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Old 12-15-2007, 01:20 PM   #61
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When I first glanced at this, I thought you said "but you're not passing on".

I momentarily had visions of the Fountain of Youth.
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Old 12-15-2007, 02:20 PM   #62
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Do you mean not passing it on, period? Or would you allow some tax free gifting to others while you are alive?
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Old 12-15-2007, 02:54 PM   #63
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2.) Capital gains that have never been taxed before means the appreciated assets have never been sold before. And you know what that means? .....
There is another thing that people miss about the capital gains issue. Let's look at two individuals, born/die on the same date and equal in all ways except:

Person A sells all his stocks (all highly appreciated) over a period of years, to convert them to bonds or other investment choices. He pays the cap gains tax of X%, and all of this (above the exemption) is still subject estate taxes.

Person B held the same portfolio, but didn't realize the gains. Never paid cap gains tax, but pays the same estate tax as person A.

Why should they pay the same in estate taxes, just because they made an earlier investment decision? It's crazy, says I.

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Old 12-15-2007, 02:59 PM   #64
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Well, at least that is consistent - I can respect your opinion on the matter, even though it differs from mine.

I still think you will find problems with this approach - what about leaving money for a needy child? You are saying that even though I may have worked extra long and extra hard, and saved every penny I could, and maybe chose not to retire early so that I could provide for this child, that I should not be allowed to do so? This child would need to become a ward of the state, regardless of my efforts to provide for him/her?

I would not want those choices taken from me, were I in that position.

-ERD50
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Old 12-15-2007, 05:16 PM   #65
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Yes, especially if "one" spends only $16K a year!

I'm getting tired of this too.
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Old 12-15-2007, 05:30 PM   #66
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One thing you are forgetting is the money you put into an IRA or 401K received a tax benefit going in. It actually saved you taxes and the money is growing tax free while in an IRA or 401K. So your statement is not entirely true.
Not so fast. The money is not growing "tax free," it is growing "tax deferred." When you withdraw the gains, you pay tax on it. When you draw out what you deposited, you pay tax on it. So, all in all you didn't avoid any taxes, you just delayed them.

This is why the net buying power of funds in a traditional IRA or a traditional 401K would not be adversely affected by the institution of a national sales tax. It's a slightly different issue with Roth IRAs/Roth 401Ks, since the owner did pay tax on the funds.
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Old 12-15-2007, 06:08 PM   #67
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Not so fast. The money is not growing "tax free," it is growing "tax deferred." When you withdraw the gains, you pay tax on it. When you draw out what you deposited, you pay tax on it. So, all in all you didn't avoid any taxes, you just delayed them.

This is why the net buying power of funds in a traditional IRA or a traditional 401K would not be adversely affected by the institution of a national sales tax. It's a slightly different issue with Roth IRAs/Roth 401Ks, since the owner did pay tax on the funds.
Not so fast if you are lucky enough to die before you start taking money out you will not pay taxes on the money. Someone else will. You are also forgetting the advantages of being able to reduce your tax liability for the contributions you make to an IRA or 401K. So those lucky people who die before using their IRA or 401K money never pay taxes on it and also have had their tax liability reduced by them. Some people really know how to bet the tax man. Who said death and taxes can not be avoided.
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Old 12-15-2007, 07:28 PM   #68
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Well, at least that is consistent - I can respect your opinion on the matter, even though it differs from mine.

I still think you will find problems with this approach - what about leaving money for a needy child? You are saying that even though I may have worked extra long and extra hard, and saved every penny I could, and maybe chose not to retire early so that I could provide for this child, that I should not be allowed to do so? This child would need to become a ward of the state, regardless of my efforts to provide for him/her?

-ERD50
First, the kid could get $2 mil before anything is taxed, right? Second, surely you'd set up a trust in the kid's name if you had significantly more than $2 mil. Or even if you didn't, you'd have to set up some sort of trust to designate continuing care for after you croak. Unless you had no money, in which case the "death tax" is immaterial.
BTW, I'm not a lawyer either, and even if I were, I wouldn't trust my advice.
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Old 12-15-2007, 11:50 PM   #69
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First, the kid could get $2 mil before anything is taxed, right? Second, surely you'd set up a trust in the kid's name if you had significantly more than $2 mil. Or even if you didn't, you'd have to set up some sort of trust to designate continuing care for after you croak.

