Zenmervolt
Elite member
- Oct 22, 2000
- 24,512
- 21
- 81
Good analogy, except that's not what people are suggesting. People are suggesting taxation at the same rate, not the same amount.
To use your body builder analogy, if the two normal people can each carry 50 pounds and the body builder 200 pounds, what should happen is that everyone carries about, say, 80% of their maximum (to prevent injuries and to prevent people from tiring too quickly). That means the body builder carries 160 pounds per load and the average people carry 40 pounds per load. The body builder is still carrying 4x as much as the other individuals, but everyone is being burdened to the same extent.
Going with your taxation analogy, no-one is suggesting that everyone pay $20,000/year. The push is to tax everyone at 18.7%. That would net $187,000 from each of the millionaires and $9,350 from each of the 47 other people. A total of $1,000,450. Everyone's burden is proportionally the same and the wealthy are still paying many more dollars in taxes than the rest of the people.
Granted, some would still argue in favor of a progressive tax, and that's a discussion for another thread. I just wanted to point out that "tax everyone equally" doesn't mean everyone pays the same dollar amount, but rather that everyone pays the same percentage.
ZV
I don't believe in taxing the estate itself. However, any entity receiving value (cash, etc) from the distribution of those assets should have that counted as income and taxed accordingly on THEIR taxes
Thump553
Lifer
- Jun 2, 2000
- 12,676
- 2,430
- 126
Very good response, only the first part is off. The federal estate tax is based on the estate size, not the number of recipients-exception being that you can leave an estate of unlimited size to your spouse without any tax. Secondly becasue of the unified credit the first $2M of the estate is exempt ($3.5M in 2009, so put Uncle Festus on life support). And, as I indicated above, it is very simple with a bit of planning to exclude substantially more assets from the tax, legally.
Genx87, you hit the nail right on the head when you said politicians focus on this tax as a class warfare talking point. You were a bit off on the number of taxable estates-I got a figure of 22,778 for 2006 from the IRS website, but this is 0.00074% of the US population that ever pays this tax. (I didn't bother to find out what percentage of federal tax revenues are estate taxes, but I bet it's a tiny fraction of 1%).
And for this people are getting their panties all in a knot? Laying awake all night wondering if lightning will hit you tomorrow makes more sense.
I'm glad that a handful of posters to this thread had the general understanding and knowledge that estate taxes are necessary to cover ""unrealized gains"" in the value of someone's net worth (real estate, stocks, retirement accounts, bonds, etc.) that have never been taxed.
I note with all the knee-jerks and flaming and obfuscation that no one actually responded to these little 'factoids'.
It's my understanding that the current 'drive' behind the repeal of estate taxes is generally being pushed by the heirs of 18 families in the United States. I'll leave the 'Googling' up to you guys (Hint: The only Paris ain't in France and she might be eating M&Ms purchased from Wally World).
The children and grand-children of these families have accumulated 'literally' 100s of billions of dollars in assets which are still open. There is no timetable on the disolution of these estates. That is, until a law is passed eliminating estate taxes and saving their families 10s of billions of dollars of taxes on stocks and real estate gains that have never been taxed.
I bet those estates will then be settled quickly.
I note with all the knee-jerks and flaming and obfuscation that no one actually responded to these little 'factoids'.
It's my understanding that the current 'drive' behind the repeal of estate taxes is generally being pushed by the heirs of 18 families in the United States. I'll leave the 'Googling' up to you guys (Hint: The only Paris ain't in France and she might be eating M&Ms purchased from Wally World).
The children and grand-children of these families have accumulated 'literally' 100s of billions of dollars in assets which are still open. There is no timetable on the disolution of these estates. That is, until a law is passed eliminating estate taxes and saving their families 10s of billions of dollars of taxes on stocks and real estate gains that have never been taxed.
I bet those estates will then be settled quickly.
I generally don't support the government taking half of anyones revenue regardless of how they obtained it (legally).
It doesn't really matter though. With proper planning the vast majority of people avoid the death tax.
It doesn't really matter though. With proper planning the vast majority of people avoid the death tax.
Deeko
Lifer
- Jun 16, 2000
- 30,215
- 11
- 81
Actually my opinion is largely formed by the NFL. One of the teams - I believe the Bills - has been owned by a family for a long time now. When the current owner dies, his son is going to have to sell the team because he doesn't have the money to afford the tax on inheriting it. You don't see a problem with that? I do.
The estate tax is double taxation to promote redistribution of wealth. It's one thing to tax the appreciation of value of an estate - that is 'income' that was not taxed yet, but a blanket estate tax is BS.
