Inheritance Tax Should be Abolished

[ERD50]

Hollywood is looking for someone to play Scrooge in the new version of the A Christmas Carol. I sent them a link to this thread and told them there are a lot of good candidates here.

Weren't you the guy complaining about the use of 'labels'? My use was not even meant in a derogatory way, just a descriptive one.

If you read the content of those posts, I think you will see that people are not saying 'Don't help someone', they are saying 'let's give them some real, meaningful, long-term help'.

At least that is what I am saying.

-ERD50

 

[RetireeRobert]

Well strictly speaking, very little of anything we have are "necessities." Do I really *need* a car, or a bus pass for that matter? I could just wake up 4 hours early and walk to work. Do I really *need* more than one shirt? I could just wash it every night (by hand, of course) and let it dry while I sleep.

Yes? Your tone is like that would be ridiculous. Strictly speaking, why the hell are taxpayers expected to pay for this stuff for the "poor"?

 

[packrat44]

80 percent of poor households have air conditioning.

62 percent have cable or satellite TV reception.

I would like to have both air conditioning and cable/satellite. While my retirement income is above the official poverty rate, I consider the cost of these luxuries too great.

 

[FinanceDude]

Hollywood is looking for someone to play Scrooge in the new version of the A Christmas Carol. I sent them a link to this thread and told them there are a lot of good candidates here.

Well, if the social program lobbyists need some more help, I'll give them your name.........

 

[kombat]

Yes? Your tone is like that would be ridiculous. Strictly speaking, why the hell are taxpayers expected to pay for this stuff for the "poor"?

This is devolving into an indefensible argument. The bottom line is, you can't simply decide to give poor people nothing and let them fend for themselves. If we did that, then they wouldn't just quietly disappear so we could all live in our productive, peaceful society. They'd turn to crime. Their kids would starve to death. It would not be pretty.

On the other hand, no matter how little you give them, there will always be people who feel it is too much.

I don't believe that society should provide all the necessities for poor people. I think poor people should be required to at least pull some of their own weight, rather than just tag along on society's coattails. However, if someone is working to get out of the rut and contributing to society, then I think it's dehumanizing to presume to dictate to that person that they're not allowed to "waste" any money on frivolities like cigarettes, booze, bus passes, or more than one shirt.

 

[armor99]

If someone else is paying your way through the world, and you are mentally and physically able to do it for yourself, yet choose not to, then there is only one conclusion to be reached here. For whatever reason, you are mentally a child that has somehow made it into an adults body. There is NOTHING shameful about being on welfare. Life is not fair, unexpected things happen, bad things happen to good people every day. Yet there IS something particularly shameful about people that do nothing to try to get themselves off of welfare. It is equally shamefull that certain politicians want to keep people there because they are counting on their votes. After all.... even the least intelligent amoung us will never "bite the hand that feeds them".
To be honest,the prevalent attitude of some people that people on welfare need to be "helped" because they cannot help themselves, should be completely offensive to anyone. It implies that these folks can never do for themselves which is certainly untrue. Some percentage might not WANT to... but there is a vast difference. You can never really get too mad at someone that is truly stupid. A lack of intelligence is not a choice. But a person that chooses to remain perpetually ignorant should be shunned by all of society.

And just one more thought for Kombat.... you wrote:
This is devolving into an indefensible argument. The bottom line is, you can't simply decide to give poor people nothing and let them fend for themselves. If we did that, then they wouldn't just quietly disappear so we could all live in our productive, peaceful society. They'd turn to crime. Their kids would starve to death. It would not be pretty.

Or... those people could ACTUALLY become productive and enjoy the same life that we do. Are you implying that the only thing they are capable of is committing crimes? Or is it more like I was getting at... that it is a CHOICE that these folks are making?

 

[work4beer]

Check your facts before you make such assertions. How "untaxed" were contributions to Roth IRAs and Roth 401ks? How "untaxed" were contributions to "non-deductible traditional IRAs? The contributions to these plans were taxed in full (and likely up the kazoo).

I should have been more clear, I mean traditional 401(k)s and IRAs.

