Blow Up the Tax Code and Start Over

[Tim Eriksen]

The government (ostensibly) is wanting to raise taxes to redistribute it to help the less fortunate.

 

Yes that is the line they want us to believe. What portion goes to the "less fortunate" as opposed to the military industrial complex or fighting the war on drugs or spying on everyone on the planet or ... 

 

The only reason a few exceedingly tiny crumbs are thrown to the less fortunate or used to sure up some of the crumbling infrastructure at all is so that we can keep believing that these things are the raison d'être for their existence.

 

They want us to believe it because it is true.  The US has a 3.7 trillion budget.  600 billion goes to defense. 2.5 trillion to human resources (education, training, health, medicare, social security, veterans benefits).  For fiscal 2015 defense is expected to decline while human resources spending climbs to 2.7 trillion.

[TwoCitiesCapital]

While I'm saving the world, I'd say lower corporate rates and higher estate taxes for any wealth over some arbitrarily high limit - maybe $10M adjusted for inflation.

 

The size of the estate shouldn't matter.  Depends on what your goal is.  If you intend to limit one individual from being given too much, then it should be an inheritance tax instead of an estate tax.

 

$10m inherited by an only child is very different from $20m inherited by 8 children (4 of them spouses of 4 children born) and 14 grandchildren (22 people all put together).

 

It's not a dynasty when you inherit less than a million!  $20m may look like a lot, but it really only matters how much each person is actually getting IMO.

 

My grandmother died in 2011 and she had about $18 million in shares, cash, and property.  She had 4 children, all surviving, and each was married.  There are 14 grandchildren including myself -- we were all at least 35 yrs old.  It looks like a lot, but it's not a dynasty.  The only people to get more than a million were the children, who were all in their late 60s and early-mid 70s at the time.  It's not going to ruin their lives and they are too old for it to become a "dynasty" problem -- once divided amongst their children, it's just not a mind-blowing amount of money and won't change the lives much.  So to meet social goals of limiting dynastic wealth, I don't see why a $17m estate necessarily needs to be taxed.  And it wasn't taxed -- her estate was in Australia.

 

You're quite right. I change my opinion to be for inheritance taxes as opposed to estate taxes. In my mind they were roughly equivalent, but now that you've walked me through it I certainly see the difference.

 

I know that families generally blow the inheritance money they receive, but it only takes a handful to invest it wisely to create dynastic wealth that affects politics/business/etc. for generations. I'm not down for that and don't think that children, grandchildren, and great grand children are in any way entitled to the wealth their relatives made.

 

I intend to be wealthy and have no problem with the idea of the government taking upwards of 50-75% of everything I want to leave my children above a reasonable limit. Forces more money back in charities, local developments, or into the government coffers for redistribution elsewhere.

[Tim Eriksen]

 

How about this option. The government provides healthcare to everyone and Social Security to all above 65? No income tax or corporate tax. Basic necessities are not taxed and there is a 30% (or whatever percentage is needed to balance the budget) VAT on everything that is not a basic need.

 

I've always liked consumption taxes.  If I want a giant boat or sports car I pay a lot of taxes for it, but if I just want to live simply I'm not paying as much in taxes.

 

A theory of mine has been a tax system where capital gains and dividends are taxed at 0%, but incomes are taxed progressively.  In theory it would create the incentive for company managers to own stock and pay dividends vs just pigging out on a fat salary.  At least with dividends shareholders would benefit as well.  You could probably set the threshold fairly high and it would only catch executives, lawyers, orthopedic and plastic surgeons.

 

I understand the allure of consumption taxes, but..

If we recognize that the tax code has become ridiculous due to government tinkering, why replace it with a system that opens the door for tinkering?  A consumption tax will inevitably lead to government choosing what is and what is not taxed. That leads to lobbying and eventually changes.

 

Realtors and investors will argue that real estate is not consumption, it is investment, art collectors will argue paintings are investment, and of course gold investors will say gold, including jewelry is an investment, etc.  Will buying a new car be consumption, but a classic car an investment? 

