That’s not quite as much detail as I was asking.[ul][li]How many estates over $1 million are there every year in the USA?[/li][li]Did you mean 50% of the estate after a $1 million exemption, or 50% of the whole estate?[/li][li]Are you including houses in the valuation of the estate?[/li][li]You appear to think that all $120T in assets is liquid. I don’t think this is accurate. Would you require all assets to be liquidated so that the 50% tax can be paid? If I inherit a business worth $2 million, do I need to sell the business to pay the tax? [/li][li]Does this tax happen every time some one dies? That is, a man dies and leaves his wife $5 million. The government takes $2 million, (or $2.5 million). Then the wife dies. The government then takes another $1 million (or $1.25 million). Is that what you mean?[/ul]TIA.[/li]
Regards,
Shodan
There is probably a Democratic tax reform plan presented every year. The problem is that it saves 100 million people $100 each while the Republican plan saves a thousand people a million dollars each. Turns out that no one really gets excited by $8/month but those guys getting a million dollars get real excited.
I wish we could stamp out this mis-thinking.
Everything should be considered relative to a status quo. Everybody knows a $1 widget costs $1.07 because of sales tax. Everybody knows we need our highways and military, and everyone knows we pay for those with income taxes, and everyone knows the rich are in a higher bracket than the poor.
Once upon a time, the home mortgage interest deduction was a “hand-out,” but now it’s part of the status quo.
Changes in the tax code should be made relative to the status quo, for which people have planned, rather than some abstract notion of “fairness.” Almost any notion of “fairness” would defy all of human history.
Do you understand the point, D’Anconia ? I’m not asking you to change your mind or change your diction; I just wonder if you grasp this alternative way of thinking.
You want to stamp out that kind of thinking without him changing his mind? How would that even work?
But your claim that everything should be relative to the status quo, and not to a sense of fairness, makes sense to me only with the caveat that we aim for fairness in the long run, but don’t ruin people’s lives in the process. That is, the tax code should be fair, but radical changes even in the direction of fairness need to be phased in over time to allow people to adjust. But then, I only think that way out of sense of fairness, so fairness is, to me, very important. YMMV, and I don’t think this is something anyone can claim to be objectively correct about.
As far as whether a tax cut is a handout or not is, as I implied upthread, more along the lines of debating how many angels can dance on the head of a pin. I’ll leave that one to the Talmudic scholars. In the meantime, we need to make sure this GOP tax plan fails.
So you oppose raising taxes on the rich, because we haven’t planned on doing it. Never mind this nonsense about fairness - we can’t change the tax code. Got it.
Regards,
Shodan
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A shit-ton if you include trust funds. This is basic mathematics, the assets exist, people who are citizens created those assets, those citizens die. You don’t dispute basic math, do you?
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Of course I mean 50% over around 1 million. How else would you do the math? That would mean you could go from inheriting 1 million to 1 million and 1 cent and suddenly only inherit 500k.
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Houses are assets. They wouldn’t be exempt.
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All assets that have value are ultimately liquid. There are various ways to handle this, and the government wouldn’t necessarily try to extract the cash value of an estate the year a taxpayer dies. They would obtain ownership of 50%, and then there would need to be a carefully performed process to actually conduct the sales, with the heirs allowed to choose which half they keep.
The government can afford to wait. Probably with extensions, these transactions could be done over 5-10 years. Interest rate applied would be the same as the interest rate on the national debt. (since that is what it is costing the government)
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There are 120 trillion in assets. If they didn’t have 120 T in market value if sold over time to third parties, they wouldn’t be worth 120 trillion.
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If a man dies in a marriage, technically he only owned 50% of the assets that were community property. So actually his wife already had 2.5 million and the government is now owed 2.5-1 = 0.75 million.
Since so many assets have such ephemeral asset values (how much is a ranch or golf course worth? This week or next?) perhaps the actual way to do this is the government basically puts a lein on all the assets a citizen has in their estate. The lein basically says Ceasar gets 50% of the ultimate sale price of the asset. And then the taxpayer must sell it or pay the estimated market price, with the estimation performed by a government appraiser, within 10 years or so.
