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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-06-2006, 04:51 PM   #21
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Re: Death Tax and the DarK Side of Warren Buffet

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Originally Posted by Will Work 4 Beer
The fallacy here, of course, is that the guy who, for example, bought microsoft in 1985 and dies in 2005 has not paid ANY taxes on the capital gains.* So eliminating the estate tax only insures that his heirs won't either.
You claim fallacy and then use a false example?
Even if there were no estate tax, would not the son have to pay capital gains when he sold the stock?

If not, I would think that should be the way it should work.
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-06-2006, 08:06 PM   #22
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Re: Death Tax and the DarK Side of Warren Buffet

Actually, Zathras, the son would not pay the tax on the unrealized gain, because his cost basis in the stock is stepped up to the value of that stock at the time he inherited it. If he sold, he would only pay taxes on the amount it had gained since the inheritance. This is one of the reasons the estate tax is not so "unfair" as some would have it. I would agree to eliminate the estate tax if the heirs did not get a step up basis. (except for the times when my communist self would have your estate escheat to the government)
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-07-2006, 01:34 PM   #23
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Re: Death Tax and the DarK Side of Warren Buffet

Quote:
Originally Posted by Zathras
You claim fallacy and then use a false example?
Even if there were no estate tax, would not the son have to pay capital gains when he sold the stock?

If not, I would think that should be the way it should work.
I don't know how a no-estate-tax system would work since the law is not passed yet. Who knows what would happen to the son's cost basis?
And I thought the whole problem some people have with the estate tax is that it forces heirs to sell businesses, not that they have to pay taxes when they do.

The real problem here of course is that without an estate tax, the son doesn't have to sell, nor the grandson, and so forth. So multiple generations can just live off the original family fortune and not pay any taxes (except dividends or income from the business).

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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-07-2006, 02:32 PM   #24
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Re: Death Tax and the DarK Side of Warren Buffet

This article has at least one factual error.* Dairy Queen was a public company when Buffet bought it, so the estate tax really couldn't have played a role in forcing a sale.

For those who want to eliminate the estate tax-- which tax would you increase instead?* I would much rather pay lower income taxes or lower Social Security taxes than lower estate taxes.* Give them my money now or after I'm dead?* I know which choice I'll take*

If I was in charge, I would reform the estate tax, not eliminate it.* Increase the exemption to 5-10 million, index it to inflation, and tax the rest at whatever the highest income tax rate happens to be.* After that, anytime someone suggests
eliminating the estate tax, I'd tell them to work on lowering the income tax instead.
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-07-2006, 02:47 PM   #25
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Re: Death Tax and the DarK Side of Warren Buffet

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If I was in charge, I would reform the estate tax, not eliminate it.* Increase the exemption to 5-10 million, index it to inflation, and tax the rest at whatever the highest income tax rate happens to be.* After that, anytime someone suggests
eliminating the estate tax, I'd tell them to work on lowering the income tax instead.
I concur Hamlet.........* The way tax loopholes are normally structured, only the ultra-rich may avail themselves.* Upper middle class folks who've managed to accumulate a few million via saving, investing, entrepreneurship, etc., get the shaft.* Let the exemption be 5 million, as you suggest, and then tax the crap out of amounts over that.*
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-07-2006, 03:02 PM   #26
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Re: Death Tax and the DarK Side of Warren Buffet

Hey, I'm all for lower taxes, I just think the estate tax is about the lowest priority tax to be cut.* You want to stimulate employment?* Let's tax about cutting the employer's half of FICA.* It's a hidden, sleazy, and regressive tax.* Of all the Federal taxes I pay, FICA is on my most hated list*

We need to talk about cutting the spending side of things before we should be cutting taxes any further anyway.* We are borrowing too much money for my comfort.* When the Baby Boomers retire, we are going to have a tough time with the bill* *


Quote:
Originally Posted by youbet
I concur Hamlet.........* The way tax loopholes are normally structured, only the ultra-rich may avail themselves.* Upper middle class folks who've managed to accumulate a few million via saving, investing, entrepreneurship, etc., get the shaft.* Let the exemption be 5 million, as you suggest, and then tax the crap out of amounts over that.*
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-09-2006, 10:20 AM   #27
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Re: Death Tax and the DarK Side of Warren Buffet

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Originally Posted by Hamlet
Hey, I'm all for lower taxes, I just think the estate tax is about the lowest priority tax to be cut.* You want to stimulate employment?* Let's tax about cutting the employer's half of FICA.* It's a hidden, sleazy, and regressive tax.* Of all the Federal taxes I pay, FICA is on my most hated list*

We need to talk about cutting the spending side of things before we should be cutting taxes any further anyway.* We are borrowing too much money for my comfort.* When the Baby Boomers retire, we are going to have a tough time with the bill* *

FICA is the most regressive of all taxes. If you make minimum wage you don't pay any income tax but the FICA tax takes over 12% including the employer part.

The Bush proposal to eliminate the "death" tax would have eliminated the step up in basis for all inherited property. That would mean that even for estates below the former "limit" the heirs would owe income tax on granny's $100K portfolio when they cashed in. At that point all estates would be taxed.

What I've found with my FIL, he has no record of what he's paid for many of his investments. I'm trying to avoid selling these until after his death to avoid the chaos.
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-09-2006, 04:20 PM   #28
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Re: Death Tax and the DarK Side of Warren Buffet

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FICA is the most regressive of all taxes.
It's true that FICA tax is "regressive." Remember, though, that this is offset somewhat by the "progressive" FICA payout structure. Lower income wokers get more in benefits for each $$ paid in FICA taxes than higher-income workers do.
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-09-2006, 05:21 PM   #29
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Re: Death Tax and the DarK Side of Warren Buffet

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It's true that FICA tax is "regressive."* Remember, though, that this is offset somewhat by the "progressive"* FICA payout structure.* Lower income wokers get more in benefits for each $$ paid in FICA taxes than higher-income workers do.* *
You assume that once a low paid worker always a low paid worker. For the lower paid people starting out, they pay a high percentage of their income. As their career grows they may max out SS and qualify for the "progressive" payout.
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Re: Death Tax and the DarK Side of Warren Buffet
Old 09-09-2006, 06:08 PM   #30
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Re: Death Tax and the DarK Side of Warren Buffet

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Originally Posted by 2B
You assume that once a low paid worker always a low paid worker. For the lower paid people starting out, they pay a high percentage of their income. As their career grows they may max out SS and qualify for the "progressive" payout.
2B,
I'm not sure I understand your point. All workers, until they hit the cap, pay exactly the same percentage of their income into SS. After they hit the cap they don't pay any additional FICA taxes, but also don't earn additional credit that would raise their SS checks in retirement.
All I was saying is that the folks earning less get a higher payout per dollar paid in than higher wage earners.

Example: Worker born in 1951, begin paying FICA in 1970, pays every year until he retires at age 66.

If he earns (and pays FICA taxes on) $20K income every year, his monthly SS retirement check is $1741

If he earns (and pays FICA taxes on) $60k income every year, his monthly SS retirement check is $1974

The worker who paid 300% more in FICA taxes enjoyed a whopping 14% higher SS check in retirement. So, from a "what you get for what you pay" viewpoint, SS is not regressive at all. It is, in efect, not just an intergenerational wwealth transfer system, but also a high income to low income wealth transfer system.
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