posted
Okay, so I don't know much about the issue. I heard a debate on it yesterday on CSPAN, and was astounded by the tenor of the debate.
We pay these morons to be our leaders? Everyone was talking around one another! The democrats could only go on and on about how this is a republican attack on social security, education, etc (and none of them gave an example of HOW it's an attack); and the Republicans could only go on and on about this will help the little families that the government has terrorized for years.
Two bright points: Mr. Goud from my own state of VA gave some good numbers supporting the Republican's initiative to dismantle the Death Tax; and Nancy Pelosi from CA was very impressive in her rational call to support the Dem's proposal to do the same. Kudos to both of them, though to hear Mr. Goud speak is . . . well, jarring. Good ol' boy accent that makes W look like a NY sophisticate. (I'll admit that I may not be spelling the gentleman's name right. . .)
So the Dems contention is that although THEY'VE supported getting rid of the death tax for AGES, the Republicans are doing it merely to benefit the wealthy. They have put forth their own bill that would cut out the death tax for 99.7% of all people covered in the Republican's bill-- and contend that that .3% MUST be taxed to prevent dynasties, and to augment medicare/social security, etc.
Does anyone here have any knowledge of the two bills, and the differences between them?
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posted
I don't even know what the death tax is, but I do find it amusing that deceased people like to have $1 donated to the political party fund.
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posted
Ugh. Don't even want to THINK about taxes. This year is really making me be in favor of a federal sales tax rather than a federal income tax.
Because if you're way below the poverty level, but half of the paltry sum you made was from "self-employment," then you end up OWING money. Right. Self-employment being odd computer jobs picked up here and there to pay the darn bills.
Talk to my landlady or the electric company if you want some of that money. I sure as heck didn't see any of it.
I feel exactly the same way every time I watch CPAC (our CSPAN equivalent here in Canada). They're like a bunch of petulant, squabbling children. Someone needs to clean house.
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posted
Kat, in your case, you wouldn't even qualify under the CURRENT "death" (actually called Estate) tax. Very few people qualify already, and the only real problems are with people that have very few "liquid" assets (farmers, by and large, who utilize very expensive equipment, and that's where most of their equity is in).
I think that an estate tax is good if properly created (and modified as needed) to ensure that large amounts of money aren't locked into a few ultra-wealthy families. I think outright abolishment of it would truly be just a way to have the very wealthy hold on to money, to the detriment of society.
posted
"I don't even know what the death tax is..."
The "death tax" is a euphemism for estate tax often promoted by people who'd like to get rid of it. The term is meant to suggest that you're being taxed for dying, which is intended to rub people the wrong way.
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quote:"The "death tax" is a euphemism for estate tax often promoted by people who'd like to get rid of it. The term is meant to suggest that you're being taxed for dying, which is intended to rub people the wrong way."
In a way it is like gouging the deceased individual twice with taxes, in that the taxes being collected are essentially from assets, and not profits.
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quote: Kat, in your case, you wouldn't even qualify under the CURRENT "death" (actually called Estate) tax. Very few people qualify already, and the only real problems are with people that have very few "liquid" assets (farmers, by and large, who utilize very expensive equipment, and that's where most of their equity is in).
Thanks... I didn't really think it applied to me, but the "T" word just gets me all riled up nowadays.
I about had a nervous breakdown last night because of all the stress in my life. Taxes being one of them.
posted
Of course, the individual happens to be deceased. From a political economy standpoint the estate tax can be a very good thing -- it reduces free riders, increasing efficiency.
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posted
More than a minimal raising of the minimum wage to reduce exploitative conditions would be economically bad. The estate tax, contrariwise, may even boost the economy (when effects of its expenditure by the state are taken into account).
Plus, the estate tax gives the government money with which to fight poverty.
I favor extremely generous exemptions in the estate tax for many things, but not its abolition.
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posted
The Democrats' plan specifically addresses those situations where the estate tax is indeed least fair -- farmers and other groups whose livelihoods are tied up in capital expenses -- without exempting those people who simply own six really, really large mansions.
posted
My problem with keeping a death tax imposed on the so-called "wealthy" is that it really hurts families who are trying to pass down family assets. As was already mentioned, we're taxing assets here, not profits or incomes.
The person that I usually think about when I hear talk of the death tax is my friend who comes from a multi-generation family farm. His father has millions of dollars tied up in assets of land and equipment, yet struggles to pay for the basics of life. Assets don't always equal income - there are a lot of farmers who are land rich but money poor. It's sad to me that people have to sell family farms just to pay the inheritance taxes.
Edit: Tom I didn't see your post - I'd have to look at the plan carefully to determine how I felt about it.
[ April 14, 2005, 09:55 AM: Message edited by: Belle ]
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posted
I still have a problem with the idea of taxing the family that owns six mansions.
