The GOP's blatant condencending views of the American Public

[Genx87]

So the family liquidates the business to pay the tax. What just happened? Well, the government took its last pound of flesh but more importantly it killed an entity that would have generated tax revenue for years to come. So who won? Well, nobody. The family loses its business/farm/whatever and the government loses a revenue stream in the quest for a one time pay off.

To add to this under this circumstance there are jobs lost as well putting people out on the street looking for a new one.

Thus less income taxes collected as well and possibly short term unemployment spent.

 

[outriding]

Originally posted by: Genx87

Originally posted by: outriding

Originally posted by: Genx87

Originally posted by: outriding

Originally posted by: Red Dawn

So they should have to pay tax on something that already was taxed because they were useless?

Useless in the sense they are not working thus not paying taxes. If they are not paying taxes how are they paying for the roads they travel on and etc?

How about those who are not rich but inherit their parents modest home. Should they have to pay tax on it or even sell it so they can afford to pay the taxes on it?

Yep everybody has to pay tax, but maybe say something like under 100k tax free etc..

Roads are paid with through gas taxes
Schools are paid for by property taxes
And I am sure the useless kids would spend a lot of money at the mall so they get nailed with sales tax.
Lets not forget they probably like big cars so they get nailed with a luxury tax.
Oh, and I am sure they have cell phones and high speed internet that gets nailed with useage taxes.
And of course there is most likely some kind of income coming from interest or appreciation so they pay capital gains taxes.

Good old United Tax of America for you.

Fantastic you have pointed things out at the State level only!

How about the military?

Who is going to pay for that?

Capital gains goes to the state?
Color me surprised.

How often do you pay Capital gains taxes? Not often

And there are federal gas taxes.
There are also federal fee's on cell phone and internet access.

I pay about $400 per month just for federal. I pay less than $5 for cell and internet and other misc federal taxes

Who is going to pay for the military? Whoever pays the federal govt through taxes.
Which appears to be the useless rich as well in your example.

So in your world $5 + captial gains taxes that someone might pay on once in their lifetime (and note there are times when you are expemt from capitol gains taxes on a house that you sell) > $400 per month

 

[theeedude]

Originally posted by: Whoozyerdaddy

Originally posted by: senseamp
The outrageous thing is that these people are complaining about having to pay taxes on inheritance income in excess of 3.5Million dollars. They are getting 3.5M tax free doing absolutely nothing, while a person working 3 jobs making 35K has to pay taxes, and they have the nerve to complain about paying taxes on the remainder in excess of 3.5M. And Republicans top priority is making sure they don't even have to pay taxes on that.

Class warfare FTL.

I agree. The inherited class should pay the same tax on their income as people who earn their income. They should stop this class warfare on workers.

And what person works three jobs to make $35k?

For some reason people seem to think that this money appears out of the blue like a winning lottery ticket. It doesn't. And often it's not liquid cash that is being taxed. It's an ownership stake in a business or some other non-liquid asset that gets taxed requiring the family of the deceased to sell the business, property or whatever to pay the tax.

So what? If someone gives me a car or a house or a stake in a business, I may have to sell it to pay taxes for it. Why shouldn't they have to? Class warfare on the middle class?

If Bill Gates died and left you his fortune do you really think you're going to have $40bil cash in your checking acct? Nope. You'll have ownership in a few silver mines, lots of stock in MS and other assets. In terms of liquid cash, (he's certainly not hurting in this dept) his bank acct is a ghost of his real worth.

So What? If bill gates gives me $40B worth of assets, I may have to sell some of them off to pay taxes, but I'll be left with at least $20B in assets at the end. These are the poor folks GOP wants to help. Poor souls get fewer billions than they would otherwise.

Scale that down to more realistic proportions. It doesn't take much for a small, family business to acquire more than $3.5 million in value. What then? In situations like that you have a lot of net worth but not necessarily the liquidity to pay the death tax.

So the family liquidates the business to pay the tax. What just happened? Well, the government took its last pound of flesh but more importantly it killed an entity that would have generated tax revenue for years to come. So who won? Well, nobody. The family loses its business/farm/whatever and the government loses a revenue stream in the quest for a one time pay off.