I assumed he meant you passed nothing on. The current exclusion changes year-by-year, and becomes infinite in 2010, so I figured it didn't qualify as 'easy'.

If you can set up a trust to evade the tax, rich people will find a way to use it to their advantage. Maybe Ms Hilton would become depressed and suicidal if she didn't have a huge amount of money to spend. Pay some psychologists to attest to that, and well, pretty soon you have your trust set up for a 'needy child' and you are avoiding the tax. They are called 'loopholes' because they utilize exceptions in the tax code that are usually set up with good intentions, but people find ways to use them that were not intended. Else, they wouldn't be called 'loopholes' they would just be called 'paying your taxes'.

This is what is making me more and more in favor of NST and abolish every other tax, including capital gains tax. There just isn't any big financial incentive to avoid a bunch of small taxes.

-ERD50
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Old 12-16-2007, 12:13 AM   #70
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.........They are called 'loopholes' because they utilize exceptions in the tax code that are usually set up with good intentions, but people find ways to use them that were not intended. Else, they wouldn't be called 'loopholes' they would just be called 'paying your taxes'.

This is what is making me more and more in favor of NST and abolish every other tax, including capital gains tax. ...........-ERD50
I'll vote for NST. When does it go on the ballot?

The death tax is just one joke we have been discussing in this thread. The income tax is its own joke. Remember when Money Mag ran its contest every other year?. They spelled out a hypothetical set of family/financial/work/business/medical/etc facts for a hypothetical family. Then asked 50 different of the best tax pros in the country to "prepare the tax return".

Yes, that's right, Money Mag ALWAYS got 50 different answers as to income tax bottom line. From the cream of the crop of tax pros.

It's ridiculous.
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Old 12-16-2007, 12:20 AM   #71
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I'll vote for NST. When does it go on the ballot?

The death tax is just one joke we have been discussing in this thread.
And AMT is the latest 'joke'. The 'joke' goes something like this:

Let's see, they pass the estate tax to catch the money from rich people, but rich people have ways to avoid paying it. They pass the AMT to catch the rich people who are avoiding income tax, and now the AMT catches the people it wasn't intended to catch.

Funny stuff, eh?

Arggggg.

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Old 12-16-2007, 11:33 AM   #72
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This came in an email today.


Building Permit Tax, CDL License Tax, Cigarette Tax, Corporate Income Tax, Dog, License Tax, Federal Income Tax, Federal Unemployment Tax (FUTA), Fishing License Tax, Food License Tax, Fuel Permit Tax, Gasoline Tax, Hunting License Tax, Inheritance Tax, Inventory Tax, IRS Interest Charges (tax on top of tax), IRS Penalties (tax on top of tax), Liquor Tax, Luxury Tax, Marriage License Tax, Medicare Tax, Property Tax, Real Estate Tax, Service charge taxes, Social Security Tax, Road Usage Tax (Truckers), Sales Taxes, Recreational Vehicle Tax, School Tax, State Income Tax, State Unemployment Tax (SUTA), Telephone Fed eral Excise Tax, Telephone Federal Universal Service Fe e Tax, Telephone Federal, State and Local Surcharge Tax, Telephone Minimum Usage Surcharge Tax, Telephone Recurring and Non-recurring Charges Tax, Telephone State and Local Tax, Telephone Usage Charge Tax, Utility Tax, Vehicle License Registration Tax, Vehicle Sales Tax, Watercraft Registration Tax, Well Permit Tax, Workers Compensation Tax.
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Old 12-16-2007, 12:10 PM   #73
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Capital gains that have never been taxed before means the appreciated assets have never been sold before. And you know what that means? It means the owners have never benefitted from spendable cash before either. Why should the government be the first to realize a huge chunk (55%) of cash on the appreciation of those assets instead of the surviving families when the owners dies? Corpse robbing used to be socially unacceptable, but for the government it's legallized.
I did not benefit from my paycheck until I received it, but I still had to pay taxes on it first. Why should capital gains be any different? Additionally, in most cases investors received benefits such as business income. I have a lot of unrealized capital gains in my business, and let me assure you I benefit greatly from the business.