When they purchased those mansions, they purchased them with money they paid income tax on. They paid taxes on the mansions themselves. To me, this person has fulfilled his tax obligation. I don't see why it should be necessary to have his son or daughter pay taxes on the mansion again because their father is dead.
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The Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of Cash and Securities, Real Estate, Insurance, Trusts, Annuities, Business interests and other assets.
Once you have accounted for the Gross Estate, certain deductions (and in special circumstances, reductions to value) are allowed in arriving at your "Taxable Estate." These deductions may include Mortgages and other Debts, Estate Administration expenses, property that passes to Surviving Spouses and Qualified Charities. The value of some operating business interests or farms may be reduced for estates that qualify.
After the net amount is computed, the value of lifetime taxable gifts (beginning with gifts made in 1977) is added to this number and the tax is computed. The tax is then reduced by the available unified credit. Presently, the amount of this credit reduces the computed tax so that only total taxable estates and lifetime gifts that exceed $1,000,000 will actually have to pay tax. In its current form, the estate tax only affects the wealthiest 2% of all Americans.
posted
I really don't have a problem with taxing those people, Belle. But I believe that the rich have a civic duty to support the poor and SELL those six mansions and live more modestly, anyway.
And an estate tax may encourage them to do just that.
<- radical fiscal liberal
[ April 14, 2005, 10:05 AM: Message edited by: Scott R ]
Posts: 14554 | Registered: Dec 1999
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posted
These evil rich people who don't deserve their assets - how many people do you reckon they gave jobs to? How many poor families were able to feed their children because this evil person started a business and employed them?
I can't stand the value judgments issued against people simply because they are rich - just because they have money doesn't make them bad people.
Yes, some of them are. Some people who don't have six mansions are jerks too.
I have a problem with designing punitive tax codes. "Everyone else can pass down the fruits of their labor to their children without penalties except you." Why? "You made a lot of money so we don't like you."
[ April 14, 2005, 10:09 AM: Message edited by: Belle ]
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posted
I wonder why, as a society, we feel that we should have the right to determine what happens to our money after we are dead. It is taken as a given that we have the right to decide that in our wills -- but should we?
I am trying to come up with compelling reasons why we should be able to do that, and the only one I can come up with is "because we've always done that." Are there better arguments that I'm missing?
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Because they're our family--the foundation of society. If we have children to create a sort of immortality, then it follows that we should be able to pass on our wealth to them as well. It's not individual wealth--it's family wealth. (You might say otherwise when trying to teach your kids about money, like Bill Huxtable telling his kids, "Your mother and I are rich. YOU are poor."--but you're still going to pass on that money.)
It takes a lot of time and effort to raise "quality" members of society, in return for doing that, you should be able to say where your money goes when you die. And since the government shouldn't get into character judgments, it should be assumed that you did your job correctly.
We don't just allow people to pass their money down to family. We allow them to pass it onto whatever person or organization that they wish -- even a pet.
Also, if it is important to you that your children get money that you earned, you are always free to give it to them while you are alive. But still, why should you have the ability to decide what happens to your money once it's not yours anymore (because, being dead, you are no longer "you" anymore, at least not in any legally [IANAL] meaningful way).
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posted
I read this story when I was a kid, set in Africa--I believe it was a true story.
Anyway, these two little girls are born to loving parents. The father is from a small tribe, he moves to the big city and marries a very "proper" nurse. They're very happy, but then the mother dies. The father takes his two little children from the big city back to his tribe, believing that they need maternal family attention from his mother/aunts. Then he gets sick and dies. The entire tribe comes in and strips their little hut clean--leaving nothing but a pillowcase and wallet that the little girl was quick enough to hide and sleep over. He was able to leave nothing to his little girls--and they had a lot of nice stuff that their mother had had. Sentimental and monetary value.
Now that's a tribal example, and an extreme one, but I think the concept is the same. He had a right to leave his family, his daughters, anything he wanted.
quote:I can't stand the value judgments issued against people simply because they are rich - just because they have money doesn't make them bad people.
I never said that they were bad people, Belle. Just that they should take their surplus wealth (that's wealth after they've saved for retirement, and for college funds, and for vacations, etc) and do something socially positve with it, instead of sinking it into more assets. By socially positive, I mean like creating another business, setting up scholarships for underpriveledged kids, giving to charity, etc.
Its about learning to live in comfort instead of in extravagance.
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posted
A compelling reason to let people determine what happens to their money. Hmmm...
Well, I know it's considered cool to hate rich people, but consider that when people make money, they usually invest it, which helps other companies grow. Many make their money by building businesses, which employ a lot of people, giving them opportunities for income. Their investments may help other businesses employ still more people.
