NY Times Editorial on Changes to Estate Tax

[stephenandrew]

A quote of a portion of an editorial from today's (11/7/10) NY Times:

"Most Democrats have called for restoring the estate tax to its level in 2009, which would exempt 99.8 percent of estates from ever facing the tax. The tax would not kick in until an estate is worth more than $3.5 million ($7 million for couples), with a rate of 45 percent on property above those levels. The proposal — which could cost $250 billion over 10 years — is more than generous.
Republicans and some Democrats want to raise the exemptions to $5 million ($10 million for couples), and lower the rate to 35 percent. That would be a huge break for mega estates, an unconscionable giveaway (emphais mine) that would cost $130 billion more than the Democrats’ plan over 10 years."

I think we can have a reasonable discussion about what appropriate tax policy is. What I find troubling though, is the language used by the Editorial writer. To claim that a lower tax rate and a higher exemption is a "giveaway" pre-supposes that the money in question belongs to the government (which it does not). The government is not giving anything away--it is just taking less of what was earned (and saved) by those individuals over the course of a lifetime.

The editorial writers could just have easily said, "The higher rates proposed by most Democrats would cost the families of those who worked and saved all of their lives $130 billion more than Republicans' plan over 10 years."

 

[keegs]

This impacts a very small percentage of estates. If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

 

[RonBoyd]

This impacts a very small percentage of estates. If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

+1

 

[73ss454]

This impacts a very small percentage of estates. If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

Because the people who have to pay for it aren't going to want to pay.

Maybe we should have the people who have pensions or went to college pay more estate taxes.

 

[stephenandrew]

This impacts a very small percentage of estates. If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

In my mind, the issue involved has nothing to do with the number of people impacted by the proposed policy. The real issue has to do with the perspective one takes on to whom the money belongs.

 

[keegs]

In my mind, the issue involved has nothing to do with the number of people impacted by the proposed policy. The real issue has to do with the perspective one takes on to whom the money belongs.

Threre's no deception in raising the estate tax Steve. There is however in the notion that you could do it without budget consequences.

 

[Danmar]

The estate tax issue is a real concern to me. For this reason I am reluctant to buy any US real estate. No such issue in Canada.

 

[stephenandrew]

Threre's no deception in raising the estate tax Steve. There is however in the notion that you could do it without budget consequences.

Well, three points--(1) I have no issue if folks think that raising/lowering the estate tax is the "right" policy. Reasonable people can disagree about a lot of things--certainly one of them would be a "fair", or "appopriate" level of taxation (estate or otherwise). (2) I agree that any policy related to taxation may well have budgetary consequences--it would seem to me that raising the exemptions & tax rates on estates would, all other things being equal, raise the budget deficit. (3) My point, and certainly others may disagree, is that the the editorial writer approaches this from the perspective that government is is giving something away by lowering taxes. I would contend, the government has nothing to give away---the money was not theirs to begin with. I think it would be more sincere if the wirter simply represented it as the government has a need for increased revenue and that, on balance, the "fair". "appropriate" place to get/take it is from individuals with estates over $X.XX.

 

[keegs]

Is this in today's paper?

 

[RonBoyd]

Is this in today's paper?

http://www.nytimes.com/2010/11/07/opinion/07sun1.html?_r=1&hp

 

[Nords]

This impacts a very small percentage of estates. If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

Because the NYT has to sell newspapers every day whether or not there's something worth writing about...

 

[keegs]

The article argues that tax policies can stimulate demand, a critical component to the recovery, while addressing the near to mid term need for addressing the deficit.

Perhaps there could have been more said about spending cuts further out, but at this point in the recovery, government clearly has a spending role to play.

If progressive taxation offends the sensibilities then so be it....it's in the constitution.

 

[MichaelB]

I think we can have a reasonable discussion about what appropriate tax policy is.

The only place once can have a reasonable discussion about tax is at this forum, and only because of active and effective moderation, and then only fir the first day or two. Then it becomes a discussion about something related to taxes, then a discussion about something unrelated to taxes.

 

[samclem]

Emphasis added:

If progressive taxation offends the sensibilities then so be it....it's in the constitution.

Really?

 

[Texas Proud]

A quote of a portion of an editorial from today's (11/7/10) NY Times:

"Most Democrats have called for restoring the estate tax to its level in 2009, which would exempt 99.8 percent of estates from ever facing the tax. The tax would not kick in until an estate is worth more than $3.5 million ($7 million for couples), with a rate of 45 percent on property above those levels. The proposal — which could cost $250 billion over 10 years — is more than generous.
Republicans and some Democrats want to raise the exemptions to $5 million ($10 million for couples), and lower the rate to 35 percent. That would be a huge break for mega estates, an unconscionable giveaway (emphais mine) that would cost $130 billion more than the Democrats’ plan over 10 years."

I think we can have a reasonable discussion about what appropriate tax policy is. What I find troubling though, is the language used by the Editorial writer. To claim that a lower tax rate and a higher exemption is a "giveaway" pre-supposes that the money in question belongs to the government (which it does not). The government is not giving anything away--it is just taking less of what was earned (and saved) by those individuals over the course of a lifetime.

The editorial writers could just have easily said, "The higher rates proposed by most Democrats would cost the families of those who worked and saved all of their lives $130 billion more than Republicans' plan over 10 years."

