First of all, it is a tax on the person who died not the heirs.
If you build up assets and pay taxes on all of your revenue (income), why can the government take up to 45% of it when you die. There’s really no difference between that and taxing you on April 15th and then taxing you on April 16th on whatever is left over.
In other words, when do assets become income?
Great question. Its just not fair.
Why is it not constitutional? What about it violates the constitution?
Assets don’t have to become income. What is unconstitutional about taxing assets?
Huh? What part of the constitution do you suppose that it violates? Might as well ask how come the Constitution isn’t interpreted by drunken inbred yahoos. Oh wait. Nevermind.
I thought the Constitution meant that the government wasn’t supposed to take your stuff… or was that the Declaration… Either way, its not fair.
If I earn $100, I have to pay $25 in payroll taxes and of the remaining $75 I have to pay taxes for fuel, sales, sin, property, etc.
So this system of double taxation (which I am fine with) exists for everyone, not just the wealthy. People pay payroll taxes, then they pay fuel/sales/property/etc taxes on the remaining income. Most forms of exchange are taxed.
Why would an estate tax violate the constitution?
beh… Government always wants more
I do not see how it violates the constitution. But I do believe it is just wrong.
I will say that it has always surprised me that the general population is ok with having the same $1 taxed over and over and over. Here is a tax trail of one of my dollars:
EARNED A DOLLLAR! HELL YEAH!
Fed tax
State tax
Sales tax when I spend it
Recurring tax for owning what I spent that dollar on in alot of cases (cars, houses, etc…)
Income tax when I sell what I spent that dollar on in some cases
If I die half that dollar is gone to estate taxes
The person who inherits my dollar gets the shit taxed out of it in the same cycle as above.
It’s fucked up.
According to the scheme that just passed the House, that would only be the case if you bundle it with 3,500,000 other dollars and have done no estate planning at all.
The point is that the estate tax hits less than .23% of estates. It prevents the accumulation of dynastic wealth that would threaten our meritocracy. As Warren Buffett says, “Dynastic wealth, the enemy of a meritocracy, is on the rise. Equality of opportunity has been on the decline . . . A progressive and meaningful estate tax is needed to curb the movement of a democracy toward plutocracy.”
I’d say that’s a stronger justification than we have for most of our other taxes. So if you want to get worked up about a tax, choose another one. As to the constitutionality, we didn’t even really need the Sixteenth Amendment for the estate tax. Such taxes preceded the Sixteenth Amendment and were upheld by the Supreme Court case that struck down the income tax (leading to the amendment).
Why shouldn’t the government tax whatever it wants?
You pay income tax on your rearnings, then you buy property. That property makes no money if you live on it, but you still pay some level of government property taxes.
It says in the constitution that the government has the power to levy taxes. The only arguement against NOT taking your money is being deprived of property without “due process of law”, and as long as the law lays out the tax method and it is applied fairly to everyone, that’s due process.
In France, I read once they have a “net worth” tax. You pay a percentage of your total assets every year. There was the famous Marseille bank robbery where they tunnelled in via the sewer and spent the long weekend cleaning out the all the safety deposit boxes. The police had trouble estimating just what was taken because a lot of it was assets being hidden from the taxman.
I think an estate tax, especially on the wealthy, is the most progressive tax. What did Henry Ford III ever do to earn billions? Or JFK Junior? Or today’s Getty family? At least Henry Ford original, crazy coot that he was, created a business empire that changed the face of America.
This was harder for me to figure out than I thought. While Article One clearly allows taxes on anything (except articles exported from any state), but direct taxes must be apportioned
The 16th ammendment allows " lay and collect taxes on incomes, from whatever source derived" without apportionment.
I’m not sure what the constitutional definition of “income” is, but if estate taxes aren’t defined as such, then if estate taxes while collectable, must be apportioned.
I’m sure I’m missing something
Brian
is this a woosh?
how is this different from any property tax?
