Are you saying that some one person NEEDS to have more than two million dollars of personal wealth, doing nothing to help anyone but laying around and being. . . I dunno. . . a house?
[ April 14, 2005, 02:58 PM: Message edited by: Scott R ]
Posts: 14554 | Registered: Dec 1999
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In order to join the business, my parents saved a lot during the years my dad was an executive in the oil business. In order to expand it, they needed capital. So, while the capital was accruing, it wasn't in business assets, but it was earmarked to become so.
Would you exempt it then, because it was meant to become business assets later but hadn't reached critical mass enough that my dad could quit the oil business and join it yet? Spending the capital then on business equipment wouldn't work because both the capital and my dad's labor was needed to expand it.
With your cut off, the ONLY way to get enough capital to start and/or expand some of these businesses with ahigh up front cost would be to borrow it, so all entrepenuers would have to start off deeply, deeply in debt.
The capital was NEVER spent on mansions or Mercedes, but it was liquid for a while. It was just as untouched then because of its future purpose as equipment and buildings as it is when it is tied up in that purpose.
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"The capital was NEVER spent on mansions or Mercedes, but it was liquid for a while."
I'd say that this is one of the costs of liquidity. The alternative is to say that anyone could, in theory, be saving their money for a good reason, and therefore money should not be taxed. Posts: 37449 | Registered: May 1999
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So...what happens if you decide to move? If I only need $1 million in assets where I live, but want to move to a place that requires $2 million, I couldn't, becuase I wouldn't have enough money.
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So saving is bad? It's better to always borrow capital and thus dramatically increase the risk and cost?
Is encouraging more debt and more instability really what we want to do? Keep in mind that without the ability to have liquid capital, the business never would have happened.
If you cap off ownership of capital at 2 million, you'd better dramatically increase the willingness of the government to guarantee loans if you want the same level of entrepenuership.
Posts: 26077 | Registered: Mar 2000
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Okay, Scott here's another situation for you - it's relevant and real, because it's my situation. I'll change the numbers but the situation is exactly what has happened.
Suppose you have been saving for years toward a new home. You take your savings, and look for an area that is quiet, peaceful, has good schools and a small town atmosphere. You use your savings to put a down payment on a 2 acre lot and then work for the next two years to pay off the mortgage on your lot.
Then you start building your house. You take out a construction loan for $100,000 and you build the biggest house you can afford to build because you plan on being here for a long time, and you also plan on adding to your family and you figure this is the biggest investment you'll ever make. You do a lot of work yourself, and you pay for some things out of pocket instead of putting them on the construction loan so you can keep your mortgage payment down.
Now you're done - the mortgage payment is high, but you're managing okay - you can pay everything with careful budgeting.
Fast forward five years. You still have that mortgage payment, and you're struggling even more because one of your two wage earners quit to stay home with the kids. You have increased your income to compensate, but you haven't quite caught up to the income you lost. You're making it, but barely.
In the meantime, during those five years, other people discovered what a wonderful place it is where you live. Homes and land started selling. Prices started going up. Houses were re-appraised. Now, that home you worked so hard for is worth $500,000 dollars. And you only owe about $80,000 on it - wow! Let's say you also own a small business, with a lot of equipment that's worth a good bit too. Combining your business assets and personal ones puts you up into the category of people that have more than $1 million net worth.
Wow. It's cool being a millionaire, huh? It's living on easy street, no worries at all.
Wrong. You still are struggling to pay that mortgage on the remaining $80,000 you owe.
Just because someone looks on paper as if they have a lot of money doesn't mean they really do.
Posts: 14428 | Registered: Aug 2001
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Belle: This isn't going to win me friends, but if someone is in a house that they cannot afford, there is no reason they should be guaranteed it anyway. It's a lifestyle, and if someone can't afford their lifestyle, then it needs to be downsized or else income increased.
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Yeah, but kat we can afford our house. We still pay the mortgage every month. We had no control over the way it rose in value - we wish it hadn't as it's vastly increased our property values.
(and remember those numbers are made up)
Edit - I think I see. When I said "still struggling to pay" it implied a situation where someone borrowed more than they reasonably should have. That is not the case.
When I say struggling I mean it in the sense of still having to get up and go to work every day, in order to bring in enough income to pay all the bills. I don't mean living paycheck to paycheck with no savings just so you can live in a big house with a fat mortgage payment.
I agree with you that someone who does that is not making sound financial decisions.
