The working people of America need to recognize the hand of Providence, the wisdom of a just and loving God Who places the resources of America in the hands best suited. That Jesus of Nazareth would appear to reward grasping ambition and porcine greed seems a contradiction, sure, but who are we to question? The good and the wise are known to Him in advance, so that their souls are embodied precisely in the appropriate womb!
Surly trailer-trash would do well to recognize that what appears to be a culture that values ruthless greed above all else is, in reality, the best of all possible worlds! Happily, the inheritors firmly defend this wisdom by sharing their wealth with those leaders who can appreciate the subtlety of traditional wisdom. Which is why it is just and proper that one of them has a million times more political power than some schmuck like me!
Property rights are but a part of human rights, true, but the *most *important part, they are the central gem of the crown, the other’s are little more than grace notes.
A better vehicle would be a family type trust. This is already available. Lots of rules around this type of vehicle of course.
I accept income tax as a necessary form of revenue generation. Earned income has different characteristics than inherited income. For the purpose of this I’ll focus on estate inheritance though I know that inheritance is tied up with the unified gift and estate tax credit. In general, the value transferred through inheritance was already taxed when it was originally earned. I oppose taxing this again.
But even more fundamentally, a parent should be able to pass their wealth to their children without the government interceding. This is a special and maybe emotional reaction but one of the principles of parenthood is striving to ensure the success of my children and it’s offensive to that principle that the government seeks to interfere.
Please explain how earned income is different from inherited income. The anti-tax libertarians I have encountered are always talking about how when we tax something, we discourage it. Sometimes there are policy reasons for that, like alcohol and tobacco excise taxes. Why should we be discouraging earned income vs inheritance? Is there a good policy reason for treating them differently, like inheritance boosts the economy by giving lucky people extra spending money?
And why are capital gains and dividends treated differently? If I buy and sell stocks on the secondary market (I am not talking about investing directly in a new business), why should I get to keep more of those gains than the money I earn from my employer? Are workers to be punished for not being sufficiently entrepreneurial?
And to your assertion that the inherited money has already been taxed, that’s bull. First, the money I earn is taxed, and then taxed again when I pay for something, and taxed again when the vendor spends the proceeds. Taxation generally occurs whenever money changes hands, so “double taxation” isn’t meaningful. But, beyond that, the entire point of my earlier post was that capital assets (like stocks or bonds or real property) has its cost-basis adjusted at death so the capital gains tax that would have been paid (if it had been sold before death) goes away entirely. As long as capital gains taxes are a thing, why should the estate/heirs not have to pay it at all?
And, yes, the government deserves a cut. The government sets up the rules for creating money, making sure there’s a stable society and system of laws that actually allow for things to have monetary value in the first place, and provides public goods that help an economy to function. No heir is an island.
Again, this is hyperbolic bullshit. We give our kids all we can while they live, and they benefit greatly from the luck of being born to parents who can give them a head start in life. They simply don’t deserve, a prior, everything they get from us. Do poor kids deserve to live in the circumstances they do? Neither do rich kids. If they are lucky enough to inherit money, it’s basically the same as winning the lottery. They should have to pay taxes just like a lottery winner. They’ll likely still be way better off because of all the opportunities we gave them growing up that a poor kid didn’t have. Really, if I’m leaving them enough to be subject to estate tax, they’ll be more than fine.
I dispute the accuracy of your characterization “taxing this again”. It is simply incorrect. The inheritance is taxed as income to the inheritor. The fact that it was once taxed as someone else’s income is irrelevant.
But I suspect that you don’t really mean this. Or did you mean to exclude people who inherit from someone who is not a parent?
I keep hearing that learning to struggle and earn what you need to survive is good for building character. That seems to be what the Republicans keep telling us in regard to any question involving what we should do for the poor.
So why would they not also want that for their own children? How is it that they actually *want *them to be selfish, entitled, useless brats instead? I just don’t get it.
Personally. I’d put the estate tax rate at 95% for all estates over say $5 million. Family fortunes are the direct cause of most of democracy’s problems. Eliminate those and let’s see if things improve.
I thought I was clear, but I can reiterate. Earned income (and unearned passive income) is generally taxed at the time it’s earned or realized. Inherited income was already taxed at the time it was characterized as earned income. There is a policy reason to treat them differently - because they have different characteristics. We already recognize this difference with the unified lifetime gift and estate tax credit.
In our current system, probably multiple reasons. The biggest reason is probably because those that write the rules benefit from them. Another less cynical reason is to encourage and reward investment. I don’t have special love for the lower capital gains and dividend tax per se, other than I’m a fan of generally lower taxes. I’d rather we have one unified flat tax myself.
