Mine would be yes, yes, and (in terms of naked self-interest) almost the last group of such people.
I’d still like you to clarify how you distinguish more affected from less so. But I think that Buffett, Soros, etc. hardly need to highlight their personal status; they’re well-known as being among the world’s richest men. That’s not something that’s easy to hide.
“Though you as a liberal…” Well, cheez whiz. I expect that from Milo (and he rarely disappoints me), but c’mon, Izzy, you’re not gonna sink to that level.
When a politician of any persuasion proposes legislation that speaks to the interests of one group in particular, whatever that group, I think the claim of representing that group’s interests is inherent. If a Democratic politician proposes legislation strenghtening the bargaining positions of labor unions, it’s fair to assume that he’s representing their interests, unless they speak up and say that no, in fact they don’t want that legislation. It has nothing to do with what I think of Bush, and everything to do with the territory.
Been busy got some catching up to do here when I got the time. The 92% Estate occured in PA in 1994. The bulk of the estate was a several million dollar IRA rollover, with “as per will” as the beneficiary ::sigh::.
You will recall that the excise for excess distributions over $150,000 was 50% (changed now.) The full amount including the excise is taxable. There is also an estate tax in PA.
I think the lifestyle of a person will be pretty much the same whether they are worth 500 million or 1 billion. There is a much greater difference in lifestyle between a person worth a half million or 1 million.
Yes but you seem to have agreed earlier in your post (in your answer to my second question) that they are not only not trying to hide it, they are actively attempting to make a point with it.
Sorry to disappoint. But you may have misunderstood me. (At least I hope so. :)). I think it’s fair to say that Bush is speaking in this instance on behalf of the universe of wealthy people who are affected by the estate tax. But it is not fair to portray him as speaking specifically on behalf of the super-rich people like Buffett and Soros et al. It is likely that Bush thinks of himself as representing people who are more like the family business types. The idea that the Republicans are only interested in the super-rich is a standard liberal claim, e.g. Al Gore’s emphasis on “the wealthiest 1%”. Anyway, no offense intended (well, maybe a slight dig - sorry).
Agreed…Better be careful if you start extending this argument down the scale though…It’s a good one for arguing why very progressive taxation is fairer than the alternative.
Well, this idea could easily be disabused if Bush just came out for raising the exemption, or making other changes to the estate tax, that did not let the super-rich completely off of the hook! What amazes me is, given how the Republicans know that this argument is going to be used against them, that they make so little attempt to devise their policies to defend against that charge! I am naive enough that every time tax plans come up, I say to myself, “Surely, with all the votes the Republicans have won from white working class voters, they are going to have to devise a tax plan this time that gives most of the breaks to these people. Surely, they won’t keep pressing their luck indefinitely.” Alas, I am perpetually wrong (and I also seem to perpetually underestimate that extent to which the Republicans seem to be able to press their luck in this regard)!
By the way, I am a little confused about your use of the term “super-rich”, since in one sentence you seem to be leaving out your standard millionaires, while in the next you are talking about Gore’s appeal to the “wealthiest 1%”. After all, the estate tax only effects like the wealthiest 2% and I imagine with the exemptions set to rise as it is that this percentage might even get smaller.
Cute, yeah, but as an aside to this thread, it is worth noting that the implication that Bush makes about his income is a bit dishonest. In particular, if you look at http://www.ctj.org/html/bushcut.htm you’ll see that Bush’s Presidential salary has rather little to do with what bracket he’ll be in or even what his total income will be. His Presidential salary will be, if his 1999 tax return is any judge, only about 20% of his income, dwarfed by income from interest and capital gains. It’s quaint that Bush seems to want us to believe that he earns most of his income like most of us do via a salary. It also happens to be untrue.
And not so surprisingly, Gore’s “wealthiest 1%” corresponds quite well with the very few people who are actually subject to the estate tax. 'Cause in 1992, 1.29% of American decedents left behind estates subject to FET, and only 0.74 percent had taxable estates worth $1 million or more.
I agree that in this particular instance, those whose interests are being defended are in the top percentiles of wealth. This is obvious. But it is still misleading to pretend that it is primarily billionaires. The vast majority of people subject to this tax aren’t even in that league. (I suspect that the majority of the revenue raised is also from the less wealthy people as well, but am not as sure).
