I never had a grip. You’ll get used to it.
Why would you think these two were analogous? You receive a personal exemption. The notion is that we don’t want to tax anything below a certain amount.
$5 million is a lot by historical standards but the $600,000 limit we used to have picked up waaay too many people and this is the blowback. Now people want the estate tax exclusion to be where their wildest imaginations think they might be when they die.
I wouldn’t class “not going into debt” as an investment.
Regards,
Shodan
The capital gains preference is usually defended one several grounds. Prevention of double taxation in the case of stock. Encouraging investment and risk taking. And rate blending (someone who had been making $50,000/year every year for 20 years who made $1,000,000 in capital gains in some stock that they held for those 20 years suddenly gets put into the million dollar tax bracket when they had really only been making an extra $50K/year, which would have been taxed at a much lower rate if recognized each year)/
I guess the 0% estate tax is to encourage relatives to pull the plug on their wealthy relatives.
Well then consider it buying back treasuries that we haven’t issued yet. 
When you cut revenue that creates debt unless you cut costs (and as we have seen, neither party cuts costs when their guy is in the white house). Collecting more revenue to avoid issuing more debt is an investment strategy as surely as paying off your credit cards before buying bitcoins is an investment strategy.
Telling someone who inherits the $80k family home* that they have to pay taxes as if they had an annual salary of $80k in liquid cash sounds like a way to get even more people pissed about “the death tax.”
*Which is a situation that’s actually reasonably common, unlike the family farms that you hear about so much in estate tax debates.
They’re so analogous they’re practically the same thing. The only difference I can see is that a person has to go out and produce useful work to receive income. Inheritances are something which just drop out of the sky. So why should our tax system favor inheritances over income as a source of money?
The answer is obvious; the people who live off five million dollar inheritances have more political influence than the people who live off fifty thousand dollar incomes. The same reason why the capital gains tax rate is better than the income tax rate.
Maybe if people were told that their tax rates would be cut in half if the same rates were applied to everyone, it would reconcile them. Our current system is that middle class people are paying higher income tax rates so that wealthy people can have tax-free inheritances.
So, basically, no-one, then?
As I understand it, the latest version of the tax bill will keep the inheritance tax, albeit with a higher exception.
Jeff Bezos is currently, I believe, the richest man on Earth. Do you think he got his fortune by stealing?
Yes.
Because we used to tax estates as small as $600,000 as recently as 20 years ago and the estate tax was highly unpopular because it was hitting so many estates. The government never fared well by poring over the estates of middle class decedents to try and pick up a few thousand here and there. We probably raised more money than we spent trying to get those estate tax dollars but it generated a whole shitload of ill will. Are you saying that the estate tax should kick in on the first value of a decedent’s estate?
I don’t think that’s true. Slackers who inherit $5 million don’t have that much political capital. Slackers that inherit $100 million might. Slackers that inherit $1 billion do have political capital.
The capital gains rate is better than the ordinary income rate for several reasons. Some of it historical and some of it economic and the rest political.
We used to have highly graduated income tax rates and without the capital gains rate you would have someone who might have bought IBM stock when it was $1 and retired after a 20 year career making $50,000/year. When they sell that IBM stock it might be worth $1million and the marginal income tax rate might be 90% on some of that income. But it would only have been 30% if the gain was taxed over 20 years. That is one justification for the capital gains rate. This argument is moot with the flat taxes we have now.
In the case of stock, there is a double taxation argument. The money is taxed once at the corporate level and again when it is distributed to me as an investor.
Lower taxation on capital gains encourages investment by lowering the cost of capital and lowering the required ROI for a project.
Republicans represent the rich, so they cut capital gains. I think their allegiance to the wealthy is pretty clear and has bee for my entire lifetime. Its a big part of how they get elected. You must know this.
He qualified it. Jeff Bezos is not basic.
People seem to forget that an estate tax which kicks in at $5 million barely affects those with a mere $6 million. All but $5 million of their 6 is exempt. (And if they couldn’t squirrel away a mere million in tax-exempt gifts and trusts they need a better tax accountant.) An estate tax that exempts $11 million is, effectively, NOT a tax on those with $12 million — it’s a tax on the super-rich.
Yes, but all taxes are double, triple, quadruple-taxation when you think about it. I pay my barber with wages on which the taxes have already been paid, but it’s taxed again when the barber files his 1040. The doubly-taxed money is taxed again when the barber gets his hair cut, since the barber doesn’t cut his own hair!
