Clinton's new 'tax the rich plan'

[Brainonska511]

Trusts don't exempt an estate from the estate tax.

I'm personally going through an estate tax return at the moment. It pisses me off to no end that we have to liquidate assets and investments to pay the government for income/investments they already taxed.

As previously stated in this thread, there are times where an investment hasn't been taxed during a person's lifetime.

 

[JulesMaximus]

As previously stated in this thread, there are times where an investment hasn't been taxed during a person's lifetime.

And Clinton's proposal doesn't solve that. It just taxes estates more.

 

[fskimospy]

Trusts don't exempt an estate from the estate tax.

I'm personally going through an estate tax return at the moment. It pisses me off to no end that we have to liquidate assets and investments to pay the government for income/investments they already taxed.

Do you get mad when you pay sales taxes? That's money that's already been taxed too. All money has been previously taxed, in fact.

Generally the government taxes money when it changes hands. The money in this case is going from (presumably) the parents' hands to their children. Why should that transfer of money have a special exemption?

 

[glenn1]

Do you get mad when you pay sales taxes? That's money that's already been taxed too. All money has been previously taxed, in fact.

Generally the government taxes money when it changes hands. The money in this case is going from (presumably) the parents' hands to their children. Why should that transfer of money have a special exemption?

If you're a resident of one of the states with no sales tax then I bet they do get mad. IMHO states should pick either a sales tax OR income tax but not both. I'd actually argue property taxes should go into the "pick 1" choice as well especially considering the distortions that causes in school funding. Of course you could still choose like you to live in a state that fvcks you over on all 3 categories of taxes, but that's evidently what you enjoy.

 

[JulesMaximus]

Do you get mad when you pay sales taxes? That's money that's already been taxed too. All money has been previously taxed, in fact.

Generally the government taxes money when it changes hands. The money in this case is going from (presumably) the parents' hands to their children. Why should that transfer of money have a special exemption?

It's not the same thing. If I don't want to pay the tax, I don't buy the item.

We are selling 2 houses and emptying bank accounts to pay this tax. We aren't rich and what we will be left with is some investment property and her 401k.

If you're a resident of one of the states with no sales tax then I bet they do get mad. IMHO states should pick either a sales tax OR income tax but not both. I'd actually argue property taxes should go into the "pick 1" choice as well especially considering the distortions that causes in school funding. Of course you could still choose like you to live in a state that fvcks you over on all 3 categories of taxes, but that's evidently what you enjoy.

We have all three in California. We don't have an inheritance tax thankfully though. Only the Federal government taxes estates.

 

[fskimospy]

It's not the same thing. If I don't want to pay the tax, I don't buy the item.

Right, and if you don't want to pay the tax don't accept the free money. Again, this is a monetary transfer. I don't see any reason why it should have a special exemption.

We are selling 2 houses and emptying bank accounts to pay this tax. We aren't rich and what we will be left with is some investment property and her 401k.

Estate tax in the US exempts the first ~$5.4 million in inheritance from taxation and if you're facing enough taxes to have to liquidate considerable assets that means you're inheriting considerably more than that unless there's something else besides the estate tax in play here. Having more than $5 million in investments and assets puts you above the 98th percentile for household wealth in the United States. That's rich.

 

[Brainonska511]

It's not the same thing. If I don't want to pay the tax, I don't buy the item.

We are selling 2 houses and emptying bank accounts to pay this tax. We aren't rich and what we will be left with is some investment property and her 401k.



We have all three in California. We don't have an inheritance tax thankfully though. Only the Federal government taxes estates.

If you're dealing with the Federal estate tax, you have an estate worth over $5.4 million. And you only pay taxes on what exceeds the exemption. I'm not really seeing the problem here.

 

[fskimospy]

If you're a resident of one of the states with no sales tax then I bet they do get mad. IMHO states should pick either a sales tax OR income tax but not both. I'd actually argue property taxes should go into the "pick 1" choice as well especially considering the distortions that causes in school funding. Of course you could still choose like you to live in a state that fvcks you over on all 3 categories of taxes, but that's evidently what you enjoy.

I do enjoy living in New York, thank you! It's a pretty great place, which is why there's such overwhelming demand to live here as well as being one of the top tourist destinations in the country (and even the world).