My point is not to have anyone feel sorry for me or someone in my position - it's just to show that determinations of wealth can be deceiving. What looks really good on paper, may not match up with reality. For example, when we had to go buy a new van, we bought a used low mileage van and were insistent on keeping our payment down so we resisted the salesman's effort to upsell us on a new, much more expensive van. They would have approved us for a loan for far more than we were comfortable paying, just because we looked good "on paper."
[ April 14, 2005, 03:32 PM: Message edited by: Belle ]
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Yeah, it's too bad. A million doesn't go nearly as far as you think it might. I believe the term for the level at which one doesn't have to work is, um, not repeatable, but the amount is much, much higher than 2 million. -------
*wants Scott to answer the question about capital*
Some businesses, to start, require a concentration of capital. Your plan would eliminate the ability of private citizens to concentrate capital, so the only source would be banks and the government, in the form of borrowing.
That would greatly, greatly increase the risk and cost involved in starting a business. How would you compensate for that?
That's an excellent point, kat. We started our business with only the money we were able to save, I doubt we would have even bothered trying to start one if we knew we'd have to start out in debt.
Posts: 14428 | Registered: Aug 2001
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You know, I think the assets should be distributed and then taxed. Because if my parents drop dead, I'd get about half of the inheritance I'd get in 4 years when it goes up.
But I think that rather than capping the estate, cap the inheritor. I mean, each kid could inherit a million. That seems more fair. I mean, an only child gets a million tax free, but a child with 4 siblings only gets 200,000 tax-free.
The way I figure it, by the time I inherit, my husband will be ready to retire, and by then, what difference will it really make? I think the money should be passed down to the next generation. My son will be the one who could use the money at that point and time. He'll probably be struggling to pay for a house and trying to keep a family in diapers and food.
But, I'm one of those people who will inherit a lot more in four years than I would tomorrow. Still, I think there should be a cap. I think there is only so much money you need. My parents are never going to run out of money. I think the money they inherited their parents is being used for some small gifts now, but mostly collecting interest. But I'm sure they want to make sure they have enough money to last them till they're a hundred, which I've read can cost two people their age a million dollars. But,I have no idea what they're doing with the rest of it. Probably spending it frivolously just to piss me off. Posts: 9871 | Registered: Aug 2001
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Correct me if I'm wrong, I think I saw the debate Scott is referencing, and the floor being discussed was 6 million dollars, not one, not three, not five, six. If the good government of the United States cleared a space for you to accrue six million dollars worth of assets, I don't know if it's unseemly to ask a little bit of sacrifice, especially considering the war and the deficit.
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I didn't see the debate and I haven't read the whole thread yet, so this may have already been posted. But since I spend about 80% of my work day dealing with probate estates and death taxes, I wanted to get this part out first.
Currently, the first one and a half million dollars of your estate at death is exempt from taxes. So if you have less than $1.5M in assets when you die, then you don't have to pay death taxes at all. If you have more than $1.5, then you pay on the amount over that exemption. The exemption increases every year until (currently) 2010, when it's up for renewal or elimination.
Because of the exemption, it would seem to me that elimination of the death tax would only benefit the wealthy, because frankly, us middle-class schmoes with no real assets don't pay anything anyhow.
Personally, I'd love to see them eliminate it entirely because FETs are a ROYAL pain in the patella to create and file!!!!! Especially when you're talking about a decedent with as much money and as many properties as some of these clients have got... someday I'm going to convince at least one of these to name me as a beneficiary under their will... Posts: 4515 | Registered: Jul 2004
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posted
Scott was spending 2.5 hours going home, because they had one lane open on a three lane bridge, and there were no alternate routes to take.
And after that was bathtime, and family time, and bedtime.
Seriously-- let's do keep our priorities in order.
Kat, Belle-- you both bring up questions which, honestly, deserve an answer that I don't have for certain. I'm fleshing my opinions out as I make 'em.
What I feel is that, in regards to the estate tax, the situation that Kat describes would be rare. Most entrepeneurs would be able to build capital as they see fit-- no one starts a business thinking, 'Now what if I die, we're going to lose all our money.'
I've tried to make it abundantly clear-- I'm not talking about stripping wealth from small, family owned, businesses.
If the $2M catches too many small fish, I'm not adverse to raising it to $6M, or $10M.
NOW. . .
No one needs a huge estate to leave their children; my opinion is that your children need your time and love far more than they need any 'security,' or 'prosperity' your wealth may bring them. So this nonsense of leaving an estate is, well, nonsense-- teach your kids to be secure and to stand on their own power. THAT'S the true American Legacy. If they want to take over the family business, fine-- let them BUY it from you.