So if someone dies and they have an estimated asset portfolio of 3 million, government doesn’t actually demand 1.5 million per say, they demand 50% of the sale price of the portfolio’s assets + interest or 1.5 million now. So if the heirs sell and they only garner 2.7 million, the government gets half of that. This system incentivizes honesty.
Thanks for your clarification. To your point 4, I’m wondering if any other countries do something like that. It sounds prohibitively complicated, but it’s certainly easier to copy someone else if they’ve worked out the kinks already.
I feel very strongly about this because :
a. I don’t see how capitalism really functions well in a system where lucky individuals who happen to be offspring of successful people get enormous, lifelong, nearly insurmountable advantages from birth. What do trust fund kids do for other people that justify them getting the absolute best of everything?
What is the difference between aristocrats and kings, who were descendants of warlords who managed to conquer some territory and now get to live in a fortress and be wealthy until they die, and the current system?
The process is accelerating. At some predictable future point, all wealth will be in the hands of a tiny number of people. There will be no remaining private property that isn’t in the holdings of a handful of wealthy families. All factories and commercial real estate and everything else will be held by a tiny 0.01%.
b. The national debt seems to me to be identical to situations in medieval times where more powerful warlords with nice castles broke away from the central government and refused to pay the king’s taxes. The king went broke and the central government as a whole foundered. This kind of thing continued until the age of the cannon, which allowed the most powerful warlords to actually unify entire countries.
I dispute math that returns “a shit-ton” as an answer to a serious question.
OK, I still need to see your figures. How many estates exceed $1 million, by how much do they exceed it, and how much will the government get with a tax of 50%?
Who is paying interest?
I create a business worth $2 million. I die. The government now owns half the business. Does my wife pay interest on the remaining half? Or do you mean that the government tells her she has to keep the half, and pay interest on the value? What if she says No? And what is the government’s fiduciary responsibility to the owners of the remaining half? Is the government liable if the business goes bankrupt? If it is a stock company, does the government get to vote in stockholder’s meetings? If the company sues, or gets sued, isn’t that a conflict of interest?
Regards,
Shodan
I know it’s 120 trillion in net assets within the borders of the continental U.S. I know that the top 1% owns 30%-50% of all assets, and all those estates are more than 1 million. Nearly all large estates today are not transferred through a taxable mechanism because they are trust funds, but this is a legal fiction and I propose breaking that.
So that’s why I got annoyed, what I am proposing is a computerized account by account, deed by deed, accounting for all the assets under protection of the Federal government. All land, intellectual property, and account balances can ultimately be found and databased, though most of it already is, it would just be centralizing it.
Stuff held anonymously or where the owners cannot be found, the government puts out notices and liquidates it eventually. If the owner shows up post liquidation and can prove their ownership, they get a check written by the treasury for their half.
My figures are rough but whether it’s 40 trillion or 60 trillion or 100 trillion doesn’t change the basis of my proposal. It’s an undisputed fact that the assets do exist.
In the example you gave, if you were married to your wife, she actually already has half, so when you die the government owns 25%.
Your wife has options. She can :
a. Sell the 25% now to a disinterested third party. The government gets whatever the 25% went for.
b. Keep the 25% for up to 10 years. If the government’s interest rate on the national debt over that 10 year period happened to be 2% year over year, that means it cost the government 21.89%. So when your wife finally sells the business, say she sells the whole thing, then the government’s share of whatever it sells for is 25%*1.2189 = 30.47%.
c. Make interest payments, but they are based on the estimated asset value. If, upon sale, it turns out the asset was worth a lot more, the government gets the difference.
This is a complex proposal and to be frank, I’m suspecting that implementing it will require state of the art technology and a group of people about as competent as the top of the industry people at Google or a hedge fund.
Sort of like the analogy above : what I am really talking about here is a financial cannon, breaking the various games and shelters the modern-day aristocracy have used to flout the law.
Can you run the figures a little more precisely than that?
Current, the federal estate tax is 40% on estates over $5.49 million after a $345,800 exemption. This tax raised about $20 billion (in 2014). Can you do the numbers and let us know how much you think raising the rate to 50% and lowering the estate limit will raise?