I only used the Gore example to show that the idea of presenting the Republicans as being the party of the rich is a standard Democratic Party tactic. In the case of the income tax, which everyone pays, this tactic emphasizes the top one percent. In the case of an estate tax, which is obviously for wealthy people, the same approach would be to push it even further up the ladder.
Not that I know that anyone has done this. Other than RTFirefly
First of all, a factual correction: Izzy, that would be “There is a much greater difference in lifestyle between a person worth $875,000 or $1 million,” not “a half million or 1 million.” The present tax on a $1M estate is actually $125K if no spouse is involved (and $0 if one is, and in five years it’ll be zero either way, under present law).
Personally, I don’t see that great a difference in lifestyle even there, but I haven’t been lucky enough to experience the distinction, yet.
I have to concur with what jshore has to say here, Izzy. If Bush is speaking for the universe of those affected by the estate tax, and he’s making no attempt to restrict his aid to those at the lower end of the scale, then he’s also speaking for the billionaires.
At any rate, under present law, a married couple dying after 2005 will be able to pass $2M tax-free. That’s still a hefty chunk of change, in my book. While the excess over $2M will be taxed at rates between 41% and 55%, all I can see here is an argument for revamping the rate structure, which I agree is long overdue. Do it in a revenue-neutral manner (ease rates on the just-barely-taxable; sock the billionaires harder), and you’ll see no argument here.
I’ll summarize my take on the need for estate tax reform as follows:
[ul]
[li]The approaching $1M/2M individual/couple exclusion from FET is adequate.[/li][li]The combined couples’ exclusion should be automatic: that is, the executor of the second estate should be able to use any of the $2M exemption not used by the first estate, without the aid of special provisions in the wills.[/li][li]The rate structure should be made more progressive in a revenue-neutral manner, by lowering rates on estates near the low end of taxability, and raising them on estates of the mega-rich.[/li][li]With the consent of estate beneficiaries, executors should be allowed to sell or give away conservation easements on farm property to The Nature Conservancy and similar groups, with the net reduction in property value counting for estate tax purposes.[/li][li]Other than that, existing tax code protections for farms and small businesses are adequate.[/li][/ul]
This last bullet is conditional on whether Scylla’s able to come up with some convincing examples that the existing provisions aren’t sufficient to prevent the breakup of family businesses and farms, but I’ll put it in there until I lose that argument.
Even if additional help is needed to preserve family farms and businesses, this still amounts to a need for a little bit of fine-tuning, rather than a need for wholesale repeal.
My understanding is that the estate tax is a tax on the estate, not the heirs. Thus the exemptions that you refer to are one per estate, not per heir. In the case of an estate with more than one heir, the exemption per heir is reduced accordingly. It appears from your analysis that you are assuming a one heir situation.
Bush is representing all wealthy interests, including Buffett et al. But not that group more than anyone else. (A person can feel that any estate tax is unjustified, but still agree that the greatest hardship is on the less wealthy).
(An estate tax that I could probably live with would be a tax on the heirs, exempting 100K per heir, and about 10% thereafter.)
The estate tax is indeed on the estate. I certainly hope I didn’t imply to the contrary. I’m not implying a particular number of beneficiaries. If a couple has two children, they will be able to pass $1M to each of them tax-free; if three, then $666,666.67, etc. You’ve got to break up a $2M estate a fair number of ways before each part becomes insignificant as the wellspring of a revenue stream.
It seems you have no quarrel whatsoever with the exemption; after all, by your plan, it would require 20 heirs to use up the $2M/couple exemption we will have in five years’ time.
Needless to say, I object to the 10% rate after that point; after one previous thread, and more than two pages of this one, no one has yet challenged my arguments that the estate tax, as is, is far less of an imposition than any other major tax. (“In defense of the estate tax,” back on page 1 of this thread.) I think that in itself argues strongly that revenue from the estate tax ought to either stay the same, or increase. Reducing the top rate from 55% to 10% would seriously cut estate tax revenues.
Barring such a rebuttal, you’re saying we should prefer taxes that are more onerous to those that are less so. That’s a peculiar position, and the opposite of the one you’ve expressed when discussing the estate tax in and of itself, as opposed to vis-a-vis other taxes.
Well, if Bush is going to give more than 40 cents of every dollar of his $1.6 trillion ta cut to the top 1%, then you are damn right the Democrats are going to emphasize this fact! My only wonder was why we didn’t start hearing about this from Gore until the first debate. I had quoting the statistic myself (via CTJ) since back about last March.
