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Old 11-09-2010, 05:41 PM   #141
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How do you propose taxing the unearned income to the recipients?
I don't. See how simple this is

What's the difference to the rest of the country if I want to take $100,000 and buy a fancy luxury car, or I want to give $100,000 to someone so they can buy a fancy luxury car, or that person uses $100,000 of their own money to buy a fancy car?

In all cases $100,000 had to be earned at some point, and it would have been taxed as earnings along the way. No reason to tax it as 'income' again. Isn't this how it works in business? For a company, salaries are expenses, taxes are on profits, and profits are above expenses. So the company does not pay taxes on the salary, but the earner pays.

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Old 11-09-2010, 05:42 PM   #142
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Let me chew on that a while. I'm probably more aligned with that thinking then you'd imagine, but on first reading, I think it downplays the effort that people put into life, but let me work on it.
It may seem that way because what I am saying is that your degree of effort is a product of all those causes and effects. So the person who appears to put in very little effort and screws up his life may not have had much choice in the matter. He also did the best he could. I know that is somewhat heretical, but I see no reason to believe otherwise.
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Old 11-09-2010, 05:48 PM   #143
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I don't. See how simple this is

What's the difference to the rest of the country if I want to take $100,000 and buy a fancy luxury car, or I want to give $100,000 to someone so they can buy a fancy luxury car, or that person uses $100,000 of their own money to buy a fancy car?

In all cases $100,000 had to be earned at some point, and it would have been taxed as earnings along the way. No reason to tax it as 'income' again. Isn't this how it works in business? For a company, salaries are expenses, taxes are on profits, and profits are above expenses. So the company does not pay taxes on the salary, but the earner pays.

-ERD50
This is unearned income. Everyone is subject to paying it. It doesn't matter if tax was paid previously - when my after-tax income is paid to a lawyer she pays tax on it.

Double taxation applies to the same income and the same individual, not the same income and another individual.

Why should one person be allowed to receive income and pay no tax while another receives and pays - when neither earned it?
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Old 11-09-2010, 05:48 PM   #144
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In IL, a high % of school funding comes from the local community. There is an affluent north shore suburb where the property taxes are very high, and they pour tons of money into their local school system. It is something they choose to do by referendum. Some activists bussed kids in from the Chicago Public Schools and demanded they be enrolled in this school that they paid no taxes to support. There were definitely comments made that if we can't have it they can't have it. Geez, what's the point of working and saving if you're not allowed to benefit from it?

-ERD50

I do not understand what this has to do with the estate tax discussion.
On one hand, it doesn't, it was a response to a slippery slope comment.

OTOH, it does - it is an example of some people who seem to think that if they don't have something, no one else should have it either. And I seem to hear "If these people can't accumulate wealth, we don't want anyone else to either. Tax 'em out of existence".

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Old 11-09-2010, 05:52 PM   #145
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On one hand, it doesn't, it was a response to a slippery slope comment.

OTOH, it does - it is an example of some people who seem to think that if they don't have something, no one else should have it either. And I seem to hear "If these people can't accumulate wealth, we don't want anyone else to either. Tax 'em out of existence".

-ERD50
OK. I understand your point, although I don't see that argument being made.
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Old 11-09-2010, 05:55 PM   #146
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This is unearned income. Everyone is subject to paying it. It doesn't matter if tax was paid previously - when my after-tax income is paid to a lawyer she pays tax on it.

Double taxation applies to the same income and the same individual, not the same income and another individual.

Why should one person be allowed to receive income and pay no tax while another receives and pays - when neither earned it?
Time for me to run, but these kinds of questions are what keeps leading me down the road of a National Sales Tax. That just seems so simple. You get taxed based on what you spend. No complex machinations about how it was earned, how long you held it, what are the various tax rates for this activity or that, who gave what to who, what is the cost basis, can I do alike-kind exchange, and a million other things. Just a number at the register (and the prebate - which would be no more complex than our standard deduction now).

And if some rich guy isn't spending his money, it must be invested somewhere and that has value. It will get spent eventually. Not gonna worry about that.

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Old 11-09-2010, 06:04 PM   #147
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Do you guys have jobs?
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Old 11-09-2010, 06:09 PM   #148
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Do you guys have jobs?
Blasphemy!
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Old 11-09-2010, 06:10 PM   #149
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This is unearned income. Everyone is subject to paying it. It doesn't matter if tax was paid previously - when my after-tax income is paid to a lawyer she pays tax on it.

Double taxation applies to the same income and the same individual, not the same income and another individual.

