody in the country is paying more than two hundred dollars a year in taxes.
No, it takes a couple hundred bucks to get the CPA to present to you, in fairly general terms, a few methods for circumventing the estate tax. Of course, you would need to tell him about the size and structure of the estate first.
The circumventing itself is a lot more expensive and CPA fees are the least of the expenses in most cases. That is why it is always a judgement call on whether to employ such methods depending on the estate tax laws and your general tolerance for hassle.
But then you probably knew all that and were just playing an idiot.
You’re not allowed to insult other posters in this forum. Don’t do it again.
I didn’t say he was an idiot. I doubt that. I said he was playing one.
Why not? Dynastic accumulations of wealth peter out quickly enough on their own.
Even if they don’t, and if dynastic accumulation is your biggest issue, which would you prefer? An estate tax, or the amount equivalent of estate tax being willed to an independent venture capital firm?
What’s better than the free market in allocating wealth? Note that I’m not a free market fundamentalist. When I say ‘free’ I mean regulated to prevent the well understood market failures like monopolies, information asymmetries etc.
Unions essentially seek to give greater bargaining power to labour. I’m ok with that. If the unions bargaining power gets too strong, capital will move to or seek a place where it has at least equal / more bargaining power. All the 7.25$/hr workers will then either have to find something else, live off a government safety net, or become way way more productive. I’m ok with that too.
I actually don’t understand. Could you explain? The richest people in the west these days seem to be giving away their fortunes to charity in any case. Most ‘dynastic’ wealth disappears(in relative terms) at most two-three generations into the dynasty, and my guess is it completely disappears a couple of more generations in. As I noted earlier, the forbes top 20 had no names that are more than one generation into their ‘dynasty’. Here’s a cite saying that 80% of millionaires in the US are first generation
I think dynastic accumulations of wealth (or at least allowing the concept) are necessary for our society. My reading of people is that we are evolved to be selfish creatures that care about ourselves and those linked closely to us the most, and being able to earn wealth and status for ourselves and those closest to us is an important incentive that drives people.
The taking clause is not an a right to property that makes an estate tax unconstitutional
We’re talking about teh real world, not some hypothetical straw man world created by hyperventialting free market fundamentalists.
Did someone say the estate tax is unconstitutional?
Not necessarily. A lot of tax shelters end up costing you nothing but the time value fo money.
The article doesn’t actually argue in favor of a flat tax so much as it argues that lowering tax rates cause higher compliance which leads to greater overall revenue. This may have been the case in a place like Russia where this is all new but this isn’t Russia. We have a developed economy with a mature tax system. Noone believes that lowering our tax rates will create enough additional compliance to apy for the reducction in tax rates… noone.
“We find that, ceteris paribus, the consumption-income gap decreased by 9 to 12% more for those households that experienced a reduction in marginal tax rates. That is, the most significant reduction in tax evasion was for taxpayers that experienced a decrease in tax rates upon introduction of the flat tax. We also find that this decline in tax evasion was likely due to changes in voluntary compliance, as opposed to greater enforcement efforts by the tax administration authorities.”
I’m a tax lawyer, I don’t specialize in trusts and estates (and it is a specialty) but aside from abusive or illegal tax shelters there are a few common methods everyone uses. Bypass trusts, QTIPs, charitable remainder trusts, rabbi trusts, spendthrift trusts, planned charitable giving. There are a few other items but they all basically fall within the gifting rules or the exemptions. A lot of folks also use insurance to fund their tax liabilities so that nothing needs to be liquidated to pay the estate tax but that’s really not reducing the estate tax hit because the insurance proceeds are part of your estate. There is certainly abuse but if things were really as porous as you say, folks wouldn’t bother exerting so much effort to reduce or eliminate the estate tax.
Not quickly and not at all if the heirs are not total slackers. These people are born on third base and they are ina much better position to score than most.
I’ve already mentioned non-profits that engage in microfinance, so the option to donate your estate to something like that is already there. If you raise the estate tax above 50% or so, I think you end up with people replacing their estate tax with a charitable contribution of 50% of their estate. That’s why I favor a 50% estate tax which leads to charitable giving that effectively shelters the other 50. It raises no revenue and provides some lingering benefits to the progeny of the donors but it does achieve the goal of making dynasties difficult to maintain if your descendants are all slackers.
You are assuming a perfectly functioning market. OK then i agree, if you have a perfectly functioning market I don’t have as much of a problem and will just go and take care of my herd of flying unicorns.
Considering that unions have not had very much power in a long time, you really can’t blame unions for the export of jobs we have seen overthe last couple of decades, now can you?
You mean Bill Gates and Warren Buffett?
I think you and I are talking about vastly different levels of wealth.
Most of the Forbes list inherited their wealth.
A million bucks is not a dynastic accumulation of wealth. Its a decent home in a decent school district in a decent city.
I understand the need to provide incentives to accumulate wealth beyond your ability to spend in your lifetime. I don’t see why it needs to go more than two generations.
Beyond that, you are not accumulating welath for the welfare of your pregeny, you are doing it for other reasons. You seriously think Warren Buffett is thinking of providing for his great great great great great great great grandchildren when he decided to buy stock in Moody’s.
The bolded is what I was pointing out.
“Tax rates” - maybe not. Estate taxes - lowering those would definitely reduce the need for the avoidance strategies.
I researched this a few years ago for someone I know. Yes, there are a lot of schemes involving trusts, but there were a couple suggested that utilized all kinds of real estate machinations, there was one involving futures trading, and there was one seriously convoluted one employing a dozen or so corporations owning each other.
Yeah, you.
Or are you saying that this mean something other than “my property rights are a constitutional right and that includes the right to inherit without getting taxed” Which leads to the conclusion that estate taxes are unconstitutional.
Yes, I said the right to property implies the right to pass the property to who you want.
Did you see “without getting taxed” in what I wrote?