By the way, the link that Minty Green posted shows that in 1992 just a tad under half of the revenues from the estate tax came from estates worth more than $5 million (and almost 20% from those worth over $20 million). I imagine these percentages would be considerably higher now. (Only about 5% of the revenues came from estates worth less than $1 million.)
I was giving an example of how a difference of 500,000 to 1 million could come about. You disputed this, saying that it would be 875,000 to 1 million. That assumes a million dollar estate and one heir. How about a 10 million dollar estate and 10 heirs? The difference between tax and no tax would be alot greater.
My suggestion about a good tax was off the cuff, an expansion of my earlier statement that I could see a sudden major increase in wealth as a rationale for some sort of tax. In this context, I would see the tax as being on the heirs, not the estate, and would see an acceptable percentage a non life-changing figure. I tossed it off as an aside, after you laid out your vision of how the tax should run.
Sorry, you didn’t mention anything besides the single $1M at the time. I was working with what seemed to be your givens. I’m happy to discuss examples involving any fairly reasonable set of assumptions.
But this is a bit off the curve. There just aren’t that many families with 10 children. And their parents made a decision to reduce their shares of the estate to begin with, by having so many children to divide it among. The law can’t be expected to bend backward to meet every eventuality or contingency in one area, when it hasn’t even started dealing with greater problems elsewhere.
Fact is, those kids still have it better than the person making $15K annually who loses $1150 to the payroll tax each year. If we’re cutting taxes, I’m starting with him/her.
Shoulda flagged it that way, so we would know not to take it seriously.
I mean, those of us on the pro-estate tax side of the discussion have laid a nontrivial bit of groundwork that supports something along the lines of my hypothetical FET reform. At this late point, you have to expect that I’m going to point out that your suggestion doesn’t take into account that groundwork, unless you do so first.
A taxable inheritance is a ‘major increase in wealth’. See next comment.
Unless the heirs have been living with Daddy, as in the Ewing clan of Dallas (yeesh!), the higher the tax and the lower the inheritance, the less life-changing the inheritance is. And if they have been living with Daddy, high time to kick 'em out and into the world.
The logic of taxing the estate, not the heirs, is pretty straightforward (to me, anyway). We can all choose as many heirs as we wish; they don’t have to be related to us. Since one’s friends tend to be at similar levels of affluence, you can see the easy dodge: a bunch of ‘you leave money to my kids in your will, and I’ll name your kids in my will’ deals.
Then you’d wind up with a thicket of rules limiting which beneficiaries were eligible for the exemption. They’d also have to juggle the matter of how to keep specific bequests intact, while guarding against the per-beneficiary exemption being used as an end run around the tax. (I’m not sure that’s even possible.) We can save a small forest by not going there.
I thought the fact that I wrote a single sentence in parenthesis at the end, qualified by the word “probably”, was enough of an indication. Sorry if I misled you.
and how too respond. To me, it’s pretty basic, and can be summarized in two parts
It’s not your money
It’s not the government’s money, and it’s not yours. I don’t think that there’s any moral or defensible reason to seize it. I think the underlying assumption that the government knows best is dangerously fallacious. Perhaps creating an aristocratic legacy is a foolish thing, but it’s not for the government to seize my assets under the assumption that I might. Creating a legacy is not illegal. Even if it was, we do not tolerate preemptive confiscation of property under the assumption that a law might be broken in the future under any other circumstance. How can we do so now? To repeat: It ain’t your money, and it ain’t the governments. The government doesn’t know better than me what to do with my money when I’m gone.
2. It won’t matter.
I think very succesful people will always be smarter than the government, and manage to pass on the majority of their assests in spite of the best efforts of the government. The people who get caught by these laws will remain the moderately wealthy and unwary, not the superwealthy, which, I think is the intended target.
We’ve been down this road before. So, without going down it again in full detail, I don’t really see where this argument leads. Do you want to eliminate taxation altogether? As RTFirefly and the rich folk who signed that petition have pointed out, the money to fund government programs has to come from somewhere and a properly-crafted estate tax is about the most painless way one can think of!
Another thing, the money is not exactly the heirs either. Do you believe in true equality opportunity or do you believe people should be advantaged by making a “smart choice” in what family they are born into ? Clearly, the current system takes a compromise approach in looking at the money…If it was looked at solely from the point-of-view of the person who dies, then I could see your view having merit. If it was looked at soley from the point-of-view of the heirs and if one truly believes in equality of opportunity, then the estate tax as it now stands is clearly way-insufficient.