Why is taxing the dead worse than taxing the living? Quite frankly I believe it is a better idea, not worse, given a choice between the two.
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Old 12-16-2007, 12:16 PM   #74
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1). Can you point out anyone on this Forum who have argued against ALL taxes? Or anyone in the major political parties who argue against ALL taxes? This is a common untrue slur thrown out as a red herring.
The individual here are a little higher caliber in terms of financial knowledge than the average American, and I doubt that many feel taxes should be abolished. However, I personally know several people who think all taxes should be abolished. However, I agree I overstated my case. Really, what I should have said is that these people believe in the abstract that taxes should be eliminate or more commonly "greatly reduced," with no ability to explain where the spending cuts would occur.
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Old 12-16-2007, 12:53 PM   #75
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you think the federal government can better spend the money I might leave behind ( FIRECALC says $1.98) than anyone I might choose to leave it to?
Just remember that Tax revenues are at an all time high despite the Bush tax cuts and our Lousy economy according to the Dems and their buddies in the media.
If we weren't spending a pile of it on war I'm sure the Dems would want to spend it on expanding social programs and not reducing the debt. After all we know the Reps are trying to build bridges to nowhere

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Old 12-16-2007, 01:42 PM   #76
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Old 12-16-2007, 11:44 PM   #77
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you think the federal government can better spend the money I might leave behind ( FIRECALC says $1.98) than anyone I might choose to leave it to?
Just remember that Tax revenues are at an all time high despite the Bush tax cuts and our Lousy economy according to the Dems and their buddies in the media.
If we weren't spending a pile of it on war I'm sure the Dems would want to spend it on expanding social programs and not reducing the debt. After all we know the Reps are trying to build bridges to nowhere

The last Democrat president (Clinton) was using the surplus to pay off the debt. The current president and Republican congress is the one that started running a deficit again. The bridge to no where was pushed by a Republican Senator from Alaska. Just wanted to make sure you had the correct parties.
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Old 12-17-2007, 12:03 AM   #78
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One thing you are forgetting is the money you put into an IRA or 401K received a tax benefit going in. It actually saved you taxes and the money is growing tax free while in an IRA or 401K. So your statement is not entirely true.
Actually, Roth IRA's and non-deductible contributory IRA' did not receive a tax benefit going in. You can refer to the IRS web site for info.
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Old 12-17-2007, 08:29 AM   #79
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As far as those with estates over 17 million I really don't care.
And this is where all wealth re-distribution type thinking falls apart. Do you really think that most people who you consider weathy, consider "themselves" to be wealthy? Most likely not. There is always more money to be had, bigger homes to buy etc. Even owners of that 110' yaht, look with envy on occasion at the 200' yaht. Very few people that I know are 100% content with what they have, and never strive for more. I think this is a constant no matter how much wealth you have.
So my question is this. What if someone who makes considerably less money than you suddenly said.... "Well I do not really care about people with estates over <fill in your own value here> they are weathy anyway!" What is considered "rich" is a completely relative term. If such taxes affected someone with a $ 2mill estate, those people would yell , "Wait... do not tax me I am not rich!!! (looking at those who have a $ 5 mill estate)" And exactly the same thing would happen to those with a $20 mill estate looking at those who make even more. I guess I just find it hypocritical for folks to advocate an esate tax for the rich (whoever those folks might actually be), but not for themselves as well. Just another example of "wanting your cake, and eating it too", you just cannot have it both ways.
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Old 12-17-2007, 10:56 AM   #80
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Actually, Roth IRA's and non-deductible contributory IRA' did not receive a tax benefit going in. You can refer to the IRS web site for info.
True on Roth IRA but a traditional IRA or 401K contributions reduce you taxable income which in turn reduces your tax liability.
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