Point being, estates subject to the tax ($2M for a married couple) are made up of assets which are likely to have been largely untaxed. I'd love to see a study which shows what percentage of estates are actually "double taxed." For me personally, when I ER I estimate about 1/3 of my "estate" will have been assets from taxed income, the rest either untaxed capital gains, or in tax-deferred accounts. For "rich" people, it will likely be more.

 

[Rustic23]

you can't simply decide to give poor people nothing and let them fend for themselves. If we did that, then they wouldn't just quietly disappear so we could all live in our productive, peaceful society. They'd turn to crime. Their kids would starve to death. It would not be pretty.

I am not sure of your age, so the state providing for the poor may be all you know, however I believe that from the inception of the country, and well before, to sometime in the last 50 to 75 years, the state did not provide for the poor. While I am a poor historian, I believe it was Carl Marx that put forth the idea that the state had a responsibility to care for it's poor. The Soviet Union went down this path, and were unable to eliminate poverty.

We were founded as a capitalistic society, and sometime around FDR we began to experiment with Socialism. Politicians learned they could buy their offices by taking from the well to do and providing for the poor. Over a trillion dollars later and we still have 37 million below the poverty level. What we are doing is not working!

 

[packrat44]

If someone else is paying your way through the world, and you are mentally and physically able to do it for yourself, yet choose not to, then there is only one conclusion to be reached here. For whatever reason, you are mentally a child that has somehow made it into an adults body. There is NOTHING shameful about being on welfare. Life is not fair, unexpected things happen, bad things happen to good people every day. Yet there IS something particularly shameful about people that do nothing to try to get themselves off of welfare. It is equally shamefull that certain politicians want to keep people there because they are counting on their votes. After all.... even the least intelligent amoung us will never "bite the hand that feeds them".
To be honest,the prevalent attitude of some people that people on welfare need to be "helped" because they cannot help themselves, should be completely offensive to anyone. It implies that these folks can never do for themselves which is certainly untrue. Some percentage might not WANT to... but there is a vast difference. You can never really get too mad at someone that is truly stupid. A lack of intelligence is not a choice. But a person that chooses to remain perpetually ignorant should be shunned by all of society.

Amen!

 

[Freein05]

I am not sure of your age, so the state providing for the poor may be all you know, however I believe that from the inception of the country, and well before, to sometime in the last 50 to 75 years, the state did not provide for the poor. While I am a poor historian, I believe it was Carl Marx that put forth the idea that the state had a responsibility to care for it's poor. The Soviet Union went down this path, and were unable to eliminate poverty.

We were founded as a capitalistic society, and sometime around FDR we began to experiment with Socialism. Politicians learned they could buy their offices by taking from the well to do and providing for the poor. Over a trillion dollars later and we still have 37 million below the poverty level. What we are doing is not working!

Well explain why the following countries have some form of a mix of capitalism and Socialism and are financially as good or better off then the US. Most of them have a lot more Socialism. You also need to study your history and get your facts correct. The Capitalist American corporation as we know it today did not exist when our country was founded. Look at the Robber Baron time period and see capitalism at it's finest. Rush is not a good source.

Norway,Denmark,Finland,Netherlands,Germany,England,France,Spain,Portugal Sweden, Ireland. All of the countries our forefathers came from.

 

[bright eyed]

This is devolving into an indefensible argument. The bottom line is, you can't simply decide to give poor people nothing and let them fend for themselves. If we did that, then they wouldn't just quietly disappear so we could all live in our productive, peaceful society. They'd turn to crime. Their kids would starve to death. It would not be pretty.

On the other hand, no matter how little you give them, there will always be people who feel it is too much.

I don't believe that society should provide all the necessities for poor people. I think poor people should be required to at least pull some of their own weight, rather than just tag along on society's coattails. However, if someone is working to get out of the rut and contributing to society, then I think it's dehumanizing to presume to dictate to that person that they're not allowed to "waste" any money on frivolities like cigarettes, booze, bus passes, or more than one shirt.

geez thank you!!!