Always nice to see you concerned about me living in a place I enjoy. Thanks for the kindness, friend.

 

[glenn1]

Right, and if you don't want to pay the tax don't accept the free money. Again, this is a monetary transfer. I don't see any reason why it should have a special exemption.

Because otherwise you don't actually own property, you just have a End User License Agreement for it from the government that expires the moment you die. At which point the government repossesses it unless someone else pays that license fee again.

 

[ElFenix]

what was the complaint that people had about the estate tax a decade ago? that the rooneys might have to sell the steelers to pay it? if the rooneys had to sell the steelers to pay the estate tax then they had piss poor estate planning (or didn't bother with it at all) and probably should have to sell the steelers because they're obviously morons.

Because otherwise you don't actually own property, you just have a End User License Agreement for it from the government that expires the moment you die. At which point the government repossesses it unless someone else pays that license fee again.

it's income to someone else, maybe that person should just pay income taxes on it instead.

 

[fskimospy]

Because otherwise you don't actually own property, you just have a End User License Agreement for it from the government that expires the moment you die. At which point the government repossesses it unless someone else pays that license fee again.

Of course you have property. When you initiate a transaction with that property to another person that transaction is taxed like any other monetary transfer.

Not sure what's so confusing about this.

 

[JulesMaximus]

Right, and if you don't want to pay the tax don't accept the free money. Again, this is a monetary transfer. I don't see any reason why it should have a special exemption.



Estate tax in the US exempts the first ~$5.4 million in inheritance from taxation and if you're facing enough taxes to have to liquidate considerable assets that means you're inheriting considerably more than that unless there's something else besides the estate tax in play here. Having more than $5 million in investments and assets puts you above the 98th percentile for household wealth in the United States. That's rich.

Like I said, all that value is tied up in investment property... which we want to hang onto as it will provide income for us and the other sibling in the trust. It's not quit your jobs and buy Ferraris and mansions on the beach type money.

 

[ElFenix]

They make loans for that sort of thing.

 

[werepossum]

Simply the frickin tax code and get rid of loopholes. Done.

Bingo. More and more I like the FairTax concept, where there are no exemptions except head count. I doubt we could ever sell a national sales tax though, except as another tax. And ironically, although the FairTax affects only what you spend, not what you earn, if memory serves it does not tax capital gains which ARE a sales transaction. (No gains unless you get a dividend or sell something.)

I think he's saying that it originally had to be taxed as income even if it was invested and created a capital gain since.

But at its basest level, isn't that true of everyone? If I work a retail job and am paid in wages, my employer likely pays me with money spent by other people after they pay their taxes. Why should the money's taxed status reset if I buy a tractor but not if I buy a stock?

It's weird to me that someone can invest $100k in stocks and have the profits be taxed at 15%, but invest $100k into a CNC milling machine and all the money you earn from that investment is taxed at much higher rates. Yet the guy with the CNC milling machine is actually creating and/or preserving actual wealth, whereas the stock sales might all be swapping stocks between individuals and/or funds (i.e. not funding any new companies or growth.)

Indeed. Redistribution only hurts those in poverty, it doesn't help. If they can't provide for themselves, what will happen when the gravy train runs out? Such welfare programs are no longer a helping hand, they're a crutch.

Having been on crutches, I can attest that sometimes they are a necessary step toward getting back on one's feet.

 

[werepossum]

Because otherwise you don't actually own property, you just have a End User License Agreement for it from the government that expires the moment you die. At which point the government repossesses it unless someone else pays that license fee again.

We've pretty much moved to a freehold system. You have a deed that says you own the land, but that's only valid as long as you keep paying various levels of government. When you die, your heirs can inherit, but they have to pay the local aristocrat to inherit. And if you can't continue your payments, out you go. Other than that, you totally own it.

 

[shady28]

We've pretty much moved to a freehold system. You have a deed that says you own the land, but that's only valid as long as you keep paying various levels of government. When you die, your heirs can inherit, but they have to pay the local aristocrat to inherit. And if you can't continue your payments, out you go. Other than that, you totally own it.

Yep, land ownership has its roots in Feudalism.

 

[zinfamous]

Because otherwise you don't actually own property, you just have a End User License Agreement for it from the government that expires the moment you die. At which point the government repossesses it unless someone else pays that license fee again.

No one actually owns property. Humans have a pathetically short life span.

