Estate taxes

[brewer12345]

Gotta disagree with you on that one brewer....... I have no problem with a smaller military aimed at basic self-defense of our country. But I would want the personnel to be higher paid and better equipped. No way would I want to increase their pain.

Right, right. Children can go without hot meals. Seniors can go without healthcare and eat cat fod (the cheap stuff). Schools can be left to crumble. But fergawdsakes, don't cut that precious military budget. That's bullshit, pure and simple.

 

[youbet]

Right, right. Children can go without hot meals. Seniors can go without healthcare and eat cat fod (the cheap stuff). Schools can be left to crumble. But fergawdsakes, don't cut that precious military budget. That's bull****, pure and simple.

Aw bullpoop brewer! The items you mentioned should be funded and I clearly said that. But I disagree with you that our soldiers should be paid less and be less well equipped. A smaller army yes, a lower paid and more poorly equipped army, no.

 

[FIRE'd@51]

Yes, it would make the playing field more level. It's called socialism.

I prefer to remain in the capitalist US.

Socialism is government control of the means of production. Who's advocating that? Look, we have a large deficit combined with enormous unfunded liabilities for entitlement programs. I'm simply suggesting that it might be fairer to reduce the gaps with estate taxes rather than raising income taxes and taxes on capital gains and dividends.

 

[Bikerdude]

I'm simply suggesting that it might be fairer to reduce the gaps with estate taxes rather than raising income taxes and taxes on capital gains and dividends.

I vote for a consumption tax. Eliminate the regressive employment tax for the working poor. Those that spend more pay more. Sounds fair to me.

 

[Texas Proud]

And lets whack the crap out of that bloated military budget while we are at it. If you are gonna leave the seniors dying in the streets, the soldiers and defense contractors should feel the pain, too.

I agreed with this a few posts back.... not a problem with me...

As an example, there was a thread about the new fighter jet... and how much it will cost... but, there is nobody that has a fighter jet better than what we already have... and then, why are we going with a jet with a pilot anyhow Use the good ole drone... a lot cheaper and it can do more... maybe 15 or 20 g's?? Don't know, but a lot more than a human can do..

 

[MooreBonds]

Aside from the 40%-50% tax rates, one of my gripes w/ the tax is that it PENALIZES responsibility in personal finance.

Sure, once you get past estates of $5 mil, you've likely entered what would be defined as 'starting to get fairly luxurious' rich.

However, whether you're ER or standard-age retired, a $1 mil or $2 mil estate doesn't take long to whither down when you look at health care, nursing home care, and 30 years of living. The responsible person says "I need to adequately plan for 30+ years of retirement, and that will cost quite a bit...and even then, the costs and investment returns aren't guaranteed". The responsible person would guesstimate a reasonable lifespan, and accumulate the assets needed to fund that - which could easily top $1 mil-$2 mil. Then comes along the gov't and says "Oh, you died with some excess....here, let me steal take that off your hands, since you won't be needing that in the ground, and I'll let my politicians decide how to spend that rather than your heirs that you love so much".

If you didn't accumulate an estate because you pissed away all of your money on a high life during your working/retired years, then you go on the gov't dole and let (in part) those responsible tax payers subsidize your irresponsible earlier lifestyle (Yes, I know that sometimes you turn on hard times - but I'm willing to bet a lot of people hadn't sacrificed nearly as much as they could, nor often nearly as much as those who accumulated the estates).

Perhaps why the estate tax generates so much controversy is that it is the ONLY tax which you have no choice in.
Income tax - you decide how hard to work/how much to make, and it is dealt with accordingly
Sales tax - the more you spend, the more you pay
Liquor/other sin taxes - the more vices you enjoy, the more you pay
Death tax - umm......don't really have much of a choice here.

Florida recently did away with their asset tax....but perhaps the federal gov't should institute a similar tax on assets in exchange for slimming down the death tax rates? That way, the uber rich can't simply get around the death tax since it would be levied on ALL non-retirement financial assets, including municipal bonds, irrevocable trust accounts, etc., which the uber rich use more frequently than us commoners, and end up paying drastically lower average tax rates. That way, the gov't doesn't have to wait until you die to get its share-they can take-and-spend from you while you're alive as well.