But, yes, there are lots of unsettling inconsistencies in the tax code. One reason companies often spend on share buybacks and boondoggles instead of dividends is to avoid that double taxation. If we were designing, completely from scratch, a complete() system for governments to raise revenue, we might make choices very different from the scheme we have now. ( - Complete system means that payroll taxes, carbon taxes, etc. are all considered, not just income and estate taxes.)
But redesigning the entire approach to taxation is not an option. All we can hope for is to identify the worst imperfections in the existing system and make incremental improvements.
The imperfections in the system of 2016 are that it doesn’t raise enough revenue to avoid increasing debt and that rich individuals and rich corporations contribute much too little, compared with the working poor and lower middle-class. Given these facts, is the GOP tax plan well-advised?
In an idealized democratic society the populace wouldn’t stand for the grotesque suffering seen in our own. Still, it’s hard to predict exact outcomes, which would depend on their values, needs, and material conditions. One can imagine everyone ensuring the whole society reaches a minimum threshold of prosperity, and then allocating the rest to those who contribute the most to society or have highly valuable skills, such as doctors, engineers, inventors, artists, and those who work in dirty and dangerous jobs.
Given such a transformation, a lot of concepts taken for granted today would fall away or be radically transformed – like the state, money, or a lot of jobs, like absentee landlords, hedge fund managers, or corporate IP lawyers. You would end up with some variety of anarchism or libertarian socialism, as described by Kropotkin, Proudhon, or Bookchin.
Hunter-gatherer societies were egalitarian. Subsequent agricultural societies introduced hierarchy and spiraling inequality, which were then fiercely resisted in the form of slave revolts and peasant uprisings. The current capitalist system took a tremendous amount of violence and propaganda to instill in people, which included everything from the enclosure acts to the old culture of thrift being replaced by consumerism.
This is a good observation, and one of the big critiques of European social democracy. You can’t very well call it an egalitarian society when you live off the blood and sweat of the global south, especially when you farm out the violence to imperial states like America and Great Britain.
Another flaw is that it contains all the inherent problems of capitalism, such as the need for eternal growth, which is suicide on a planet of limited resources as seen by the whole raft of environmental issues humanity will have to deal with sooner or later. Social democracy also doesn’t change the underlying social relations, so the capitalists can still use their political power to beat back the social movements that fought for these reforms. Look at America, where New Deal policies, unions, welfare, banking regulations, high taxes on the rich, and so on, have been systemically chipped away or entirely dismantled over the previous decades. I’m to understand Europe has also seen a similar, if less extreme process.
Always remember that liberals, including social democrats, are capitalists. Their interest is in maintaining the system.
As for this board, is it very liberal indeed, perhaps owing to its demographic of mostly American white male boomers. In all my time here I’ve seen precious few vocal lefties, or perhaps they’re just reticent to make their views known because arguing with liberals, let alone conservatives, feels mostly fruitless. I’m not sure if I’ve ever seen anyone here say, for example, that the police are foot soldiers of the propertied class and grew out of slave patrols and the need to suppress worker movements, or even an edgy throwaway line – like billionaires are immoral sociopaths who should be guillotined.
Boy, you want a profitable war? Invade Bermuda quickly enough to seize all assets present, then force the tax cheats to pay a hefty rate on it.
About 5000 estates are subject to the estate tax every year. Its about 0.2% of all estates. Most of these estates have large capital gains that were never taxed.
This is different than the taxation of transfers of money. This is taxing the same income twice. Lets say I am a 25% partner in a business, lets say that business earns $100 this year. I would pay taxes on that $25 once before I could spend the money. If I own 25% of the exact same business but hold my interest in stock form I pay taxes on that $25 once at the corporate level and again at the individual level.
Yes and the capital gains tax is one of the ways we try to resolve these inconsistencies. Its not really an answer to say “well, shit, there’s lots of fucked up stuff in the tax code, why not just let everything be fucked up”
Yes and the capital gains tax is supposed to be one of the ways we correct for these imperfections.
No, its not only grossly regressive and a windfall for the wealthy. It is partisan in how it limits state and local tax deductions (a deduction that has been in place since the beginning) and is another example of double taxation.
We can balance the budget by cutting spending or raising taxes. Our budget deficit is larger than our entire discretionary non-military/security budget. I don’t think the Republicans have an appetite for cutting defense spending so they can’t balance the budget just by gutting social programs unless these social programs include social security, medicare and medicaid. Something they are afraid to do. In fact they campaigned against Obamacare on medicare fearmongering. We are raising interest rates which mans we can probably raise tax rates as well.
You would see a large repatriation of a LOT of offshore money if we did something like that. Every tax haven would enter into a tax treaty with the USA.
Did you read post #132?