First of all, you can take out a loan to pay the taxes, or you can sell stake in the entity. Either way, you don't have to kill off the entity, and either way you end up with after tax increase to your net worth. Not only that, 3.5M of that income is tax free. And you are complaining about having to pay taxes on remainder, while everyone else has to pay taxes on all their income, outrageous.

 

[theeedude]

Originally posted by: Genx87

So the family liquidates the business to pay the tax. What just happened? Well, the government took its last pound of flesh but more importantly it killed an entity that would have generated tax revenue for years to come. So who won? Well, nobody. The family loses its business/farm/whatever and the government loses a revenue stream in the quest for a one time pay off.

To add to this under this circumstance there are jobs lost as well putting people out on the street looking for a new one.

Thus less income taxes collected as well and possibly short term unemployment spent.

Complete bull. If you suck at business so much that you can't make enough money at it over a lifetime to pay estate tax, then find another business. We are talking about a once every few decade taxable event. Just a cost of doing business just like any other tax.

 

[Genx87]

How often do you pay Capital gains taxes? Not often

Whenever you realize an income on an asset, so once a year. Or do you think these useless rich will live off monpoly money?

I pay about $400 per month just for federal. I pay less than $5 for cell and internet and other misc federal taxes

Sounds like that progressive tax the left pushes on you is working out perfect.

So in your world $5 + captial gains taxes that someone might pay on once in their lifetime (and note there are times when you are expemt from capitol gains taxes on a house that you sell) > $400 per month

Capital gains is taxed at 20% of realized gain on a long term asset when you sell that asset. So if somebody who is rich realizes a 200,000 dollar gain in appreciation, when they cash it in to buy that new yacht or sports car they are paying 40K in taxes or about 3300 a month, which appears to be about 8x the amount of federal tax dollars you are contributing from my vantage point.

 

[Todd33]

Originally posted by: Genx87
So do you disagree with the assesment of the house report or the cbo report?

And why?

And even if he did say that in 1974 do you think anything has changed since the raising of the cap that would drastically change the opinion?

You agree with it, why? Because it tells you what you want to hear, it was written by a repug for the purpose of changing policy through public opinion. It is mostly conjecture and missing evidence...

http://ataxingmatter.blogs.com/tax/2006/05/the_joint_econo.html

Your attempt to throw a massive documents at people with official sounding titles is pretty lame.

 

[Genx87]

Originally posted by: senseamp

Originally posted by: Genx87

So the family liquidates the business to pay the tax. What just happened? Well, the government took its last pound of flesh but more importantly it killed an entity that would have generated tax revenue for years to come. So who won? Well, nobody. The family loses its business/farm/whatever and the government loses a revenue stream in the quest for a one time pay off.

To add to this under this circumstance there are jobs lost as well putting people out on the street looking for a new one.

Thus less income taxes collected as well and possibly short term unemployment spent.

Complete bull. If you suck at business so much that you can't make enough money at it over a lifetime to pay estate tax, then find another business. We are talking about a once every few decade taxable event. Just a cost of doing business just like any other tax.

This is a laughable statement. Do you realize the costs of doing business at all? I was looking at a gas station that generated 3.8 million in revenues each year from its gas + attached grocery store. After paying taxes, salaries of the employees, benefits, and the cost of goods the owner walked away with about 90K in take home pay.

If a business like this was hit with a few hundred thousand dollar tax bill from an inheritance tax you tell me on that amount of cash how it would pay that bill.

A business's wealth isnt sole determined by the amount of money in the bank. Its assets, client lists, revenues generated can create its value or wealth much higher than the amount of liquid cash on hand. This is where the situation gets dicey, when the business is forced to deal with a hefty tax bill without enough liquid cash to pay it.

 

[outriding]

Originally posted by: Genx87

Capital gains is taxed at 20% of realized gain on a long term asset when you sell that asset. So if somebody who is rich realizes a 200,000 dollar gain in appreciation, when they cash it in to buy that new yacht or sports car they are paying 40K in taxes or about 3300 a month, which appears to be about 8x the amount of federal tax dollars you are contributing from my vantage point.

Nope you are wrong.

There are alot of long term assets which are exempt from capitol gains taxes.