The first question I always ask myself when considering whether or not a certain tax is "fair" is how the government will replace the funding it would be losing if that tax were to magically vanish or be reduced. Usually, the end result when such a thing happens is not what I consider to be in our country's best interest. Therefore, I have come to the conclusion that eliminating or reducing taxes should be the last step. The first step should be to come up with a solution that solves whatever issue(s) the tax dollars are being used to solve. That solution needs to be just as effective if not more effective at solving the problem and it needs to be in our country's best interest rather than an individual's best interest. If that solution is intelligent enough then the result could very well cost less money. The fruits of our labor could then reasonably be the reduction of taxes. Hardly anyone wants to take that general approach though or they just want to pretend that the problems don't exist because they don't care despite how it will negatively impact the country in the long run or even the short run. Everything that negatively effects our country as a whole takes a toll on all of its citizens regardless of income although the amount that it takes a toll on people can vary and it is most certainly on a case by case basis. Too many people tend to want many things, but they don't want to pay for them. They would rather have someone else pay for them instead like China.
jonks
Lifer
- Feb 7, 2005
- 13,918
- 20
- 81
No, that's not basically how it works. Before you get all worked up about it and start a thread with a paragraph riddled with factual inaccuracies, maybe read up a little bit on the issue first?
http://en.wikipedia.org/wiki/E...x_in_the_United_States
http://www.factcheck.org/article328.html
Feel free to object to the tax, but do so from an informed position.
Fern
Elite Member
- Sep 30, 2003
- 26,907
- 173
- 106
Some good info here, also some misconceptions.
I really don't see a need to address some of the more detailed aspects of the estate tax, no one really has a question that pertaines to them, nor will I address whether or not it's fair (that's really in the eye of the beholder).
I think the first thing to understand if the theory behind the etsate tax; it's purpose.
Unlike Eurpoean countries, the USA wanted those who were productice to enjoy the fruits of their labors during their life. That generally mans a lower income tax, a high income tax (Europe once had a rate in excess of 100%) prevents/slows productive people from "moving up". The very wealthy did not have this problem as they can simply hold their assets and often avoid income tax. The Euro model generally meant those who were rich stayed rich, and those who were not couldn't manage to get rich no matter how productive they were. The USA did not find this system desirable. We wish to encourage/motivate people to be productive, and do so by letting them keep the rewards of that productivity.
So, we balanced out a low income tax with an estate tax. And yes, a part of that is to prevent new *monarchies* from arising. There are plenty of easy ways to leave your children/grandchildren decent ammounts of money to help them get a good start in life. But we see no need to be able to leave them a bazllion dollars tax-free.
As a tax professional and conservative, I am in favor of the estate tax. In fact I think it needs reform to eliminate the current loopholes the very wealthy enjoy.
Fern
I really don't see a need to address some of the more detailed aspects of the estate tax, no one really has a question that pertaines to them, nor will I address whether or not it's fair (that's really in the eye of the beholder).
I think the first thing to understand if the theory behind the etsate tax; it's purpose.
Unlike Eurpoean countries, the USA wanted those who were productice to enjoy the fruits of their labors during their life. That generally mans a lower income tax, a high income tax (Europe once had a rate in excess of 100%) prevents/slows productive people from "moving up". The very wealthy did not have this problem as they can simply hold their assets and often avoid income tax. The Euro model generally meant those who were rich stayed rich, and those who were not couldn't manage to get rich no matter how productive they were. The USA did not find this system desirable. We wish to encourage/motivate people to be productive, and do so by letting them keep the rewards of that productivity.
So, we balanced out a low income tax with an estate tax. And yes, a part of that is to prevent new *monarchies* from arising. There are plenty of easy ways to leave your children/grandchildren decent ammounts of money to help them get a good start in life. But we see no need to be able to leave them a bazllion dollars tax-free.
As a tax professional and conservative, I am in favor of the estate tax. In fact I think it needs reform to eliminate the current loopholes the very wealthy enjoy.
Fern
It's not double taxation. In your specific case it seems to me the Wilson family is using the IRS as a convenient scapegoat to 'take the money and run'.
Wilson paid a $25,000 franchise fee for the right to establish the Buffalo Bills in 1959.
Last year, Forbes magazine estimated the Bills? franchise value at $627 million.
The accelerated basis (value) of that asset has never been taxed.
Let's say the estate taxes on that gain are $250 million. The Wilson family could easily borrow $100 or so million dollars on that asset to pay the taxes and:
1) Sell a 25% interest in the franchise; or
2) Establish community ownership by selling stock with a commitment to remain in the area for fifty years.
Los Angeles or Toronto could pay $800 million to $1 billion for the Bills in an open auction. I understand how difficult it is for the community but your argument is with the Wilson Family, not the IRS.
They own an asset of exceptional value, especially in an open market. They can work to keep the franchise primarily based in western New York by any number of creative ways, pay the taxes and earn quite a decent living from its existence.
OR they can sell out, pay the estate and capital gains taxes, pocket $640 million and leave the fans 'high and dry'.
It's a tough situation - but you can't blame the IRS for that ...
Vic
Elite Member
- Jun 12, 2001
- 50,415
- 14,305
- 136
'Fair' is a null term. An opinion at best. Life isn't fair, and I'm not interested in fairness.