There are a lot of assumptions flying around about what some of the government funds are used for. Are there people who abuse the system? sure, are there programs that need to be improved or closed down? sure...

but there are a LOT of great programs that y'all have been assuming aren't supported by your tax dollars...(and say you would if you were given the option to)

For example, many counties have a program for public health nurses who go to homes of low income young mothers, help teach them how to care for their kids, and also give them referrals to parenting programs and encourage them to go to college or pursue better employment opportunities - for young women who otherwise might not know about those opportunities or ever have someone else show them they could do it. It improves outcomes for the kids and the moms.

Most programs have a "teach to fish, not give a fish" orientation...

Also - Armor - your statement (that got an amen) about - why some people just can't do better for themselves in the lowest wage earning classes - is because they can't - because they were born in the wrong country - into the wrong family, into a social class where they didn't get the education or other skills so they are picking your fruit and veggies, or cleaning up after you leave mega corp. Is it my father in law's fault he only had a 4th grade education? He busted his butt for decades doing the best he could do...i'm sorry that doesn't pass your "doing well for yourself" test.

ERD, I agree that most of us would agree if we took a minute to see what each other is complaining about. I'm all for reform, more efficiency, a saner tax system - just not for throwing the baby out - ya know what i mean ... but what i have trouble with are proposals to abolish/remove/change that don't address filling the gap that exists - but just say - tough for you...

 

[ERD50]

ERD, I agree that most of us would agree if we took a minute to see what each other is complaining about.

Thanks - it does tend to get lost in the emotion. I think that is simply because each of us come into any discussion with different views based on our own history. Rather than look for the common ground, we often tend to defend our past history. It's human nature I guess, we all do it to some degree. Patient, respectful discussion can let us see that common ground. And just maybe see a compromise?

I'm all for reform, more efficiency, a saner tax system - just not for throwing the baby out - ya know what i mean ... but what i have trouble with are proposals to abolish/remove/change that don't address filling the gap that exists - but just say - tough for you...

The recent posts are getting worked up over the whole social program issue, and tying this into Estate Tax reform/elimination. To get back some perspective, remember that in an earlier (way earlier ) post, we learned that the current Estate Tax, with all it's loopholes, only accounts for around 1-1.5% of the federal revenue.

So it shouldn't be too hard to reform this, remove the loopholes, and end up with something that collects as much or more than the present code. Or even eliminate it, and eliminate other loopholes to cover it.

If you keep this revenue neutral, social program effectiveness is really a separate issue. It's not one or the other.

-ERD50

 

[Gumby]

..

 

[FinanceDude]

Well explain why the following countries have some form of a mix of capitalism and Socialism and are financially as good or better off then the US. [/quote[

Define, "better off", please...........

 

[Rustic23]

If I wanted to live in a Captilistic Socialist country I would move to

Norway,Denmark,Finland,Netherlands,Germany,England ,France,Spain,Portugal Sweden, Ireland.

 

[armor99]

Also - Armor - your statement (that got an amen) about - why some people just can't do better for themselves in the lowest wage earning classes - is because they can't - because they were born in the wrong country - into the wrong family, into a social class where they didn't get the education or other skills so they are picking your fruit and veggies, or cleaning up after you leave mega corp. Is it my father in law's fault he only had a 4th grade education? He busted his butt for decades doing the best he could do...i'm sorry that doesn't pass your "doing well for yourself" test.

Hi Brighteyes.... I think I understand your point. There are some people that are certainly born into a deck that is stacked against them. But I think you are overlooking the most important factor that determines your future... the human factor. Perhaps I am just more of an optimist than most about life, and about people. But I really do believe that almost ANYONE can become successfull if they are really motivated to do so. Almost everyone has some skill or aptitude at something. The most brilliant person in the world might never become a great artist, or a sports star. Not through lack of knowledge, but through lack of skill. I have a really hard time believing that there are people out there with no aptitude or skill in ANYTHING.
I have often heard people say of others that get good paying jobs that they won the "job lottery". As if somehow it was total luck, and the years of struggle in college, the skills they learned along the way, etc.... meant nothing. It is certainly not your father in laws fault that he only had a 4th grade education, what is his fault, is not seeking to rectify that situation. To my thinking, lack of education is not the same thing as lack of intelligence. At some point it is up to each of us to take ownership of our own lives. Blaming society, being born into the wrong family, lack of education, will only get you so far. I think it is a choice every person has to make between, "sigh... there is nothing I can do... I am trapped by fate and luck", and "this situation is not good.... what am I going to do to make it better for myself".