Of course, that would probably get a lot more complaints versus complaints from people hit by the death tax (i.e. zero )

Probably my other biggest complaint on the death tax is overall gov't waste. I mean, come on - an almost $2 TRILLION budget, and they can't get it balanced!??!?! We need to throw out the whole budget and start from scratch - make each agency justify its budget, rather than simply piling on more spending, and let me see just where my $2 Trillion goes, and I might not be so pissed at handing it over.

 

[saluki9]

And lets whack the crap out of that bloated military budget while we are at it. If you are gonna leave the seniors dying in the streets, the soldiers and defense contractors should feel the pain, too.

Brewer, while we're at it, lets convert the dome on the capital to a mosque. I'm sure if we just cut our military enough, the bad guys will just leave us alone

 

[saluki9]

Let me throw out another thought for you folks to shoot at! I'm kind of thinking out loud here. I look at life, among other things, as a sort of game. If we are "born equal", why should some people be given a large financial head start. Would you let your opponent in Monopoly start with $10,000 while you had to start with $1500? Now I know we are not really born equal - inherited genes, intelligence, environment in which we are brought up, etc, etc. However, if you take two fairly equal persons in terms of innate potential at birth, why should one be given a financial head start? Doesn't it seem somewhat unfair that one person's child can inherit a nice house in the suburbs with additonal money to fund the property taxes, etc., while someone else's child has to save up the downpayment for that house after paying high income taxes. Mightn't it be fairer, as has been suggested by some posts above, to have a tax system with much lower income tax rates, even at the expense of higher estate taxes (perhaps 100% with no exemption, except to a spouse and a child who can't take care of himself/herself because of a disability)? Wouldn't this make the playing field more level?

That may be the most disgusting thing I have ever read on the internet, and that says a lot!

Question for you, do you actually think that people will accumulate capital at their current rates if they know that the govt will take it all at death? I do work for some very wealthy people. These people could have stopped working long ago, but instead they keep building businesses and creating wealth in most cases because they want to create a legacy for their families. Are these the people (wealth and job creators) that you want to dis-incentivize?

 

[brewer12345]

Brewer, while we're at it, lets convert the dome on the capital to a mosque. I'm sure if we just cut our military enough, the bad guys will just leave us alone

Oh yeah, since our current military strategy has been SO effective, what with the Taliban running part of Afghanistan, Iraq a ****ing disaster with no end in sight, and a drooling idiot-in-chief that can't figure out that throwing more men and money into the abyss won't fix the problems we have created. USA! USA! USA! Luv it or leave it! <insert jingoistic slogan here>

Give me a break. Do you give more capital to managers who screw up? Not me.

 

[brewer12345]

Liquor/other sin taxes - the more vices you enjoy, the more you pay

That one is very easy to avoid even if you imbibe. Make it yourself. No taxing authorities involved in any way.

 

[kaudrey]

I vote for a consumption tax. Eliminate the regressive employment tax for the working poor. Those that spend more pay more. Sounds fair to me.

I think that is an option that should definitely get more attention and discussion.

 

[FIRE'd@51]

Question for you, do you actually think that people will accumulate capital at their current rates if they know that the govt will take it all at death?

Probably. I know I would.

I do work for some very wealthy people. These people could have stopped working long ago, but instead they keep building businesses and creating wealth in most cases because they want to create a legacy for their families.

Maybe they enjoy what they are doing. Maybe they plan to set up a foundation and give to charity.

Are these the people (wealth and job creators) that you want to dis-incentivize?

You don't think raising income tax rates and rates on capital gains dis-incentivizes people? I think it dis-incentivizes people more than the estate tax. In addition it makes it harder for someone who starts with nothing to amass wealth. All I'm saying is I would prefer an estate tax over raising income taxes and taxes on capital gains and dividends.