 

A flat tax, where each one is free to spend as they choose seems wiser.  And for some who post on this board, it seems more consistent with their libertarian beliefs.

[TwoCitiesCapital]

 

How about this option. The government provides healthcare to everyone and Social Security to all above 65? No income tax or corporate tax. Basic necessities are not taxed and there is a 30% (or whatever percentage is needed to balance the budget) VAT on everything that is not a basic need.

 

I've always liked consumption taxes.  If I want a giant boat or sports car I pay a lot of taxes for it, but if I just want to live simply I'm not paying as much in taxes.

 

A theory of mine has been a tax system where capital gains and dividends are taxed at 0%, but incomes are taxed progressively.  In theory it would create the incentive for company managers to own stock and pay dividends vs just pigging out on a fat salary.  At least with dividends shareholders would benefit as well.  You could probably set the threshold fairly high and it would only catch executives, lawyers, orthopedic and plastic surgeons.

 

I understand the allure of consumption taxes, but..

If we recognize that the tax code has become ridiculous due to government tinkering, why replace it with a system that opens the door for tinkering?  A consumption tax will inevitably lead to government choosing what is and what is not taxed. That leads to lobbying and eventually changes.

 

Realtors and investors will argue that real estate is not consumption, it is investment, art collectors will argue paintings are investment, and of course gold investors will say gold, including jewelry is an investment, etc.  Will buying a new car be consumption, but a classic car an investment? 

 

A flat tax, where each one is free to spend as they choose seems wiser.  And for some who post on this board, it seems more consistent with their libertarian beliefs.

 

You simply tax all physical goods and services at the same rate. No exceptions. All purchases/fees/transactions would carry the same VAT on the service/transaction/purchase/fee amount. Anytime cash is exchanged for something, there's a VAT on it. As simple as that. I don't see why it would have to be difficult.

 

I think a consumption tax makes way more sense than a tax on income which doesn't seem productive at all....plus, there seems to be way more loopholes on how income is categorized than transactions. It's as simple as if you exchange payment for something, then VAT applies.

[MVP444300]

 

 

https://www.randpaul.com/rand-pauls-fair-and-flat-tax-op-ed

 

I like his plan; it would help simplify a tax code that cost hundred of billions to comply with and he proposes to do it with previously proposed budget cuts. 

 

 

From article:

 

My tax plan would blow up the tax code and start over. In consultation with some of the top tax experts in the country, including the Heritage Foundation’s Stephen Moore, former presidential candidate Steve Forbes and Reagan economist Arthur Laffer, I devised a 21st-century tax code that would establish a 14.5% flat-rate tax applied equally to all personal income, including wages, salaries, dividends, capital gains, rents and interest. All deductions except for a mortgage and charities would be eliminated. The first $50,000 of income for a family of four would not be taxed. For low-income working families, the plan would retain the earned-income tax credit.

 

I would also apply this uniform 14.5% business-activity tax on all companies—down from as high as nearly 40% for small businesses and 35% for corporations. This tax would be levied on revenues minus allowable expenses, such as the purchase of parts, computers and office equipment. All capital purchases would be immediately expensed, ending complicated depreciation schedules.

 

 

How can anyone look at the current tax code and the enormous number of man-hours american citizens and corporations waste complying with it and not think that something drastic needs to be done?

 

Rand Paul isn't even half the Libertarian his father is, but in many areas I agree with him, he's far and away better than the Clinton's, Bush's, and other candidates who spend hundred's of thousands of taxpayer's dollars gouging their fat faces on food.

 

The cost of compliance to the tax code is in the hundred of billions of dollars; depending on how you look at it the cost could be more than what the US govt collects in corporate income taxes. 

 

The lost opportunity cost is mind boggling.

 

http://www.laffercenter.com/wp-content/uploads/2011/06/2011-Laffer-TaxCodeComplexity.pdf

 

 

 

[MVP444300]

The government (ostensibly) is wanting to raise taxes to redistribute it to help the less fortunate.