 

[bright eyed]

Thanks - it does tend to get lost in the emotion. I think that is simply because each of us come into any discussion with different views based on our own history. Rather than look for the common ground, we often tend to defend our past history. It's human nature I guess, we all do it to some degree. Patient, respectful discussion can let us see that common ground. And just maybe see a compromise?


The recent posts are getting worked up over the whole social program issue, and tying this into Estate Tax reform/elimination. To get back some perspective, remember that in an earlier (way earlier ) post, we learned that the current Estate Tax, with all it's loopholes, only accounts for around 1-1.5% of the federal revenue.

So it shouldn't be too hard to reform this, remove the loopholes, and end up with something that collects as much or more than the present code. Or even eliminate it, and eliminate other loopholes to cover it.

If you keep this revenue neutral, social program effectiveness is really a separate issue. It's not one or the other.

-ERD50

ERD i agree completely - i think perhaps the discussion got broader because of general negative sentiments about taxes and what they pay for.

Armor - I agree with you - to a degree - I do think we are all capable of amazing things - but we should not let that optimism outshine the harsh light of reality that some of us come with a bigger weight on our shoulders than others. Some people rise out of adversity, others are crushed - do you look at the ones who are crushed and step on them harder? I don't know what makes some people more resiliant or positive than others...My FIL is very resiliant in some ways and in others he was very weak and is an alcoholic etc etc...

 

[Independent]

I got to this discussion late. So I got to read all 10 pages of comments before making any of my own.
I want to comment on the estate/inheritance tax issue, not on the last two pages of “poverty program” discussion.

In the first 8 pages, I didn’t see the following comments. Maybe they are so obvious that people didn’t bother to write them out. But here they are:

1. As long as we have a gov’t, we’re going to have taxes.
2. All taxes have some side effects.
3. Most side effects are “bad”. Taxes on earned income discourage work, taxes on capital income discourage investing, taxes on real estate discourage home improvements, etc.
4. Occasionally, we find a tax with positive side effects. Taxes on tobacco, alcohol, and gasoline are “good” to people who think we should reduce the use of these things.
5. There aren’t enough things like tobacco, alcohol, and gasoline to fund our whole gov’t on just those taxes. Therefore, we need to choose the other “least bad” taxes to pay for the rest of gov’t.

Now for some more controversial comments.
I think the estate tax has a couple modest positives. It reduces the concentration of wealth, and it reduces the “dumb luck” factor in economic results (it makes us more of a meritocracy). Neither of these is huge, but they are small positives.
It also has some “bad” side effects*, and maybe the bad still outweighs the good. However, I think (5) above is an important principle.

Estate or inheritance taxes could allow us to make some small reduction to taxes that have only “bad” side effect, such as income, payroll, sales, or real estate taxes.

If that’s the way they are used, then I think they are better than the alternatives.


* I'll agree with ERD50 that one of those "bad side effects" is the level of avoidance that results from trying to collect a lot of money at one time. Maybe an annual "wealth tax" would be better than an estate tax.

 

[Independent]

Well, top 10% net worth of US households is ~$1mm. Surely, the top 10% are "rich" and don't need to pass on all that money, do they? 55% of wealth above that level?

Median net worth of US households in 2000 was $55,000. Adjusted up to 2007 levels, surely the top half can help the bottom half? 55% of wealth above that level?

Anyone here in favor of either of those proposals? Or, lowering the tax rate until the 10% or median change becomes revenue-neutral??

I'm apparantly a minority of one here, but I would take you up on the idea.
This is the pretty direct result of my post above.

However, I'd want the median to be calculated on all estates (or better yet, inheritance), not on a median net worth that includes 30 year-olds in the data.