One of the things that drives people to become successful is the idea of leaving behind a legacy, and caring for their children and descendants. I think it's something that should be encouraged.
One of the driving goals for us to build our business was so we could have something to hand down to our children. My husband hoped that when he got ready to retire, either one or all of the kids might step in and take it over, or we could sell it, and have money to pass down to our children and grandchildren. Both of us believe we can't take any wealth with us when we die, so building a successful business was never all about us. We wanted to provide for our kids, we wanted the peace and security that would come from knowing that our grandchildren wouldn't go hungry.
Had we not been working toward that goal - we might well have quit years ago. Certainly life has been easier for us since we quit.
Maybe we should have quit years ago, maybe none of it matters. But I think it does matter - because in the last two years or so we've had two employees that came to work for us, we provided them with a chance to get experience, paid for them to take licensing tests, and helped them learn a trade. My husband gave a lot of his tools to them when we shut down.
Running the business three years longer may not make all that much difference to us - we still have nothing to pass down to our kids - but it made a difference in the lives of those two men. They now have skills and a trade license that helps them support their families. One is striking out and starting up his own company, we have referred all our customers to them. Maybe they'll actually make it, and have something to pass down. I hope so.
But at any rate, if the idea and goal of passing down something to our children when we die had never been there in the first place, we probably wouldn't have ever bothered, and those guys wouldn't be in the situation they are in now.
So I'd have to say that I believe giving people the power to control what happens to their assets at death is a good thing - it encourages people to try and build something and that can positively impact the people that work for them, and so on.
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posted
By the way... I'm talking as a very uninformed regular person... I have never studied this.. so I'm very wrong on occassion. It's okay. -Katarain
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posted
No, Belle, its "everyone can pass down millions of dollars worth of property to their children, including you, but after that the government takes most of it to provide social programs to people who get to pass down a pair of shoes."
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quote:do something socially positve with it, instead of sinking it into more assets. By socially positive, I mean like creating another business,
How does that not qualify as "sinking it into more assets"? It can be argued that investing their money is extremely benificial to the community.
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posted
My husband describes the American Dream like this: A poor man can immigrate to America, working himself up from nothing, make a fortune, and pass it on to his children. That's why he does it. To make life better for his children.
I understand we're only talking about the extremely wealthy here, and I hardly think they need little old me to defend them, but I think it would be wrong to apply that rule to the middle class, so I also think it's wrong to apply the rule at all.
I have no problem with rich folks enjoying their largesse while living. I just worry about systemic issues that can arise if they are allowed to pass their largesse onto their heirs such that the heirs can live very comfortable lives through no effort on their own. This can breed all sorts of social consequences.
One way to look at this is that the heirs (not the deceased) pay the tax because it is only through our orderly civic society, regulated and governed by our government that they can without much conflict receive anything. Without government regulations (and this is an absurd extreme example) they might have had to enlist security forces to defend their parent's properties/bank accounts, or legions of lawyers against people who may feel they have a right to some of the property (long time work collaborators, lovers, etc).
posted
As far as I'm concerned, no person has the right to pass down a personally owned $10 million business (for instance) to his or her offspring. He or she has the right to see it perpetuated, but that is one reason corporations and other collective entities of various sorts exist.
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quote:Just that they should take their surplus wealth (that's wealth after they've saved for retirement, and for college funds, and for vacations, etc) and do something socially positve with it, instead of sinking it into more assets. By socially positive, I mean like creating another business, setting up scholarships for underpriveledged kids, giving to charity, etc
And many people do.
But see, as they build their wealth, and spend it, they are positively impacting people. You may think it's disgusting that people spend $5 million dollars on a home, but consider who gets that 5 million. It's split among the carpenters, painters, plumbers, electricians and others that worked on the home. They are people who don't have millions of dollars, but they survive because other people do have wealth, and they spend it on homes, which gives them a job so they can feed their families.
I would maintain that wealthy people spending money on things does help others. Remember the fallout from the luxury tax? Who got hurt? The small business owners and tradespeople who made their living building things like yachts. My uncle is a carpenter for a company that builds yachts. He shakes his head at people who would spend a million dollars on a boat, but he is certainly glad they do.
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quote: As far as I'm concerned, no person has the right to pass down a personally owned $10 million business (for instance) to his or her offspring. He or she has the right to see it perpetuated, but that is one reason corporations and other collective entities of various sorts exist.
So they should work for years simply for the good of society? How noble. Sorry, but I care more about my family than I care about the rest of the people in the world. I'm not ashamed of that. It doesn't mean I don't care about the rest of the world, but if I don't care most about my family, who will??
And I also don't see the problem with rich kids living off daddy's wealth. Well, I see the problem... but I don't think the government has any right to say anything about that. Because every once in a while, there will be some rich kid who wants to give something back.