 

Yes that is the line they want us to believe. What portion goes to the "less fortunate" as opposed to the military industrial complex or fighting the war on drugs or spying on everyone on the planet or ... 

 

The only reason a few exceedingly tiny crumbs are thrown to the less fortunate or used to sure up some of the crumbling infrastructure at all is so that we can keep believing that these things are the raison d'être for their existence.

 

They want us to believe it because it is true.  The US has a 3.7 trillion budget.  600 billion goes to defense. 2.5 trillion to human resources (education, training, health, medicare, social security, veterans benefits).  For fiscal 2015 defense is expected to decline while human resources spending climbs to 2.7 trillion.

 

Tim for defense I think you should have to include things like stage, intelligence, etc to get a real cost of our foreign policy.

 

DOD $600 Billion

DOS $50 billion

Intel $50 Billion

VA    $139 billion

 

I think VA should be included in foreign policy because the larger the overseas adventurism the more VA cost will rise. 

[Guest longinvestor]

While I'm saving the world, I'd say lower corporate rates and higher estate taxes for any wealth over some arbitrarily high limit - maybe $10M adjusted for inflation.

 

The size of the estate shouldn't matter.  Depends on what your goal is.  If you intend to limit one individual from being given too much, then it should be an inheritance tax instead of an estate tax.

 

$10m inherited by an only child is very different from $20m inherited by 8 children (4 of them spouses of 4 children born) and 14 grandchildren (22 people all put together).

 

It's not a dynasty when you inherit less than a million!  $20m may look like a lot, but it really only matters how much each person is actually getting IMO.

 

My grandmother died in 2011 and she had about $18 million in shares, cash, and property.  She had 4 children, all surviving, and each was married.  There are 14 grandchildren including myself -- we were all at least 35 yrs old.  It looks like a lot, but it's not a dynasty.  The only people to get more than a million were the children, who were all in their late 60s and early-mid 70s at the time.  It's not going to ruin their lives and they are too old for it to become a "dynasty" problem -- once divided amongst their children, it's just not a mind-blowing amount of money and won't change the lives much.  So to meet social goals of limiting dynastic wealth, I don't see why a $17m estate necessarily needs to be taxed.  And it wasn't taxed -- her estate was in Australia.

 

You're quite right. I change my opinion to be for inheritance taxes as opposed to estate taxes. In my mind they were roughly equivalent, but now that you've walked me through it I certainly see the difference.

 

I know that families generally blow the inheritance money they receive, but it only takes a handful to invest it wisely to create dynastic wealth that affects politics/business/etc. for generations. I'm not down for that and don't think that children, grandchildren, and great grand children are in any way entitled to the wealth their relatives made.

 

I intend to be wealthy and have no problem with the idea of the government taking upwards of 50-75% of everything I want to leave my children above a reasonable limit. Forces more money back in charities, local developments, or into the government coffers for redistribution elsewhere.

 

+1 Good for you and your thought about wealth is appreciated. In fact you just injected a welcome dose of inspiration into this thread. Thank you!

 

So there are two kinds of people based on how they handle their (large) amount of wealth,

 

A. Those who recognize that they have more wealth than any foreseeable needs.  What lies beyond their consumption needs they don't mind sharing with others, either through philanthrophy or taxes or..In fact, there are at least 137 such billionaires who have stepped forward to pledge away half of their wealth in their lifetime. Arguably some of this giveaway would have otherwise passed on as inheritance. No matter how they came to this decision, others' children stand to benefit along with their own. Who knows, their children learn this lesson in their own lifetimes and pass it on. So a vicious cycle of sharing is created. And it touches not just Billionaires, there are the emerging wealthy who are now inspired to share a larger part of their wealth too. Entire societies that didn't traditionally think this way, start thinking of sharing versus giving it all just to their children.