What you’re missing is that the estate tax is not a “direct” tax in the constitutional sense–but a duty or excise. And that means it’s perfectly constitutional even before the Sixteenth Amendment.
The reason for this, is that the estate tax is an event tax, rather than a tax on land, incomes or persons----it is a tax on the transfer of an estate, rather than a literal tax on the property itself (it may look like a tax on property–but it’s not in a formal sense–since the tax is only imposed when property is transferred through an estate).
The best analogy is a customs duty–there, the duty is in proportion to the property you’re importing (so again, it may look like a tax on the property), but if you look closer, it’s clear it’s not a “direct” tax merely based on owning the property–but an “event” tax that is only imposed when you bring property into the country.
Duties and excises must, under the constitution, be uniform–and the estate tax is–it applies to all estates under a uniform set of rules.
This.
The estate tax is a transfer tax. The statement. . .
. . . is just silly.
There’s this thing called death that, like it or not, forces you to give up all of your worldly possessions. They have to transfer to someone. The world is full of transfer taxes. Just about any time money changes hands it gets taxed. That’s life (or in this case, death).
Would you rather that there was no estate tax and anybody that received anything from the estate had to declare it as income? That would be much more onerous. Why should anybody get a windfall without having to pay a tax? It’s no different than winning the lottery.
It’s only a small percentage of the population that is affected by inheritance taxes. Anybody that complains about them is just too lazy to do some basic estate planning. There are numerous, legal, basic ways to minimize the impact of estate taxes. It just takes a little planning. The biggest complainers are the spoiled kids of people that raised crybabies.
Let’s take this one thing at a time.
We have a federal system. Many conservatives like it that way. But that means the states don’t get the money raised by federal taxes, and vice versa. Are you really suggesting we get rid of one of those?
It’s sad that I have to actually explain this—it seems so obvious. But here goes: states raise money by some combination of sales, income, and property taxes. To suggest having more than one is “double” taxation is ignoring reality.
A state providing a given level of services needs to raise a certain amount of money. If they don’t have a sales tax, income taxes are higher. If they don’t have an income tax, sales taxes are higher. If neither, property taxes are higher. Or would it be OK from your point of view for a state to have just one, 60% income tax? You seem to prefer that to a 5% income, 5% sales, and 5% property tax.
Further, quite a few states in fact don’t have both income and sales taxes. Some states have no sales tax (AK,DE, MT, NH, OR). Some states have no income tax (AK, FL, NV, SD, TX, WY (and NH/TN do not tax income from personal services)). In any of those, you’re not even faced with the “problem” you point out.
See above
False. Income tax (in many cases, at very favorable rates) on the GAIN you make when you sell the thing. That’s not your original dollar–that’s the money you earned with it.
Already addressed by others.
Why yes, because our system would work if we only taxed a given “dollar” once and never again. How much revenue would the U.S, and the states have?
As much as they had before in year one.
Zero in year two–all those dollars have already been taxed. No more united states, or states.
This makes as much sense as getting upset about the fact that you earn income, are taxed on it, spend that money–and then it’s income to SOMEBODY ELSE!!!
I am fine with that point of view, as long as the corollary “why shouldn’t the populace do all it can to (within the framework of the law) evade payment” is fine as well.
Is there anywhere where this isn’t the rule? As far as I can tell, there always been a distinction between (quite legal) tax avoidance and (criminal) tax evasion.
Further, it seems to me that this is the rule, by definition–avoiding payment “within the framework of the law” means, by definition, avoiding payment in ways that are legally allowed. Conversely, if a particular way of evading payment is illegal, it’s not “within the framework of the law.”
While we’re on what “should” be as opposed to what “is,” there “should” be a rule that you have to understand what you are talking about before you complain about it.
I realize that this would almost shut down the Dope. And the Internet. And most of the real world.
But, hey, as long as we’re dreaming…