You really need to do some reading

 

[Genx87]

Originally posted by: outriding

Originally posted by: Genx87

Capital gains is taxed at 20% of realized gain on a long term asset when you sell that asset. So if somebody who is rich realizes a 200,000 dollar gain in appreciation, when they cash it in to buy that new yacht or sports car they are paying 40K in taxes or about 3300 a month, which appears to be about 8x the amount of federal tax dollars you are contributing from my vantage point.

Nope you are wrong.

There are alot of long term assets which are exempt from capitol gains taxes.

You really need to do some reading

/sigh

I figured when we were talking about assets we werent talking about selling ones own home to buy a yacht or sports car.

Are you going to be this silly through the rest of the thread?

 

[theeedude]

Originally posted by: Genx87

Originally posted by: senseamp

Originally posted by: Genx87

So the family liquidates the business to pay the tax. What just happened? Well, the government took its last pound of flesh but more importantly it killed an entity that would have generated tax revenue for years to come. So who won? Well, nobody. The family loses its business/farm/whatever and the government loses a revenue stream in the quest for a one time pay off.

To add to this under this circumstance there are jobs lost as well putting people out on the street looking for a new one.

Thus less income taxes collected as well and possibly short term unemployment spent.

Complete bull. If you suck at business so much that you can't make enough money at it over a lifetime to pay estate tax, then find another business. We are talking about a once every few decade taxable event. Just a cost of doing business just like any other tax.

This is a laughable statement. Do you realize the costs of doing business at all? I was looking at a gas station that generated 3.8 million in revenues each year from its gas + attached grocery store. After paying taxes, salaries of the employees, benefits, and the cost of goods the owner walked away with about 90K in take home pay.

If a business like this was hit with a few hundred thousand dollar tax bill from an inheritance tax you tell me on that amount of cash how it would pay that bill.

A business's wealth isnt sole determined by the amount of money in the bank. Its assets, client lists, revenues generated can create its value or wealth much higher than the amount of liquid cash on hand. This is where the situation gets dicey, when the business is forced to deal with a hefty tax bill without enough liquid cash to pay it.

First of all, how much is that gas station worth if it's only generating 90K income for the owner? If it's worth more than $3.5M, why doesn't he just put that money in bonds and CDs and make $175K a year off the 5% interest? If a business does not return more on assets than the prevailing interest rate, it's not economically viable. Most of these gas stations that make 90K income, the "owner" doesn't really own it, the bank does, so he is not going to be passing it on to anyone, so it's not applicable here.

 

[dullard]

Originally posted by: Genx87
I do like somebody's post about people having 2.5 million in assets and "only" a 500K tax bill. Where the hell is somebody going to come up with a half million dollars in cash for a tax bill as ridiculous as that?

I'm confused here. Someone gives you $2.5M dollars and now suddenly you can't come up with a half million dollars in cash? Hmm, maybe from that $2.5M?

Yes, you can sell part of your farm. Yes, you can sell an inherited house. Yes, you can sell a share of a business. Yes, you can sell stocks or bonds. You can come up with the money.

If you don't want to sell the asset, and if you didn't inherit enough cash, then borrow against your asset. If the asset isn't good enough to return the interest, then why do you want to hold onto that asset?

And that example is pretty awful to begin with. If you inherit $2.5M now, your tax is actually ($2.5M - $2.0M) * 46% = $230K. That example exaggerates the tax by more than double.

 

[theeedude]

Originally posted by: dullard

Originally posted by: Genx87
I do like somebody's post about people having 2.5 million in assets and "only" a 500K tax bill. Where the hell is somebody going to come up with a half million dollars in cash for a tax bill as ridiculous as that?

I'm confused here. Someone gives you $2.5M dollars and now suddenly you can't come up with a half million dollars in cash? Hmm, maybe from that $2.5M?

Yes, you can sell part of your farm. Yes, you can sell a share of a business. Yes, you can sell stocks or bonds. You can come up with the money.

If you don't want to sell the asset, and if you didn't inherit enough cash, then borrow against your asset. If the asset isn't good enough to return the interest, then why do you want to hold onto that asset?

And that example is pretty awful to begin with. If you inherit $2.5M now, your tax is actually ($2.5M - $2.0M) * 46% = $230K. That example exaggerates the tax by more than double.