I see your point about taxation at the point of money changing hands - though I would say interfamilial transfers are different than arms length, IMO. So it’s not to say bullshit that the inherited money has already been taxed - you seem to agree with that. Your issue seems to be the step up in basis being incongruent with also having capital gains taxes, as the step up allows the receivers of an inheritance to avoid those capital gains taxes. I would ask why life insurance proceeds are not taxable either? I think the reason is that there is a special relationship in passing wealth to future generations and there are all sorts of carve outs that recognize this.
I’m not talking about what people deserve. Lower income folks definitely get the short end of the stick when it comes to inherited wealth. To me that’s independent of the principle I describe. This isn’t a quantitative evaluation of whether a kid who gets an inheritance subject to the estate tax will be more than fine. To me it matters not if it’s $1 or $1 trillion dollars as it’s a matter of principle. Like I said, I will likely not be passing as an estate anything near what would trigger the estate tax. I’m still against it.
I’m unclear what you’re disagreeing with. I think you’re talking about the step up in basis?
I understand how the law currently works. The statement is my assessment of its impact and my characterization of it. I consider the estate tax to be double taxation which since I’m opposed to, I’m also opposed to the estate tax. I’m okay with disagreeing, but you asked for my reasoning so I offered it.
Tax policy can be a blunt instrument. I’d be less opposed to an estate tax that only applied to non familial inheritance but for the sake of less convoluted rules I’m fine with abolishing the estate tax in toto.
But it isn’t double taxation. We don’t tax money, we tax income. And an inheritance is income.
I’m afraid I cannot back this conception at all: it blatantly favors people due to their birth, giving them rewards simply for being lucky enough to be born to the right people. The estate tax hardly leaves an inheritor penniless, and they would not be getting anything at all were it not for the systems and infrastructure that the government regulates and creates and enforces. Anyone inheriting an estate large enough to be subject to the estate tax likely already has had quite a few advantages in life; why should they reap a windfall without paying any taxes on that income?
Not until it’s transferred. The inheritance tax comes from the estate, which at that moment is owned by nobody. The inheritor doesn’t receive his windfall income until after the estate tax is paid, along with any other debts the estate may owe that the deceased had rung up. The estate may even be zero or negative after that, leaving Junior with jack to the power of squat.
It isn’t a “death tax”, either, despite the GOP’s Frank Luntz focus-group use of the term. Dead people don’t pay taxes. Their estates do.
I’m not bothered by large inheritances. Encouraging inheritance encourages already productive people to keep being productive when they’ve already accumulated “enough” (according to them) for themselves. It’s good for parents to try work to make their children’s lives better than their own. I’ve certainly dealt with enough students where that isn’t the case. I’d rather a rich 60-year-old keep working rather than retire.
That said, it feels weird that a share of stock trading for $100 that has a basis near zero gets treated so differently if sold right before or right after death.
But is is double taxation. I mean, we disagree sure, but I think that’s the nature of the disagreement. What is life insurance proceeds, is that income? Those don’t get taxed at all. If a person transfers their assets to a trust and designates their children as trustees, when the person dies and the kids take over the trust, that’s not taxed either. An inheritance is taxable income to the extent it is greater than the unified lifetime gift and estate credit only to the extent we define it that way. I would prefer to not define it that way is all.
Because I believe that parents should be able to pass wealth to their children uninhibited by the government, period. That’s my opinion of course, but you asked for the reason so I’ll respond.
As I said in my previous post, this is exclusionary by design and IMO would ill serve society in general by enshrining in law language designed to perpetuate lineage dynasties.
The Trumps, for instance, already have a huge leg up on most of the rest of us just because they were born a Trump. I don’t want to live in a society that helps them increase that advantage perpetually. I see no good that comes of it nor any reason to allow inheritors to ignore taxes on their income and thus far have not been shown any.
The person who earned the money in the first place. First when they earned it, and second when they gift it. Yes for inheritance the gift happens after death and the estate pays the tax - but I’m treating the estate as an extension of the person. The estate is what is used to settle the affairs of the deceased and it’s essentially a vehicle to do that. In the event a person wants to transfer their wealth before they die, then the unified credit can come into play and the person is also taxed twice in the same fashion.
I accept that as a potential consequence and am okay with disagreeing on the outcome.
I think by this logic you could say that money that you don’t end up keeping is virtually always taxed twice - once when you get it, and once when you lose it. Taxing money when it’s transferred to another owner seems to be just how we roll.
Except it ain’t a canard; it’s the truth. Public investment in things like the Interstate Highway System have made our massive economy possible. It could not have happened with a purely “free market” of private investment.