Dirt and rocks laugh at our notion of what we think we own.

 

[JulesMaximus]

They make loans for that sort of thing.

Sorry your Mom died kid but we're gonna take two of her homes, her car and all the cash she had in her bank accounts.

 

[fskimospy]

Sorry your Mom died kid but we're gonna take two of her homes, her car and all the cash she had in her bank accounts.

...leaving you with only more than five million dollars.

Even five million is an astronomical sum of money, approximately triple what the average person earns over the course of their entire life. This is the sort of tax that only affects the extraordinarily wealthy and it's not unreasonable. In all honesty I would remove the exemption entirely.

I'm sorry that your mother passed away, by the way.

 

[Fern]

-snip-
It's weird to me that someone can invest $100k in stocks and have the profits be taxed at 15%, but invest $100k into a CNC milling machine and all the money you earn from that investment is taxed at much higher rates.

If you held the $100k CNC machine as an investment (crate it up and store it until it was worth more) it would be taxed just like the stock.

But most people don't do that. They use the CNC machine in a "trade or business". (That phrase in quotation marks is key.) This means that, unlike with stocks, they can write the $100k off against ordinary income (depreciation or section 179 expense).

In reality all you're doing when a gain happens on your (used) CNC machine is recapturing the excess write-off/deduction. E.g., if you purchased it for $100k and used it for 3 years expensing away $30k as depreciation and sold it for $70k then you have no gain or loss. The amount you claimed as depreciation expense was accurate. Now you sell it for $80k you obviously wrote off $10k too much and that will go back into income. You sell it for $50k you didn't write off enough and get an additional deductible loss of $20k.

Much of what people complain about in taxation actually makes good sense if you know enough to fully understand all the ramifications.

Fern

 

[elitejp]

...leaving you with only more than five million dollars.

Even five million is an astronomical sum of money, approximately triple what the average person earns over the course of their entire life. This is the sort of tax that only affects the extraordinarily wealthy and it's not unreasonable. In all honesty I would remove the exemption entirely.

I'm sorry that your mother passed away, by the way.

Its easy to pat the govt on the back when they are taking other peoples money but don't they dare touch my money!
If my mom or dad died and could leave me an inheritance then I say they were financially responsible. What they earned was taxed already no need to tax it again. I don't see why the govt feels it necessary to tax it again. People will most likely spend a good majority of that money in their lifetime anyways which will put it into circulation to be taxed again.

 

[IronWing]

Its easy to pat the govt on the back when they are taking other peoples money but don't they dare touch my money!
If my mom or dad died and could leave me an inheritance then I say they were financially responsible. What they earned was taxed already no need to tax it again. I don't see why the govt feels it necessary to tax it again. People will most likely spend a good majority of that money in their lifetime anyways which will put it into circulation to be taxed again.

Using that argument, I don't see why my plumber should have to pay income tax when the money I paid him was already taxed when I earned it.

 

[ivwshane]

Its easy to pat the govt on the back when they are taking other peoples money but don't they dare touch my money!
If my mom or dad died and could leave me an inheritance then I say they were financially responsible. What they earned was taxed already no need to tax it again. I don't see why the govt feels it necessary to tax it again. People will most likely spend a good majority of that money in their lifetime anyways which will put it into circulation to be taxed again.

It was previously explained already. Do you have a hard time reading a whole thread and following along?

Money is taxed when it exchanges hands including gifts over a certain amount per year, how is this any different? It's not other than there being a higher threshold before a tax is assessed on this exchange.

 

[fskimospy]

Its easy to pat the govt on the back when they are taking other peoples money but don't they dare touch my money!
If my mom or dad died and could leave me an inheritance then I say they were financially responsible. What they earned was taxed already no need to tax it again. I don't see why the govt feels it necessary to tax it again. People will most likely spend a good majority of that money in their lifetime anyways which will put it into circulation to be taxed again.

So can you explain why if they gave you that money while they were alive it would be (mostly) taxed but now that they are dead it's special and shouldn't be?

 

[elitejp]

I don't think parents giving money to children should be taxed at all. Now what the govt does or doesn't do is something totally different and trying to explain why they do something can get even more confusing. But most people will support taxing the rich because it doesn't effect them personally. The govt knows this and that's why they do it. They want your votes.