 

B. Those that will consume less if, let's say their wealth was cut down from say $500M to $350M, due to new taxes. They are maimed. They now decide that their budget has no more room for some of the services they were used to receiving when they had $150 M more wealth. Let's say there are 10 body parts (5 on the face and 5 elsewhere) that they used to get service from ordinary folks who would have otherwise been on the streets, who knows, homeless etc. Now they have a real job. Boom, then came the tax man with the new taxes, the indignation that ensues and the poor people are now out of jobs and back on the streets.

 

Now what?

 

Thankfully group A's philanthropy somehow reaches the poor folk hurt by the trickle down that has now been shut off. Now their children are given the chance of getting ahead through education. Perhaps some of these children have one goal in life, never to be poor again. (Many self made rich people are made this way); Some of them become entrepreneurs, get rich and join group A. Natural for them. They have not forgotten how they got rich and would be wishing to see that their wealth is distributed such that no child should ever face the plight of seeing their mom and dad servicing others' body parts.

 

How about Group B? History tells us that when the wealth they have left over is passed on to their progeny it is often all pi$$ed away in about 20 years after they pass. So call it about 70 years and there is no more wealth. Whew! It is fairly likely that this group does not produce too many self made wealthy in the next generation. Who knows, the second generation perhaps become totally destitute and because they have never had to lift a finger, they don't have survival skills and they may actually join the ranks of the poor in their lifetimes. But not to worry, the next generation will have its' share of Group B who have, you guessed it, 10 body parts to service. The new poor can count themselves lucky again.

 

 

[adesigar]

2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

Ah an article from Forbes magazine about no dynastic wealth. Wasn't the magazine started by the current Forbes' grandfather about 100 years ago.

 

I believe the word you are reaching for is "nepotism".

 

Forbes works for his money.  Was he fairly chosen for the job out of a pool of thousands of candidates?  Probably not.

 

http://www.celebritynetworth.com/richest-businessmen/ceos/steve-forbes-net-worth-2/

 

Forbes inherited the Forbes magazine is all. And speaking of Forbes and articles on Forbes.

 

http://www.forbes.com/sites/kerryadolan/2015/07/01/billion-dollar-bloodlines-americas-richest-families-2015/

 

http://www.alternet.org/corporate-accountability-and-workplace/wealth-america-getting-increasingly-dynastic-we-should-be

 

Edited to add one more article

 

http://www.forbes.com/sites/katiasavchuk/2015/07/01/americas-oldest-billion-dollar-family-fortunes/2/

 

 

[ERICOPOLY]

2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

Ah an article from Forbes magazine about no dynastic wealth. Wasn't the magazine started by the current Forbes' grandfather about 100 years ago.

 

I believe the word you are reaching for is "nepotism".

 

Forbes works for his money.  Was he fairly chosen for the job out of a pool of thousands of candidates?  Probably not.

 

http://www.celebritynetworth.com/richest-businessmen/ceos/steve-forbes-net-worth-2/

 

Forbes inherited the Forbes magazine is all. And speaking of Forbes and articles on Forbes.

 

http://www.forbes.com/sites/kerryadolan/2015/07/01/billion-dollar-bloodlines-americas-richest-families-2015/

 

http://www.alternet.org/corporate-accountability-and-workplace/wealth-america-getting-increasingly-dynastic-we-should-be

 

Edited to add one more article

 

http://www.forbes.com/sites/katiasavchuk/2015/07/01/americas-oldest-billion-dollar-family-fortunes/2/

 

Your alternet article claims that a great crime lies behind every great fortune.  Why don't you tell that to Gates and Buffett instead of sharing it with us?  That sounds like well-researched information to me.

 

Oh yes, it gives examples of some families that have remained rich like the DuPonts.  Does it explain what harm that has brought upon us?

 

Instead, the article lists (Koch brothers) a crime from getting rich on fossil fuels -- but that's without inherited wealth.  Hmm....

 

And a complaint that Steinbrenner made a lot of money in baseball -- oh, can't we just confiscate it because it was "absurd"? 