How about option d, where she says “it’s your headache - you sell it”.
Regards,
Shodan
I think it will raise trillions. The reason is because your numbers are based on estates under the current system. Nobody wealthy pays estate tax because they move their money to a fictitious legal entity called a trust fund before they die and then that entity is immortal.
My numbers are based upon the actual fact that there’s 120 trillion in total assets and humans are mortal. What is your counter-argument to these facts?
As for option d, sure. So the government would pay a third party firm to perform the sale, probably, same way it actually has third party private firms administering student loans. And the fee for that service is charged from your wife’s cut, so good luck with that.
It’s not mis-thinking. (And according to my browser, that’s not even a word).
I disagree.
I understand the point, but your point is wrong.
Correct me if I’m wrong, but under present law there is no estate tax on jointly held property when one of the spouses dies, right? Tax is paid on the death of the second spouse.
I am NOT trying to nitpick the above quote. I AM interested in clarifying inheritance law for myself. What if assets are held jointly, but the joint owners are not husband and wife?
Perhaps you think so. What I keep hoping for is some concrete figures on which you base that hope.
AFAICT you want to revoke trust law. Which kinds of trusts are you talking about, and what will be the effects of the government simply declaring trust law null and void?
My counter is that the moon revolves around the earth, and most people wear shoes.
Really, you need to connect the dots between “there is $120 trillion in assets out there, so we will revoke all trusts” before you need much of a counter-argument.
Why does the government charge my wife for selling something my wife doesn’t own?
Regards,
Shodan
Yes, in essence, trust law would be phased out. Not revoked, that would be stupid, but all existing trusts would have to be registered with a living group of owners and upon those owner’s deaths, caesar gets it’s due.
Your argument is facetious and borderline abusive. You know damn well my argument boils down to "the U.S. has enough money in assets to pay the national debt. Taxing people on those assets while they are alive would break the current system because self-made billionaires would be forced to sell assets, and this is not optimal. (because self made billionaires, if left with their assets, might do something to make them even more valuable). But the descendants of the people who created the assets shouldn’t get an eternal free ride : though 50% of one is still going to be a lot. It’s one of those series of halvings, the first descendent still has 500 million, the second 250, the third 125…quite a few generations before anyone has to work.
So it damn well matters to this tax and national debt discussion that the assets exist and that all of it will eventually be held by someone who did not earn it. Versus shoes and the moon.
I think you are philosophically against this idea and so you just want to waste my time with meaningless petty counter-arguments. It’s clearly possible to do, but would require world class experts to actual implement, and I’m not going to claim to be one.
You are not real clear on how trust funds work, are you?
You still need to explain how forcing an estate to sell its assets is so much more productive than forcing people to sell their assets. You can’t just assert it. Most of the $120 trillion you keep mentioning is not liquid.
It would require someone to be able actually to explain the plan in some kind of detail.
Regards,
Shodan
IMHO, the Dems need to take a page from Newt’s playbook and do their own version of the “Contract With America”. Not a tax plan (which they can’t propose anyway), but a declaration of principles, goals, and policy objectives.
Do this, say, a month before the 2018 election. Have all Dems sign it in a public ceremony, then campaign on it. Since the election is likely shaping up to be a referendum on Trump (just as the original CWA was a response to Clinton), one can put the “all politics is local” wisdom on the back burner.
Since I’m dreaming, I also want a million, tax-free, dollars. 
You know even less than I do :
I was trying to explain an algorithm that would cover all cases since the true value of an asset is unknown. If an asset can’t be sold for it’s market value over 10 years, then it was overvalued. Everything has a price. And as I mentioned, the government’s procedure would have to be based on percentages of an asset’s sale price, not the estimated value. You obviously want to just deny that a straightforward procedure exists to handle this, because, again, I suspect you are seeing this as morally wrong. You probably believe that the wealthy earned all of their wealth, the government and civilization had no effect, and therefore to deny their distance descendants the benefits of the same fortune is evil.
I have a more nuanced view and am well aware that in a game like our financial system, the only way to really get ahead was probably to cheat.
Your plan has “nuance” in the sense that you are unable or unwilling to show how the math works out. That’s not a good thing.