 

[retire@40]

Just as an aside, there is a new book on this topic called "Death by a Thousand Cuts (The Fight Over Taxing Inherited Wealth)" by Graetz and Shapiro.

It might be an interesting read for those of you who enjoy this subject.

As a reminder, you can buy it from Dory's link on the bottom right.

 

[Alex]

Here is a study from the Congressional budget office which indicates that the estate tax at the current rates does not unfairly burden family farms and small businesses. http://www.cbo.gov/ftpdocs/65xx/doc6512/07-06-EstateTax.pdf

One more point. Estate taxes are simple if you lead a simple life. Even if you are rich. Value the assets at fair market value and pay the tax. Complications come when you try to take discounts on the valuation or try to squirrel away your assets.

. the best way to eliminate the problem is for congress to make the $3.5 million exemption permanent and to adjust annually for inflation. This will eliminate the problem for small businesses and farmers. $1 million ain't what it used to be.....

 

[Alex]

Right, right. Children can go without hot meals. Seniors can go without healthcare and eat cat fod (the cheap stuff). Schools can be left to crumble. But fergawdsakes, don't cut that precious military budget. That's bull****, pure and simple.

I told you a million times not to exagerate!!!

 

[brewer12345]

I told you a million times not to exagerate!!!

Whatever you say, chief. :

 

[lets-retire]

I'm late, again, but I have an example of the government taking a family farm from the family. I have cousins in upstate New York. If the farm had stayed in the family it would be on the fourth generation. The first generation was two brothers who purchased a large tract of land in the middle of no where. The company, as with most farming operations, was cash poor but land rich. By the time they died off a highway had been built in front of their farm. Their heirs had to sell of a portion of the farm land to McDonald's to pay the taxes. When the second generation started dying off they sold off another portion of the land to the Red Roof Inn, again to pay the estate tax. Now all that is left is a house with a modest lot with a highway view out the front. The farm is gone, taken by taxing the land as part of an estate. My cousins farm used to employ several people, but not any longer. With this said I think some form of estate tax should be in place. Maybe the government should not included an operating business in the value of an estate. This would allow it to pass from generation to generation, without losing the tax generated by a profitable business.

As far as the cost of aircraft for the military, all I'm going to say is there are more advanced aircraft on the drawing boards of other nations than what we currently have in the old technology. Drones might be a good option in the future, but now it is similar to playing a video game and there are several shortcomings with that idea.

 

[Texas Proud]

OH.... this came back to me on this subject...

Many years ago when I was doing estate tax work... (yes, I actually did it for a living, so I know a bit...) The Gallo family, who has hundreds of millions of dollars (maybe a billion by now, I don't know).... BUT, they got their congressman to put in a special exemption for them in a tax bill way back when.... I heard about it from an attorney during one of my classes... basically, they got an exemption from paying estate taxes on all thier wealth.. It was buried in the text that nobody reads and you would not know it was there unless you questioned the language...

Also, there are some super rich that have given up their American citizenship so they do not have to pay, but I think there is some law that trys to tax them for leaving.... not sure on this...

 

[dmpi]

I'm late, again, but I have an example of the government taking a family farm from the family. I have cousins in upstate New York. If the farm had stayed in the family it would be on the fourth generation. The first generation was two brothers who purchased a large tract of land in the middle of no where. The company, as with most farming operations, was cash poor but land rich. By the time they died off a highway had been built in front of their farm. Their heirs had to sell of a portion of the farm land to McDonald's to pay the taxes. When the second generation started dying off they sold off another portion of the land to the Red Roof Inn, again to pay the estate tax. Now all that is left is a house with a modest lot with a highway view out the front. The farm is gone, taken by taxing the land as part of an estate. My cousins farm used to employ several people, but not any longer. With this said I think some form of estate tax should be in place. Maybe the government should not included an operating business in the value of an estate. This would allow it to pass from generation to generation, without losing the tax generated by a profitable business.