Your concern about wording is correct in the way we think.... but incorrect in the way of Washington think... it is based on the paygo system...

IOW, IF you propose a tax cut.... so the people can keep more of THEIR money... you have to either cut some service OR raise taxes from someone else... So if you are in this mindset... any tax cut is 'spending'.. ie, your current laws lists it as income to the gvmt.... so changing that is a giveaway....


NOW... I could argue that if they want to cut taxes by this amount of money.... there might be a better place to cut them... that is the other argument about 'giveaway'.... who should you give tax cuts to


One of the suggestions that I would make is they take away ALL prior exemptions that are in the law... I remember one where there was a special deal cut for the Gallow family (IIRC back in the 80s) that saved them millions in estate taxes... this should not be allowed to happen.. period..

 

[stephenandrew]

If progressive taxation offends the sensibilities then so be it....it's in the constitution.

It is not the progessive nature of the tax code that I find offensive--I tried to articulate my issue with the editorial in the two prior posts. Obviously I need to work on my rhetoric---back to my freshman debate class I guess!!

 

[MichaelB]

IOW, IF you propose a tax cut.... so the people can keep more of THEIR money... you have to either cut some service OR raise taxes from someone else... So if you are in this mindset... any tax cut is 'spending'.. ie, your current laws lists it as income to the gvmt.... so changing that is a giveaway....

Except this tax, if cut, does not let people keep their money, because they're deceased. It lets other people keep their money.

 

[ERD50]

This impacts a very small percentage of estates.

That makes it OK?

I could make a long list of crimes that affect very few people, should we decriminalize those crimes?

For 2007,

United States Crime Rates 1960 - 2009

16,929 murders in the United States.

How many people pay the estate tax?

14,700 estates had to pay any estate tax at all.

Murder, estate tax, they only affect a small percentage, it's OK.

If progressive taxation offends the sensibilities then so be it....it's in the constitution.

Emphasis added:

Really?

Add me to the list waiting for your reply.

-ERD50

 

[ERD50]

Except this tax, if cut, does not let people keep their money, because they're deceased. It lets other people keep their money.

And if they try to distribute it while they are still alive, it gets taxed. So they can't do what they want with their own money.

edit/add: Just want to say that I agree with the OP, the language is insulting.

-ERD50

 

[harley]

If the additional revenue can go to funding public pensions or to make college more affordable then my only question is why is someone arguing the issue.

So then, you agree with many of us that they shouldn't do it, right? Because it won't help with funding pensions or making college more affordable. It will just get spent.

If progressive taxation offends the sensibilities then so be it....it's in the constitution.

Really?

Add me to the list waiting for your reply.

Me too.

 

[youbet]

Maybe we should have the people who have pensions or went to college pay more estate taxes.

I hear ya man! It's time for those darn pension recipients to pay their fair share!

 

[samclem]

If the additional revenue can go to funding public pensions or to make college more affordable

Lottery proponents in Florida sold it as a way to boost funding for schools. "Every dime we raise will go to the schools". And, it did. And this allowed the government to reduce the amount spent from the general fund on education by a corresponding amount. So, the lottery didn't benefit the schools at all. Now, I'm not opposed to lotteries (I think lotteries are a great voluntary tax), but anyone who thought the schools would benefit learned a lesson about how government works.

Fungible (adj)fuhn-juh-buh

l
- being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligatio

As far as tax money making college more affordable, nothing has done more to make college unaffordable than the bucketloads of money Uncle Sam pumps into the system.

 

[youbet]

Lottery proponents in Florida sold it as a way to boost funding for schools. "Every dime we raise will go to the schools". And, it did. And this allowed the government to reduce the amount the spend from the general fund by a corresponding amount. So, the lottery didn't benefit the schools at all. Now, I'm not opposed to lotteries (I think lotteries are a great voluntary tax), but anyone who thought the schools would benefit learned a lesson about how government works.

I think you have the states mixed up samclem. It was Illinois where lottery revenue was dedicated to schools but the state legislators simply reduced the general fund contribution to the schools by an equal amount. If you're trying to say that Florida politicians can be as deceitful as Illinois politicians.......ahhhhhh.......I don't think so. Not even close.

I also agree though that the lottery is a good tax. I've never purchased a ticket!

 

[samclem]

I think you have the states mixed up samclem. It was Illinois where lottery revenue was dedicated to schools but the state legislators simply reduced the general fund contribution to the schools by an equal amount.

Then that makes at least two states where this happened. Google Florida "Education Enhancement Trust Fund" for more info.

But you are right, Illinois probably thought of this sell-and-switch first. You've got to get up pretty early to out-scam an Illinois politician.

 

[Animorph]

1. I already paid taxes on that money. Suddenly it becomes taxable again when I die?

2. It costs me plenty, $ and time, to tax plan and set up trusts just so DW and I can each leave an estate instead of having it combined into one estate for the surviving spouse, with one estate tax exemption applied.

3. It incentivizes me to spend the money before I die, rather than saving it in case I, or my family, need it late in life.

I have no problem leaving the tax basis of everything where it is, without the normal step-up. Although that does make it easier for the survivors. But this tax is just another money grab and a social wealth transfer.