 

So the crime is being really wealthy, because a great crime lies behind each fortune.  Ahh.... lock up the really wealthy people because they are criminals.  That's a really great article, thanks for sharing.

[ERICOPOLY]

I have yet to see an article on estate taxes that doesn't list the DuPonts or the Waltons or the Kochs or some other very extremely large fortune as a reason why we need the tax.

 

Notice these articles don't obsess upon fortunes that are only $5m in size.  The author doesn't want to be laughed at perhaps?

 

Yet that's the size of "fortune" where the tax kicks in.

 

What "great crimes" lie behind the $7m fortunes?  Hmm?

 

Why are not the families with $17 million being vilified by these articles?

 

We must crack down hard on those with $6m, right?

 

For the country would be ruined if their 6 grandchildren each inherited $1m?

 

It's absurd and you know it -- which is why the articles only talk about the billion dollar fortunes.

 

"Man of 35 years (and his 3 siblings) each inherits $1.25m while avoiding the estate tax -- enough to buy a condo in Santa Barbara.  We must raise taxes to prevent this sort of dynastic wealth transfer."

 

The estate tax hitting $6m "fortunes" isn't about stopping dynasties -- it's about taking money.  You must be kidding if $6m is a dynasty.  In Los Altos Hills, it's called "mom and dad's house that they paid $50k for in 1970".

[ERICOPOLY]

Here is an example of a "dynastic" amount of wealth if fully paid off:

 

http://www.zillow.com/homes/for_sale/15582795_zpid/1_pnd/37.525656,-121.976223,37.392391,-122.2756_rect/11_zm/1_fr/?view=map

 

It's a friggin' house on 0.38 acres.  Where are the butlers and ascots?

 

Or here's one for $7m on a quarter of an acre:

 

http://www.zillow.com/homes/for_sale/19496160_zpid/1_pnd/37.446056,-122.114818,37.429393,-122.15224_rect/14_zm/1_fr/?view=map

 

I grew up in Los Altos Hills in a house that was purchased for $52k in 1970 and Zillow claims is now worth a bit over $4m.  Should you be worried that if it climbs another 25% it will become a seed for a family dynasty? 

 

That's a "seed" for a dynasty, not yet a dynasty.  Put Roundup on the seed to kill it because there is a chance it could be a dynasty after decades of further cultivation by the heirs, who normally spend it anyhow? 

 

Could your neighbor have a dynasty?  What if the guy at work had a secret dynasty?  Communities can organize and form watches to look out for potential dynasties.  Beware, the guy who moved in down the street could be harboring plans to have a dynasty.  The pastor could be one of them too.  Maybe that nice guy... oh wait, but what if he is one of these dirty dynasty types too?  Oh, you really have to watch out these days... these dynasties could be anywhere.

 

 

[Rainforesthiker]

My wife's parents have a family farm west of Houston where they have traditionally grown rice, sorghum, raised cattle, etc.  As Houston has grown westward the land has appreciated in value quite a bit.  But like most family farmers they are land rich but cash poor, and struggle a bit to make ends meet as farmers.  When the time comes for a generational transfer, a decent bit of the land will need to be sold to pay estate taxes.  Those likely willing to pay the most for this land will be developers, not farmers.  I agree with Ericopoly that most of the articles about the estate tax focus on the outliers, the .001% scenario of the very rich (or very productive) and the supposed need to prevent "dynastic wealth."  But these articles ignore the true reality, which is that the main affect of a low estate tax threshold is to kill family farms and family businesses.  At least the estate tax threshold is much higher now than it used to be.  In 2001 the threshold was $675k which was a real killer of family farms and businesses.  The $5 million it is now is better, but IMO should be higher still.  $5 million ain't what is used to be.

[adesigar]

2. Eliminate gift and estate taxes aka promote dynastic wealth.

 

Was there dynastic wealth before the gift and estate taxes were created?  Or did they solve a problem that only exists in the imagination?