I'm curoius... what's the "house with a modest lot" worth? I would suspect that its worth a lot. Also If you consider how many people work for the McDonalds & the Red Roof Inn vs. the farm. I think you'll see there are more workers and more economic value than before.
As for fairness, with land one can generate giants capital appreciations & never pay capital gains tax. Estate just trys to capture some of that. I see that as a fair tax.

 

[Martha]

I work with a real estate developer down near Minneapolis. The company has been buying up farm land from a family of farmers for development projects. That farm family recently got paid $20,000,000 for part of their farm where a Target store and other retail operations are now going to be located. They were complaining about the capital gain taxes when we cut them the check. (Actually, a wire transfer but it doesn't sound as sexy) They were also complaining bitterly about how much their property taxes had increased on their remaining land. They still keep cattle and went home to do chores.

 

[Martha]

OH.... this came back to me on this subject...

Many years ago when I was doing estate tax work... (yes, I actually did it for a living, so I know a bit...) The Gallo family, who has hundreds of millions of dollars (maybe a billion by now, I don't know).... BUT, they got their congressman to put in a special exemption for them in a tax bill way back when.... I heard about it from an attorney during one of my classes... basically, they got an exemption from paying estate taxes on all thier wealth.. It was buried in the text that nobody reads and you would not know it was there unless you questioned the language...

Also, there are some super rich that have given up their American citizenship so they do not have to pay, but I think there is some law that trys to tax them for leaving.... not sure on this...

Wasn't this the generation skipping transfer tax exemption? IIRC they worked with Bob Dole to reduce estate taxes. It didn't just apply to them, but to everyone.

 

[ERD50]

That one is very easy to avoid even if you imbibe. Make it yourself. No taxing authorities involved in any way.

And it can taste better too. I just bottled a batch of German Alt, an English Pale Ale, a Nut Brown Ale, a Cream Ale, a Pumpkin Ale and I'll probably start a Porter after the holidays.

Whoops, a bit off-topic, but heck - taxes can drive one to drink, so maybe not.

-ERD50

 

[HelpMeRhonda]

I'm curoius... what's the "house with a modest lot" worth? I would suspect that its worth a lot. Also If you consider how many people work for the McDonalds & the Red Roof Inn vs. the farm. I think you'll see there are more workers and more economic value than before.
As for fairness, with land one can generate giants capital appreciations & never pay capital gains tax. Estate just trys to capture some of that. I see that as a fair tax.

You miss the $$#$ point.... Yes, they are left with a house. And how does that house produce income (which after all is what they needed from the farm). Their only option is to sale the house to a McDonald's nightshift manager and find a new line of work. What part of that is fair.....

Spoken by someone who doesn't seem to be able to relate to the effected party.

 

[HelpMeRhonda]

I'm a newbie to this forum and I'm certain I've posted far beyond my alotted quota.

Unfortunately, as you can tell, I have passion about this topic.

I heard a motivate of the tax is to prevent wealth hording, etc. Fine setup a tax that would tax inheritance beyond a certain amount. So an estate could give xxx $ per person. Thus, estates that want to give to a larger number of people can give a meaningful amount to each individual.

That's my piece.

sorry for the emotion...

 

[lets-retire]

You miss the $$#$ point.... Yes, they are left with a house. And how does that house produce income (which after all is what they needed from the farm). Their only option is to sale the house to a McDonald's nightshift manager and find a new line of work. What part of that is fair.....

Exactly. Where they once were able to fend for themselves and make a decent living, now they are forced to work for someone else. Farming traditionally does not make a lot of cash, all of the value is in the land. These people lost their farm, not because of market forces or poorly running their enterprise, but because the government forced them to pay estate taxes on the value of the land. As I said, I think the estate tax should not include the value of a family run business in the tax.

As far as the value of the property, it has little value as a house, due to being in the flight path of the local airport and being next to a major highway. As commercial property it has some value, but only to the Red Roof Inn or McDonald's, as a parking lot. The lot is too small to build any type of reasonable business on it.