So sure-- acquire as much as you can, but after you've acquired a certain amount of personal wealth, it should revert to governmental control. If you don't like the government, that's fine-- there are LOTS of entrepeneurs looking for cash.
There is no sense in owning a home that has a $20,000 bathroom. It is socially irresponsible, when that money could have been used to fund education, or scientific research, or actually done something useful. I realize that there are artisans and high end carpenters that are employed by this type of work-- and I realize that my way of thinking could cost them their jobs. I'm willing to pay higher taxes to support them until they find work that suits their skills. Heck, I'm willing to pay higher taxes to MAKE jobs where their skills are needed-- heaven knows, some of our governmental buildings could use a little beautification.
There, I've said it-- higher taxes. We need 'em. And we need a tax code that the rich can't pay to find a way out of.
This is why I'll never be a candidate for anything-- I advocate with sincerity, honesty, and a loud voice for higher taxes. Elect me, I'll tax you! Posts: 14554 | Registered: Dec 1999
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quote:No one needs a huge estate to leave their children; my opinion is that your children need your time and love far more than they need any 'security,' or 'prosperity' your wealth may bring them. So this nonsense of leaving an estate is, well, nonsense-- teach your kids to be secure and to stand on their own power. THAT'S the true American Legacy. If they want to take over the family business, fine-- let them BUY it from you.
I agree with this, actually.
Mostly.
No one needs to be handed a kingdom, but I also know that no one really does make it completely alone. Not alone does society help, but families do and should help. My family's business never would have started without my grandparents' help. My grandmother did the accounting for free for the fifteen years, and my grandfather, a chemist, ran the lab for the first twenty. He just barely stopped this year, at 85. Those are expensive labor positions, and their labor often made the difference between making payroll and not.
It is okay to help, I think.
Have you read The Millionaire Next Door? I think you would find it interesting. There is a whole section on giving adult children money to maintain a lifestyle they could not have on their own, and the conclusion was that those who recieve this assistance are considerably less likely and/or able to ever stand on their own.
Another point made is that the vast, vast majority of millionaires are self-made. Seriously - family fortunes self-destruct and dissapte in a generation or two all on their own.
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Scott, how about this with respect to the floor...The Wealthiest x-percentile of the population...then it isn't about so-and-so wealthy-asset cash-poor farmer, it's about trust-fund gadabout. And it isn't about new memebers of the ever-growing (though still INCREDIBLY EXCLUSIVE) American Millionaires club. It's only the mega-millionaires and billionaires who routinely find ever-multiplying ways to prevent anyone from taking their treasure. How much more would it benefit society if instead of ensuring the livelihood of a billionaire's say forty or fifty descendants (and this is one fertile billionaire i'm talking about) the assets upon his/her death were used to give good public education to 50,000 poor students? And it's a TAX, it's not like we're taking the whole thing (though that doens't sound like such a bad idea either).
Posts: 16 | Registered: Apr 2005
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quote:So sure-- acquire as much as you can, but after you've acquired a certain amount of personal wealth, it should revert to governmental control. If you don't like the government, that's fine-- there are LOTS of entrepeneurs looking for cash.
How exactly does this money "revert" back to the government when it never belonged to the government in the first place?
You're missing the point. Perhaps no one "needs" that much money, but they earned it, and they have the right to decide how it is spent.
Posts: 413 | Registered: Apr 2003
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Dead people don't spend money. Nor do they make decisions. And heirs didn't earn it.
Does "Render unto Caesar that which is Caesar's" ring a bell? Money doesn't grow on trees. USdollars are printed by the USmint. Your money would be worth less than the cost of the ink&paper if "This note is legal tender for all debts, public and private" wasn't backed by the full faith and credit of the US government. Plus there is the value added by the fact that the US dollar is the only acceptable means of paying US taxes. Similarly, the government is the sole backing for claims of property ownership.
And if ya don't think the government has anything to do with creating wealth, move to Zimbabwe. You should do at least as well there as in the US.
quote:Sith own everything so there is no need to worry about taxes.
Such pettiness.
Your sad attempts at humor amuse me. . .
not at all. If you don't have anything to add to this (or any) serous discussion, please refrain from posting. Keep the stupidity to the fluff threads.
You wouldn't annoy me so much, if you didn't go around posting this idiocy on so many serious threads. Please stop.
Posts: 1357 | Registered: Mar 2002
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I don't know what it is about Darth Ender that annoys me. I think it's the repetition. The first couple of times, I just ignored it. But after all the variations on what is, essentially, the same stupid joke, it just started to irritate me.
Ok, enough derailing. Back to the topic at hand, and if anyone wants to continue this track, make another thread.