Exactly. You are getting $2.5M tax free in exchange for taking out $230K mortgage to pay off taxes. Everyone else has to take out a $2.5M mortgage and pay for it with aftertax earnings to get the same property.

 

[Genx87]

Originally posted by: dullard

Originally posted by: Genx87
I do like somebody's post about people having 2.5 million in assets and "only" a 500K tax bill. Where the hell is somebody going to come up with a half million dollars in cash for a tax bill as ridiculous as that?

I'm confused here. Someone gives you $2.5M dollars and now suddenly you can't come up with a half million dollars in cash? Hmm, maybe from that $2.5M?

Yes, you can sell part of your farm. Yes, you can sell an inherited house. Yes, you can sell a share of a business. Yes, you can sell stocks or bonds. You can come up with the money.

If you don't want to sell the asset, and if you didn't inherit enough cash, then borrow against your asset. If the asset isn't good enough to return the interest, then why do you want to hold onto that asset?

And that example is pretty awful to begin with. If you inherit $2.5M now, your tax is actually ($2.5M - $2.0M) * 46% = $230K. That example exaggerates the tax by more than double.

Someone gives me 2.5 million in assets, assets that may or may not be easily convertible to cash. When uncle sam comes a calling, you think it is as easy as writing out a check for 500K?

btw it wasnt my example.

First of all, how much is that gas station worth if it's only generating 90K income for the owner? If it's worth more than $3.5M, why doesn't he just put that money in bonds and CDs and make $175K a year off the 5% interest? If a business does not return more on assets than the prevailing interest rate, it's not economically viable. Most of these gas stations that make 90K income, the "owner" doesn't really own it, the bank does, so he is not going to be passing it on to anyone, so it's not applicable here.

It is an example, there is no need to argue the exact figures. There are business's out there that run on these types of margins and they are valuated more than this guys business. The point which you obviously cant grasp is when the business is hit with a large tax bill it is unable to meet the demands of that bill and must liquidate part of the business or the whole business to make this bill.

 

[theeedude]

Originally posted by: Genx87

Originally posted by: dullard

Originally posted by: Genx87
I do like somebody's post about people having 2.5 million in assets and "only" a 500K tax bill. Where the hell is somebody going to come up with a half million dollars in cash for a tax bill as ridiculous as that?

I'm confused here. Someone gives you $2.5M dollars and now suddenly you can't come up with a half million dollars in cash? Hmm, maybe from that $2.5M?

Yes, you can sell part of your farm. Yes, you can sell an inherited house. Yes, you can sell a share of a business. Yes, you can sell stocks or bonds. You can come up with the money.

If you don't want to sell the asset, and if you didn't inherit enough cash, then borrow against your asset. If the asset isn't good enough to return the interest, then why do you want to hold onto that asset?

And that example is pretty awful to begin with. If you inherit $2.5M now, your tax is actually ($2.5M - $2.0M) * 46% = $230K. That example exaggerates the tax by more than double.

Someone gives me 2.5 million in assets, assets that may or may not be easily convertible to cash. When uncle sam comes a calling, you think it is as easy as writing out a check for 500K?

btw it wasnt my example.

First of all, how much is that gas station worth if it's only generating 90K income for the owner? If it's worth more than $3.5M, why doesn't he just put that money in bonds and CDs and make $175K a year off the 5% interest? If a business does not return more on assets than the prevailing interest rate, it's not economically viable. Most of these gas stations that make 90K income, the "owner" doesn't really own it, the bank does, so he is not going to be passing it on to anyone, so it's not applicable here.

It is an example, there is no need to argue the exact figures. There are business's out there that run on these types of margins and they are valuated more than this guys business. The point which you obviously cant grasp is when the business is hit with a large tax bill it is unable to meet the demands of that bill and must liquidate part of the business or the whole business to make this bill.

I can grasp that point, but you can't grasp that if anyone else were to buy that business, that person would have to either pay for it with aftertax money, or take out a mortgage and pay for it with aftertax money for the whole amount. The person receiving it as inheritance only has to take out a mortgage to pay off the estate tax, which is a fraction of the cost of the business, and only if the business is worth more than whatever the exemption is that year. So he is getting a tax benefit that noone else is getting.