I happen to believe that this compromise approach is the right approach. You either clearly believe that the only point of view that matters in formulating this public policy is the point of view of the person who is dead, or you don’t believe in equality of opportunity, or you have a very different view about what equality of opportunity means. I am sort of curious which of these three options you subscribe to.
As for the whole aristocratic legacy thing, I agree with you that this argument is a bit fallacious. If one really wanted to prevent this, one would have to make the estate tax way more confiscatory than it is now! There is no way it comes even close to preventing this. Again, it is a whole compromise thing…Okay, we will let people create aristocratic legacies, but society will at least get some “cut” of that wealth returned to society at large to further (a bit) equality of opportunity for those who do not have sufficient foresight to be born into wealth.
I don’t understand exactly what your argument here is. The fact is that the amount of money raised by the estate tax, while not huge, is significant, particularly in the context of monies available for discretionary spending. Also, the fact is that a significant portion of this tax is paid by the wealthiest of the estates (as I pointed out above, on the basis of the table in that paper from the Dept of Treasury). And, some of the ways that people avoid the tax is to set up foundations or give to charities in ways that returns some of the wealth to society, which is what the tax is all about. Personally, I am not particularly bothered by this sort of tax avoidance.
By the way, left out of the above is the whole issue of capital gains that end up never getting taxed if one eliminates the estate tax without doing something to make the capital gains taxable. (Are you proposing to do that? Is Bush? I am honestly confused on this part…I.e., if the estate tax is eliminated and one of the heirs sells stock that was bought by his parents at $5 per share for $100 per share, will he be taxed on that total gain, or only the part of the gain that occurred since the stock was transferred to him?)
scylla
Once again, your arguments apply equally well to all taxes. Nothing in your post applies more to estate taxes than to income taxes, property taxes, tarriffs, etc.
If you accept that some taxation is necessary, then the argument becomes one of relative impact/justification. To argue for repeal of the estate tax as opposed ot any other tax you need to address teh relative merits of the taxes.
Sieze it? Well, if you presume all tax is siezure, then perhaps this verb is admissable, but then we should reframe the debate then. If we do not assume taxation is seizure, and I think we have excellent arguments for this position, then this verb is really abusive.
I believe that assumption that the question be framed in terms of the government is fallacious.
At some point one has to grapple with economic policy. Any government does so, as the world and even markets, bless their little relatively efficient selves, don’t run themselves. (Think so, come to a country in anarchy. Not pleasant.) It’s not a matter of “government” the abstract entity knowing better, its a matter of government attempting to put into action society’s best-guess as to what policies are most appropriate for building and maintaining long term wealth creation and maintenance.
May I suggest this is a distortion of the issue. Let’s first lay aside the attack verb seize, since this is really an attack on taxes generally. Regarding intergenerational wealth transfers, it’s quite clear, emperically that excessive concentration of wealth, I believe we can posit transfered through generations, breeds uneconomic behaviour. The whole issue of rent seeking behaviour I noted above. There is no personal assumption here, its a question of aggregate effects. Thus, Buffet’s posiiton (which he, if my recollection is correct, applies right to his own family).
Quite so. And the point is not relevant to the issue of minimizing negative aggregate economic effects through taxation.
Non sequitur. (1) Taxation of intergenerational wealth transfers makes no statement about legality (2) confiscation is of course an abusive and inaccurate term, IMHO, and certainly does not seem applicable to this otherwise normal tax.
Irrelevant argument against a straw man.
Empirical evidence suggests that it does.
I believe you really mean that wealthy people will always have the means at their disposal to circumvent the law?
Perhaps, although the question of sheltering money from taxes is a general one and not just one for estates.
We should argue this on the data, though, and not on an assertion.
Well, given the subjectivity of the terms, its hard to really comment here, other than to refer to the response above.
This is the thing that infuriates me. For 3 pages we talk about how the purpose of this tax is confiscatory. Now I point out why it’s wrong, and all of a sudden we pretend that it’s not
“That same argument could be applied against any tax”
**ARRRRRGGGGGHHHH!!!
Goddamn Fuckstick!!!**
Any old sales tax doesn’t run at 55%
You don’t pay a tax on goods when you buy them, and then another when you take them out of the store.
I thought it had been established about halfway through page one that the tax was to prevent the creation of an aristocracy.
It’s not the land of equality if we rob those with to give to those without. It’s the land of enforced mediocrity, or a socialist state at best.