Why should one person be allowed to receive income and pay no tax while another receives and pays - when neither earned it?
Would you also tax life insurance money paid to the beneficiary as unearned income? I see little difference between being the beneficiary of an inheritance or a beneficiary of life insurance. In either case, someone dies and you get something you didn't earn.
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Old 11-09-2010, 06:11 PM   #150
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Do you guys have jobs?
What kinda question is that? Of course we don't have jobs. I mean..... I mean..... geeeze, what a mean spirited thing to even bring up!
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Old 11-09-2010, 06:16 PM   #151
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Coming at this from a different angle, the following is a quote from a study performed by the Tax Policy Institute in the late 90s:

"Estate taxes also affect the heirs' work effort and savings. Recent evidence suggests that large inheritances may speed up the retirement decision. Even for those who remain in the labor force, one may also observe a reduction in labor supply. However, labor supply effects are generally small. Similarly, consumption is also observed to rise in the aftermath of inheritance. But, again, these effects are small." (emphasis added)

Logic dictates that if you are for an estate tax you are against early retirement....so put that in your tax pipe and smoke it.

Obviously I kid, but the information about consumption and retirement is interesting albeit noted to only have a small affect.
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Old 11-09-2010, 06:30 PM   #152
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What kinda question is that? Of course we don't have jobs. I mean..... I mean..... geeeze, what a mean spirited thing to even bring up!
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Old 11-09-2010, 06:40 PM   #153
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Would you also tax life insurance money paid to the beneficiary as unearned income? I see little difference between being the beneficiary of an inheritance or a beneficiary of life insurance. In either case, someone dies and you get something you didn't earn.
Good question. I never thought about it.

OTTOMH, an insurance payout is the result of a premium having been paid to compensate for a risk and the payout is for damages, so it doesn't represent any type of economic gain, and therefore wouldn't be taxed. If there were insurance paid that represented something other than damages, yes. So, if the insurance recipient incurred damages (like a spouse or minor child) than it would not be taxed, if the beneficiary is someone else - adult child or extended family, perhaps it should be taxed. Gotta think about this one.
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Old 11-09-2010, 07:14 PM   #154
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I'd be in favor of eliminating the estate tax as long we tax inherited money. If I win the lottery, or the World Series of Poker, I have to be tax on all the money. However, if I win the genetic lottery my winnings are tax exempt. Why is that fair?
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Old 11-09-2010, 07:18 PM   #155
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No problem TP. You would have had to read my comments in light of the quote which was included in my post. Taken out of context, as you did, naturally you misunderstood my point.

I do it all the time... so why not now
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Old 11-09-2010, 07:21 PM   #156
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This is unearned income. Everyone is subject to paying it. It doesn't matter if tax was paid previously - when my after-tax income is paid to a lawyer she pays tax on it.

Double taxation applies to the same income and the same individual, not the same income and another individual.

Why should one person be allowed to receive income and pay no tax while another receives and pays - when neither earned it?

Is there a lawyer joke in there
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Old 11-09-2010, 07:26 PM   #157
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I'd be in favor of eliminating the estate tax as long we tax inherited money. If I win the lottery, or the World Series of Poker, I have to be tax on all the money. However, if I win the genetic lottery my winnings are tax exempt. Why is that fair?
Interesting about lotto.... I do not think you pay state taxes on lotto winnings... but I do not know

If you win the lotto over in Europe, you do not pay taxes (at least the ones I know about)...
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Old 11-09-2010, 11:13 PM   #158
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Interesting about lotto.... I do not think you pay state taxes on lotto winnings... but I do not know

If you win the lotto over in Europe, you do not pay taxes (at least the ones I know about)...
Generally states don't tax the winning on their own state lotteries, but do owe them on other state. So a CA residence won't owe taxes on the CA lottery, but would on the multi-state megalotteries. US citizens owe taxes on things like Irish Lottery.
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Old 11-09-2010, 11:20 PM   #159
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Generally states don't tax the winning on their own state lotteries, but do owe them on other state. So a CA residence won't owe taxes on the CA lottery, but would on the multi-state megalotteries. US citizens owe taxes on things like Irish Lottery.
I wonder if Hawaii residents are even eligible to collect lottery winnings. I guess it'd be treated as "out of state" income and taxed voraciously. Just like the way all us Hawaii residents rigorously report our Vegas gambling income...
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Old 11-10-2010, 03:21 PM   #160
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Hmmmm, we seem to have these discussions about "luck," "fairness" and "wealth re-distribution" every year or so. I don't intend to hi-jack this thread into a philosophical discourse about those notions, but I think we'd all benefit from this informative lecture by Professor Sandel: Justice with Michael Sandel - Episode Eight.

By the way, I read his recent book on Justice and it's fast reading and a very good primer on some of the essential readings on moral philosophy.
I happened to catch this particular lecture on our public television station. I thought it was good and looked for more. I discovered that this was a type of online course, but it was only open (at least the original discussion forum) to Harvard alums and parents.

I'll see if I can take your advice and do some more reading.
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