 

[wirelessenabled]

Originally posted by: Genx87

Originally posted by: dullard

Originally posted by: Genx87
I dont haver to make any apologies for a party who see's taxing somebody for death is ridiculous.

There isn't a tax for death. It is a tax on income to a person who gets free stuff. Those concepts are not the same thing. For example, a dead person can give everything to charity. No tax - no matter how much the person had. Thus, it isn't a tax on death.

That money has already been taxed to the hilt through the lifetime of the person who died.

Another fallacy. Suppose I buy a house for $100K, live in it for 30 years. Now house is worth $600K for a gain of $500K. I die. When was I taxed on the $500K gain? Same thing for unrealized gains on stocks etc, etc.

The notion that the estate tax is a double tax is completely wrong.

 

[GroundedSailor]

Originally posted by: Genx87

Originally posted by: dullard

Originally posted by: Genx87
I do like somebody's post about people having 2.5 million in assets and "only" a 500K tax bill. Where the hell is somebody going to come up with a half million dollars in cash for a tax bill as ridiculous as that?

I'm confused here. Someone gives you $2.5M dollars and now suddenly you can't come up with a half million dollars in cash? Hmm, maybe from that $2.5M?

Yes, you can sell part of your farm. Yes, you can sell an inherited house. Yes, you can sell a share of a business. Yes, you can sell stocks or bonds. You can come up with the money.

If you don't want to sell the asset, and if you didn't inherit enough cash, then borrow against your asset. If the asset isn't good enough to return the interest, then why do you want to hold onto that asset?

And that example is pretty awful to begin with. If you inherit $2.5M now, your tax is actually ($2.5M - $2.0M) * 46% = $230K. That example exaggerates the tax by more than double.

Someone gives me 2.5 million in assets, assets that may or may not be easily convertible to cash. When uncle sam comes a calling, you think it is as easy as writing out a check for 500K?

btw it wasnt my example.

First of all, how much is that gas station worth if it's only generating 90K income for the owner? If it's worth more than $3.5M, why doesn't he just put that money in bonds and CDs and make $175K a year off the 5% interest? If a business does not return more on assets than the prevailing interest rate, it's not economically viable. Most of these gas stations that make 90K income, the "owner" doesn't really own it, the bank does, so he is not going to be passing it on to anyone, so it's not applicable here.

It is an example, there is no need to argue the exact figures. There are business's out there that run on these types of margins and they are valuated more than this guys business. The point which you obviously cant grasp is when the business is hit with a large tax bill it is unable to meet the demands of that bill and must liquidate part of the business or the whole business to make this bill.

A gas station with 3.5 million in revenue is just that. The 3.5 million is it's sales - which has nothing to do with its worth. The estate tax is not applied on revenue, it applied on the value of the business, which would most likely be under a million - actually a lot less than a million. There's something wrong if a business worth 3.5 million has only 3.5 million in sales.

And even if you inherit the gas station - and assuming it is actually worth 3.5 million - the estate tax is 45% of (3.5 - 1.5) million which is 0.9 million. And that is also assuming no special use valuation is applied (which can reduce the value by 40-70% and most likely push it under the estate tax limit). If you read my post earlier in this thread you will see that the inheritor has 14 years to pay that amount and that too at reduced interest rates. (see below)

Also most of estate tax comes from capital gains - which have never been taxed before so the double tax theory is bunk.

Family-owned farms and closely held businesses receive especially generous treatment under the estate tax.2 Farmers and small business owners may reduce the value of their real estate using a special formula as long as their heirs maintain its use as a family-owned farm or business and do not sell it to a nonrelative for at least 10 years. Special use valuation can reduce the value of the real property portion of most farms by 40 to 70 percent of its market value. In addition, estates in which farm and business assets make up more than 35 percent of the gross estate may pay their estate tax in installments over 14 years at reduced interest rates. Only interest is due for the first five years. In 2003, the interest rate on the first $493,800 of estate tax was 2 percent; the interest rate on amounts above that was 45 percent of the interest rate that applies to underpayment of tax (which was 4 percent for the third quarter of 2004).