I'm so just talking here... it's not like they're getting all of the money taxed away, right? They're still rich.
Bah. And as for those social programs. I needed one last year. I didn't qualify. Most of my life will be spent paying into those social programs, and the one year I needed it, I got a big ... well, you know.
When I watch the Parliament I have the same feeling. People yelling over one another, people heckling. The Speaker had to keep standng up and syaing something equivalent of "Now quiet down everybody..." or "Inside voices please, children."
I came to the conclusion then that everyone who wants to be a politician shouldn't be allowed, because it's clear that they can't even exhibit qualities learnt in elementary school.
if they yell they should be thrown out, same as anywhere else.
posted
Sure, you can give it quite freely, and a good portion won't go taxed, though a good portion will. Even more will go untaxed if you earmark it for certain sorts of expenses.
Just as with any other gift. (By the by, there's a gigantic reason gifts over a certain amount are taxed -- so people won't use them to circumvent income, capital gains, and other taxes).
And when you're dead and incapable of giving anything to anyone, your will can pass on a good portion of that $10 million, particularly in certain sorts of assets, to your kids.
But I see no particular reason your kids should be able to receive the $10 million at one time without penalty (whether we're talking as a gift or as part of an estate), whether you have $11 million or $100 billion.
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quote:You may think it's disgusting that people spend $5 million dollars on a home, but consider who gets that 5 million. It's split among the carpenters, painters, plumbers, electricians and others that worked on the home. They are people who don't have millions of dollars, but they survive because other people do have wealth, and they spend it on homes, which gives them a job so they can feed their families.
I contend that a similar number, or perhaps slightly more, could be employed by building quality affordable housing for low income families for the same amount of wealth.
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posted
Kat, one solution for your story would be to have the government defend the girls, and give them most of what their parents had, minus some amount for the cost of the defense. Of course, in this story, the girl's parents had much lower than any reasonable minimum for any sort of estate tax, so the government would have protected them for free.
That story is more of a support for judicious use of government regulation as opposed to an anti-tax cautionary tale, in my view anyway.
posted
Belle: of course large expenditures circulate money. As do government expenditures from money that's taxed (even the debt servicing goes mostly straight to tax payers).
However, money that circulates in the higher strata (large financial transactions, for instance) doesn't create as much money as that which gets spent on houses and tinker toys and nice clothes. Which is why I like the idea of letting people exempt millions of dollars, giving them an extremely comfortable cushion from which there will be many expenditures. Extremely large monetary assets, however, I see no reason they need to be passed on.
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quote:I contend that a similar number, or perhaps slightly more, could be employed by building quality affordable housing for low income families for the same amount of wealth.
I think it is generally a bad idea when you try to start telling others how they should spend their money. If you think that people should give money to low-income housing, then you should do it. If the rich people feel the same, then let them do it on their own.
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posted
My family has quite a lot of assets, all untouchable and tied up in the family business, which translates in low cash flow. They are still building the business, so most of the profits go back into it.
No one owns six mansions. No one owns one mansion, although my uncle's house might be considered one depending on your definition. On the other hand, they have six children, so they are using every inch of the space.
If my dad or my uncle died, we'd have to sell the business to cover the estate tax. They pay double taxes now (once for the business, and then again when the profit becomes income), besides employing a hundred people and paying umpteen amounts of taxes on labor and licenses. It's a business with a small profit margin, so the taxes make a difference between black ink and red.
The state is much, much better off with the business intact, running and continuing to employ people and pay taxes. Where, exactly, is the incentive to build a business that can keep going if it has to be sold as soon as one of the founders dies?
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posted
Porter, I think that was more of a general statement/opinion of economic value, than one of coercing people to do that.
kat, I wonder if there isn't something your family is missing in this case (probably not, I admit), that would lower the net estate value, due to debts and the like.
posted
Regardless of the manner in which a person dies or the state of their assets upon the time of death, those assets are private property, and are to be given by the individual to whoever they desire via a will upon their death. The government doesn't have a right to take someone's private assets. If people here really hate that concept, then they can voluntarily go live in a commune, or move to Cuba, China, or North Korea. Posts: 57 | Registered: Aug 2003
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For the arguments of keeping the money out of the same families generation after generation, human nature takes care of that. Families rarely stay wealthy longer than two or three generations - there is a reversion to the mean of human behavior, and the suceeding generations rarely have the drive/need/impetus to keep and build the empire that their great-grandfather built. In other words, they are going to spend it away anyway. The government doesn't need to get involved to ensure that the money gets back into circulation.
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posted
katharina: in 2009 the base exemption increases to $3.5 million. Plus, you can get special valuation on the business which will reduce the taxes owed on it considerably, and since its most of the estate you'd have 14 years to pay the taxes from time of death.
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