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I'd be curious to know why so many people seem to treat "trust fund" like a dirty word. What is it about leaving money to someone that they can't spend outright that annoys people so much?
I also don't understand the idea that it's better to give money to the poor which they will immediately spend, be it on beer and cigarettes or a new car. At the end of the day, that irresponsible poor guy still has nothing to show for his money. The beer is drunk, the cigarettes are smoked, and the car will only depreciate in value.
I am a bank teller. I see where people spend their money. Please stop telling me the poor would spend it wisely if they just had more of it. I've seen inheritances blown through in months. I've seen law suit settlements spent in a great orgy of self-indulgence. I can count on one hand the number of times I've seen people without money spend it wisely when they did get a windfall.
I still say the vast majority of the poor look at money differntly from the rest of us. Maybe Scott's right and it's a self esteem thing. Maybe if we were all nicer to the poor they wouldn't act like that. So let's work on that first. Because if we give them a bunch of money with the attitudes they have now, they'll still be poor next week.
Posts: 2283 | Registered: Dec 2003
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What annoys me about trust funds is more the self-serving attitudes I tend to see in the beneficiaries....
Many of these "kids" do not learn any kind of fiscal responsibility, and since my boss is their trustee, he holds the purse strings, so to speak. Which means they come running to him demanding money on a much more frequent basis than the alloted distributions, often claiming an emergency.
"I can't pay my rent, you need to send me more money" - that girl gets four grand a month, her rent is $1,500... what did she do with it all?
"I need a tooth extracted" - okay, this definitely falls under best interests and welfare, but don't you have insurance?
"I'm in Vegas and I just drained my account" - {jawdrop}
Posts: 4515 | Registered: Jul 2004
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quote:Maybe Scott's right and it's a self esteem thing.
I never said anything about the poor and a self-esteem problem; that's more along the lines of Irami's philosophy, I think.
And I've never advocated GOVERNMENT handouts, ever. I advocate personally giving money to the poor, whenever they ask, without needing (much of) a reason, but I don't think this type of thing should be a social institution. I advocate using money garnered from the estate tax to create jobs. I'm not terribly sure how to go about doing that-- but believe me, it's a fine idea in my head.
Boy-howdy, is it ever. Posts: 14554 | Registered: Dec 1999
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quote:I still say the vast majority of the poor look at money differntly from the rest of us.
I think I have a different view of money from the rest of you. I think it's possible to be proudly poor. I'm not sure material poverty is the same as degradation, even though the two often accompany each other. I also think it's possible to be wealthy trash.
Posts: 5600 | Registered: Jul 2001
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quote: I also don't understand the idea that it's better to give money to the poor which they will immediately spend, be it on beer and cigarettes or a new car. At the end of the day, that irresponsible poor guy still has nothing to show for his money. The beer is drunk, the cigarettes are smoked, and the car will only depreciate in value.
So people are poor because they're irresponsible? They never spend money given to them on food or clothes? What if they buy a slightly used car that runs well in order to have more job opportunities?
Posts: 1658 | Registered: Sep 2003
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posted
And I'm sure some of them do. But often times, a poor person will take a large chunk of money, buy something expensive with it, and think they've made an investment. That car won't be worth as much as it is before you buy it for a good 25 years, if you keep it in pristine condition. Driving it around does not mean you've invested in a potentially classic car.
I don't know. I just get annoyed with the attitude that rich people are bad and poor people are good. Just because. Trust me, there's never been anything noble about the poor people I've known. I've known a few people who were temporarily poor through unfortunate circumstances, but they didn't stay poor.
Sorry I misunderstood you, Scott. The self-esteem bit was from the OSC essay you linked to. An idea that other people tell the poor it's their fault they don't have any money until they believe it and feel powerless to change. Personally, I'm all for education. Let's get investment bankers in inner city schools and trailer parks giving lectures on letting your money work for you. Teach people how to invest in long term annuities, CDs, stocks, bonds, something other than bling.
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I submit you have not known very many poor people, then.
Irami, I do not see anything to be proud of in being poor. I don't see anything to be proud of in being rich, either. What's the logic behind your idea?
Posts: 14554 | Registered: Dec 1999
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quote:I submit you have not known very many poor people, then.
I must not, either, or perhaps AvidReader and I are thinking of people who aren't necessarily poor but extremely irresponsible.
Come to think of it, I'm surrounded by poor people. But I don't think of them as poor because they're careful with their money. They don't consider government help an option, so they cut where they can.
Perhaps what I'm doing--what AvidReader is doing as well--is associating "poor" with those on welfare, which isn't necessarily the same thing.