However, it could be easily argued that multi-generational wealth is an enemy of capitalism, and as such it should at the very least be taxed at some appropriate rate, preferably IMO at a similar rate as other forms of income are taxed. And yes, inheritance IS a form of income, just like capital gains are too. I, for one, would much rather see these kinds of passive incomes taxed than the heavy tax burdens we place upon income derived from labor.
However, it could be easily argued that multi-generational wealth is an enemy of capitalism, and as such it should at the very least be taxed at some appropriate rate, preferably IMO at a similar rate as other forms of income are taxed. And yes, inheritance IS a form of income, just like capital gains are too. I, for one, would much rather see these kinds of passive incomes taxed than the heavy tax burdens we place upon income derived from labor.
At one of the earlier threads, I believe I was the only that thought 100% death tax to be an excellent idea.
Why? Simply because I think a meritocracy is a very good idea, and that a two-way meritocracy to be an even better one. A society that gives everyone opportunities to develop and fulfill their potential and get a place on the socio-economic ladder that is consistent with their contributions.
In addition to making our society fairer and more meritocratic, removing inheritances would also means you would be taxed at a far smaller rate while you're alive and might even encourage parents to raise better children.
Why? Simply because I think a meritocracy is a very good idea, and that a two-way meritocracy to be an even better one. A society that gives everyone opportunities to develop and fulfill their potential and get a place on the socio-economic ladder that is consistent with their contributions.
In addition to making our society fairer and more meritocratic, removing inheritances would also means you would be taxed at a far smaller rate while you're alive and might even encourage parents to raise better children.
HannibalX
Diamond Member
- May 12, 2000
- 9,361
- 2
- 0
Let's fix the tax problem (in a nut shell)!
1.) Eliminate ALL current taxes (City, County, State and Federal).
How to fund the Federal Government:
2.) Set a Federal 10% flat tax on all imported goods. Any goods coming into the country will be taxed. No exceptions.
3.) Set a Federal 2% flat tax on all exported goods. Any goods exported out of the country will be taxed. No exceptions.
4.) Set a Federal 2% sales tax. Any and all purchases for goods or payments for services rendered will be taxed. No exceptions.
How to fund the State Governments:
5.) Set a State 8% flat tax on income for each individual person making over $10,000/year. Everyone pays on an individual level (no or household married benefits). No exceptions.
6.) Set a State 4% flat tax on income for each individual corporation doing business in that state regardless of income level. Every corporation pays. No exceptions.
How to fund the County & City Governments:
7.) Set an annual County property tax on ALL private property at a rate of $100 per $25,000 in value.
8.) Set an annual City property tax on ALL private property at a rate of $250 per $25,000 in value.
1.) Eliminate ALL current taxes (City, County, State and Federal).
How to fund the Federal Government:
2.) Set a Federal 10% flat tax on all imported goods. Any goods coming into the country will be taxed. No exceptions.
3.) Set a Federal 2% flat tax on all exported goods. Any goods exported out of the country will be taxed. No exceptions.
4.) Set a Federal 2% sales tax. Any and all purchases for goods or payments for services rendered will be taxed. No exceptions.
How to fund the State Governments:
5.) Set a State 8% flat tax on income for each individual person making over $10,000/year. Everyone pays on an individual level (no or household married benefits). No exceptions.
6.) Set a State 4% flat tax on income for each individual corporation doing business in that state regardless of income level. Every corporation pays. No exceptions.
How to fund the County & City Governments:
7.) Set an annual County property tax on ALL private property at a rate of $100 per $25,000 in value.
8.) Set an annual City property tax on ALL private property at a rate of $250 per $25,000 in value.
jonks
Lifer
- Feb 7, 2005
- 13,918
- 20
- 81
So right now around 1% of estates are subject estate tax, and the portion they pay ranges from a few percent to about 50%. You propose that 100% of estates are taxed at 100%? Who'd bother working any harder than they have to to live comfortably? Your plan is terrific if you wanted to destroy all innovation and motivation.
Lots of good info in this thread.
How this continues to be a wedge issue with people is beyond me.
How this continues to be a wedge issue with people is beyond me.
Somehow I don't think you've ever done anything innovative or even know such people. Did you know most non-megalomaniac people do things for reasons other than to try and build dynasties that last 1000 years?
jonks
Lifer
- Feb 7, 2005
- 13,918
- 20
- 81
You mean like work their way up from a low-class beginning and become successful enough to be secure in the knowledge that their children won't have to suffer financially? Yeah, I know a lot of people who have done that, and many more who would like to have the chance to do that. Divesting them of all of the assets they earned over a lifetime doesn't afford them such opportunity, forget about dynasties.
You also realize the effect this would have on debt? If people knew their estate would not be inherited, they could take out massive mortgages late in their lives, run up credit card and other personal debt, and it would never cause the person to worry about screwing their heirs out of an estate, because there'd be no estate to screw them out of anyway.
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