Bullshit. These loopholes don’t appear by magic. How do you think the estate tax rate was lowered in the first place? Special interests went to politicians and convinced them to change the tax law in their favor. And if the law can be changed in their favor it can also be changed back.
Then you don’t understand what these “loopholes” are. The methods that transfer wealth without it being touched by estate tax can involve things as diverse as manufacturing shoes in Hong Kong, buying/selling copper futures or ten-step-deep arcane manipulations of real estate.
Some people think of “loopholes” as some kinds of trapdoors that are put in laws specifically to help the “rich” to do whatever nefarious things the rich do. Nothing could be further from the truth.
These things are put into laws, in 99% of cases, because some politician or group of politicians wanted to encourage some kind of behavior, usually economic, for the good of the economy, or some industry group, or some economic strata. What’s called “social engineering”, mostly with good intentions. And then there are people, very smart people, who are paid a lot of money, whose job it is to know these laws very well, and to seek out how to use these well-intentioned-clauses in combination with a few dozen other well-intentioned-clauses to do things like reduce taxes for their clients or to be able to transfer wealth without having to pay estate taxes etc.
All perfectly legal, of course. And since all those well-intentioned clauses have support among politicians who put them in and people/sections of economy they are supposed to help, getting rid of them is problematic at best.
I think part of the aversion to an estate tax is the level of privity and closeness between family members. Sure you get double taxation all over society when you spend money at the mall and everyone who touches it pays taxes.
But if I want to give my son, my brother, my sister, or my child something of mine, that is a personal and intimate gift and it seems heavy-handed for the federal government to supervise those types of transfers.
As was said upthread, I earn money not just for myself, but my family. Part of being successful is knowing that you can pass on nice stuff to your kids and they can have a better start than you. That satisfaction is part of what was earned and not something that IMHO, the government should have their nose in at any rate, let alone confiscatory 55% rates…
Not true. the loopholes are snuck into bills ,often as riders, and are payoffs to lobbyists and companies that give big donations. I saw a congressman interviewed last week and he claimed they have some kind of tax break in almost all bills. They are payoffs and frequently very specific. That is why the tax code is many volumes.
So what was the social engineering motive behind lowering the estate tax? Was the government encouraging millionaires to die? I guess we should be relieved they went with an economic incentive rather than a hunting season.
You missed my point completely. Not that I am surprised.
So you’re claiming there’s no correlation between the estate tax rate and the amount of revenue collected. That changing the rate has no effect on revenue. And you’re citing an article as evidence. An article about the effects of the lowered rate which is titled “Death tax revenue tumbles 22%”.
Yes, I did. I genuinely thought you believed the government wanted to kill millionaires.
But let’s elaborate on the argument you made. You said
Now as I’ve documented, the estate tax rate in 2001 was 55% with an exemption of the first $675,000. Ten years later, the estate tax rate is 35% with an exemption of the first $5,000,000.
Now you say that changes in the tax rate are made for good intentions. To socially engineer some behavior for the good of the economy.
So what’s the behavior we’re aiming for here? What behavior is encouraged by lowering the estate tax rate and how is this behavior good for the economy?
I gave you the data. Show me the correlation.
The article is about an exception - in 2010 the rate was not “lowered”. It was zeroed. The article was about the fun fact that although the rate was zero, there was still some revenue.
No, I didn’t. You missed the point yet again.
You do realize that just because we go to Page 4, it doesn’t mean the posts on Page 3 have vanished?
Because all the other transactions are commercial transactions. You work, you get paid, government takes a cut. You sell something, you make money, government takes a cut. You give pocket money to your son, government does not take a cut. (Mind you, when son spends pocket money on a coke, government will take a cut there, so it’s not like the money escapes taxation or anything)
To make this example into a slightly more universal principle, people generally see their families, and especially their children, as extensions of themselves. As such, it is particularly galling that any money on which you’ve already paid tax when you earned it should be taxed again when you give it to your family.
I explained to you why you’re wrong. (Hint: the estate tax applies only to very rich. What sort of assets do you think they pass on?) It took an extra query-response cycle for you to even understand. You then admitted you knew little or nothing relevant about taxation. And now you’re still spouting the same misconception I corrected you on. :smack:
Perhaps I was over-harsh (or arrogant) in my earlier explanation; I thought that might help you remember. Wrong. Call me arrogant if you wish; I’d rather be arrogant than ignorant.
Yes. Where in what you quoted did I say that the estate tax law is a “loophole”?
Oh no. I absolutely accept your point on the long term gains tax. It should be applied based on the price at which the appreciating asset was first acquired. Doesn’t that take care of your objection?
p.s I know little about american taxation systems. You’re treading close to the arrogance problem again 
I don’t understand. How does this work?
How does long term capital gains tax work right now? Septimus said capital gains tax does not perfectly capture capital appreciation because asset prices are considered from when they are inherited, not from when they were acquired by the person who passed them on. To me, a much fairer solution to this would be to apply capital gains tax based on the initial price of acquisition rather than use this as a justification for estate tax. To use an example - say stock is purchased at 100 by the father, passed on to a daughter when it hits 150, and sold by the daughter at 160, the tax to be paid by the daughter should be whatever the capital gains tax is applicable on the appreciation from 100 to 160. Why this is fairer than using estate tax as a solution is obvious. Lets say the stock was bought at 200, went down to 150 when it was inherited and then goes back to 200 by the time it is sold. Capital appreciation in this case is actually 0, but the asset will now get taxed twice(once at father’s death and then when it is sold) simply because it is held by the daughter instead of the father.
I’ll guess that an argument against this is that asset purchaser is legally obligated to record or remember the price he paid, but this obligation doesn’t follow the inheritance. (If I inherit shares of IBM from my Dad, but can’t find the box where he kept records, should I have to declare their cost basis as zero?)
That problem is lessened by recent rules requiring brokers to report purchase details to the IRS, but that won’t apply to old purchases, non-broker purchases, etc.
I apologize for the “stick stuck up my ass” but I hope you can see that with much revenue from the “Death Tax” actually ** covering for a loophole on untaxed gains rather than being “double taxation”** it can be a sore subject for rationalists who seek to combat bullshit right-wing rhetoric.