The government rewards irresponsibility, so the people I know who get government assistance don't actually need it. They just live the way the government tells them to live in order to get welfare, food stamps, etc.
On the other hand, I've never known, or met, or heard of an actual responsible poor person who needed financial help, who received anything of use from the government. I mean, besides the "You don't fit our criteria, so we can't help you." bit.
That doesn't mean some genuinely poor people haven't been helped. It just means a lot of people--and I do mean a lot of people--take advantage of the system when they don't really need it. It's free money to them.
That's what irks me about the welfare system, about estate taxes. If I knew that every dollar, or every half dollar actually went to someone who needed it, not a mother of three who spends $200 a week on hair and nail appointments and doesn't want to divert that money to buy food for her kids, (true story), then I'd be okay with it. But a lot of the money is wasted and given to the kind of people who con their way into, while those who need it are ignore.
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Just because someone accepts help from the government, doesn't make them "white trash," or "irresponsible."
The majority of welfare dollars DO go to people who need it. And I think the stereotypes being perpetuated by certain people in the last few posts are disgusting.
Posts: 32919 | Registered: Mar 2003
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quote:Irami, I do not see anything to be proud of in being poor. I don't see anything to be proud of in being rich, either. What's the logic behind your idea?
I meant that people can be noble inspite of being materially poor. I also think that many virtuous decisions lead to material poverty.
I think US culture endorses a set of materialistic priorities, possibly born from a sense of security or stability or dignity or even Godliness that is supposed to be evidenced by material wealth, and the ability to produce and maintain it.
And maybe security, stability, dignity,and Godliness are the fruits of making money, but I think that there are other ways to attain those qualities with only a little bit of money, and furthermore, focusing on making more than that bit is a shameful distraction. And in this culture, I think takes a little bit of courage to say "no" to drugs, cell-phones, cars, cheeseburgers, and the spending eight hours of your working day concerned about how to make more money. So yes, when I see people who are materially poor by decision and not circumstance, I think it's a good thing. _____
Again, I'm not one of those who sees money as a good in itself.
quote:Just because someone accepts help from the government, doesn't make them "white trash," or "irresponsible."
No one said that. At least, I wasn't implying that at all. A lot of good people need help at times. My point is that the government (or the way welfare is run) only helps a select few. They don't dole out money according to need, but according to lifestyle.
quote:The majority of welfare dollars DO go to people who need it.
I disagree. I think some people are helped, and that's a good thing. But there's a lot of fraud and a lot of people working the system.
quote:And I think the stereotypes being perpetuated by certain people in the last few posts are disgusting.
That all poor people are white trash? Well, yeah. I'd be white trash then, because I'm technically poor, and I'm white.
But not all poor people are saints, and I think that was the point AvidReader was trying to make. That was the point I was trying to make, at least.
Posts: 407 | Registered: Jul 2003
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quote:But not all poor people are saints, and I think that was the point AvidReader was trying to make. That was the point I was trying to make, at least.
Maybe, but when AvidReader said it, it came out, " Trust me, there's never been anything noble about the poor people I've known."
Posts: 5600 | Registered: Jul 2001
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quote:Maybe, but when AvidReader said it, it came out, " Trust me, there's never been anything noble about the poor people I've known."
The poor people he/she has known, though. That's the difference. Perhaps AvidReader is surrounded by a lot of crappy people, poor or not.
I felt I was in the same situation, until I recalled that I do know quite a few poor people, most of whom are exceptional people. But they never came off as poor, because they don't walk around with their hands out. Instead, they're very, very careful with their money and only ask/accept help when they have no other options.
But then there's those other "poor" people I know, people who are always demanding help, but have houses--or trailers--full of junk they squander their money on. Or the lazy people who can't hold down a job, even though they're healthy, smart, capable, and want everyone else to take care of them. Those are the people that I don't think should get help from the government. But of all the people I personally know, those are the only people who are getting help from the government.
That's why I get a bit about welfare.
Posts: 407 | Registered: Jul 2003
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"But of all the people I personally know, those are the only people who are getting help from the government."
This is because you consider a refusal to accept charity to be a positive trait. Ergo, the people who do accept charity are less deserving of it.
Posts: 37449 | Registered: May 1999
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quote:This is because you consider a refusal to accept charity to be a positive trait. Ergo, the people who do accept charity are less deserving of it.
No, I consider people who demand charity, whether they actually need it or not, who can't admit to themselves or anyone else that their poverty is a result of their own actions, less deserving.
Pride--or an inability to accept help even when you need it--is also a character flaw.
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