Some good points, let me take a stab at 'em:
I've read all the posts here and want to get my 2 cents in.
I don't buy any argument that sounds like "I have an absolute right to do what I want with my money." Sorry, living in a modern country means paying taxes.
Mostly agree. There is no absolute right, it must be legal and of course we need to pay taxes to support some level of govt. But hitting a pile of money with a 55% (or whatever it is) rate all in one fell swoop just doesn't sit well with me. I'll try to touch on this later.
I don't buy the "but we have to keep family businesses together" argument. ... spread the payments over 14 years, then the business has to generate free cash flow equal to 1.8% of it's market value to pay the tax. I'd like to see the financials of a business that can't do that.
Whats the average profit margin of a business (I'll guess 8-10% range?)? I'd bet that 1.8% is a substantial chunk of it, just like we talk of an added 1% expense fee requiring us to have an added 25% in our nest egg for a 4% WR. And maybe what I'm about to say is a small number, but I'll repeat that doesn't make it right - maybe some of these businesses were on the edge. The owner just died, maybe he/she was instrumental in running the business, and this 1.8% for 14 years is the straw on the camel's back?
I don't buy the "but the rich will always avoid it" argument. Sure, we all try to avoid taxes, but that doesn't mean we set tax rates at zero.
I don't think too many here think it always turns to zero. But whatever is avoided is avoided. It doesn't change the argument.
I don't buy the notion that the money in large estates arises from incredibly hard work over a lifetime. I think that lots of people work very hard, much of the difference in result is luck. To a large extent, when we tax big estates were taxing extremely good luck, not hard work.
I have no idea what the break out is, obviously it some combination of all of the above. But I do find it
offensive to lump them together. Clearly
some of those who accumulated wealth did it through hard work, skill, education, vision, etc. And they created useful products and services and created jobs and overall were a real asset to society. Someone else won the lottery and goofed off.
There is no way for the tax code to differentiate "good" money from "bad" money. So let's not lump the good with the bad, they good might even be the majority, I don't know if numbers can capture this. And then we get into the crazy discussions of whether a sports star is "lucky" to be born with the physical attributes to play the game. To me, this lumping of the rich is no less
offensive than saying that since poor people have higher rates of committing theft, we should start locking up all poor people.
If we want to make moral judgments on "good" money and "bad" money, I suggest we vote with our wallets and not broad brush tax code. I don't buy products from rappers that I find offensive, (add endless examples).
Very wealthy people have advantages before the law because they can hire the best lawyers, they have advantages in making laws because they can make the big political contributions.
Damn right they do! And they can buy fancy cars and villas and yachts! That's why so many aspire to be rich! And let's not forget that the vast majority of posters here are "rich" relative to the average US citizen, and "filthy rich" compared to your average third world citizen.
I think it's beneficial to society that we break up those big estates.
I'll go back to my broad-brush defense. We need proper laws and enforcement to prevent/punish wrongdoers. Someone with a lot of money can use it to do damage. A union with a lot of power can do damage. I want the damage stopped, I'm not going to pre-judge the class of people.
I think we should respect hard work, but to me that means our financial position should be based more on what we do an less on what our ancestors did.
Money is a resource. Setting a good example, exposing your child to books, music, the arts, sciences are other resources. Good parents try to pass these onto their children. When do we go in and decide that it isn't "fair" for a child to have the advantage of good parents? If I can't give my kids money, maybe I can't give them a good education or experiences either. It isn't "fair". The "fair" police don't want my kids to have anything that everyone doesn't get, whether I worked for it or not. I know that sounds silly, but it really is an extension of what you are saying.
-ERD50