 

http://www.forbes.com/sites/phildemuth/2014/07/07/the-family-is-a-machine-for-destroying-wealth/

 

Ah an article from Forbes magazine about no dynastic wealth. Wasn't the magazine started by the current Forbes' grandfather about 100 years ago.

 

I believe the word you are reaching for is "nepotism".

 

Forbes works for his money.  Was he fairly chosen for the job out of a pool of thousands of candidates?  Probably not.

 

http://www.celebritynetworth.com/richest-businessmen/ceos/steve-forbes-net-worth-2/

 

Forbes inherited the Forbes magazine is all. And speaking of Forbes and articles on Forbes.

 

http://www.forbes.com/sites/kerryadolan/2015/07/01/billion-dollar-bloodlines-americas-richest-families-2015/

 

http://www.alternet.org/corporate-accountability-and-workplace/wealth-america-getting-increasingly-dynastic-we-should-be

 

Edited to add one more article

 

http://www.forbes.com/sites/katiasavchuk/2015/07/01/americas-oldest-billion-dollar-family-fortunes/2/

 

Your alternet article claims that a great crime lies behind every great fortune.  Why don't you tell that to Gates and Buffett instead of sharing it with us?  That sounds like well-researched information to me.

 

Oh yes, it gives examples of some families that have remained rich like the DuPonts.  Does it explain what harm that has brought upon us?

 

Instead, the article lists (Koch brothers) a crime from getting rich on fossil fuels -- but that's without inherited wealth.  Hmm....

 

And a complaint that Steinbrenner made a lot of money in baseball -- oh, can't we just confiscate it because it was "absurd"? 

 

So the crime is being really wealthy, because a great crime lies behind each fortune.  Ahh.... lock up the really wealthy people because they are criminals.  That's a really great article, thanks for sharing.

 

Those articles were a reply was to your dumb article about family is a machine for destroying wealth. Find the quote below from that article.

Fittingly, there is no dynastic wealth in the United States.  If there were, there would be a handful of families passing down wealth generation after generation, pulling the strings behind the scenes like Texas oil tycoons in some Oliver Stone movie.  These families do not exist.  Rich families are big noise for a while, then they fade out.  That leather-bound copy of the Forbes 400 list you put in your library in the 1980s is now completely obsolete.  How come?

Im sure 1.3 trillion controlled by 20 families is a paltry sum. Im also sure these inherited fortunes some spanning 200 years have never been used to manipulate US politics/policies for the advantage of the wealthy. Im sure there is no dynastic wealth in the 10s and hundreds of millions and these people are not manipulating state/city/local politics/policies for their advantage and for the advantage of their heirs. 5 million is too small an amount for New York/Chicago. But it could pay for a mayoral election to any other city in the US.

http://www.citylab.com/politics/2012/11/skyrocketing-costs-running-mayor-major-us-city/3814/

 

As for being taxed at 5 million. Everyone over with estates over that will whine and cry (like you are doing) till the tax no longer applies to them. That's how it works. Raise it to 50 million and people with 100 million will complain. Raise it to 500 million and the billionaires will complain. See no matter the amount, the group that has to pay it will complain about having to pay it. NO ONE LIKES TO PAY TAXES. But the country need the money to run.

 

So maybe instead of pouting like a toddler who isn't getting his way you could contribute to the discussion about the Rand Paul tax plan. I think its a dumb idea and I said why. Maybe you can tell us why the plan is a good idea.

 

Here let me get you started

 

1. It eliminates estate taxes which don't promote dynastic wealth. Estate taxes just save farms/small businesses.

 

2.

[ERICOPOLY]

So you are concerned that $5m will influence a mayoral election.

 

Hmmm...

 

Are you going to propose that nobody is allowed to grow their wealth beyond $5m?

 

Your argument has little to do with inherited wealth if you believe we have no democracy at the $5m level.

 

I have much more than that -- do you believe I have the power to appoint a puppet mayor?

 

Is Obama the puppet of the ultra wealthy you claim hold the power?  Which of his tax hikes did they pay for?

 

I think you have a comic book version of reality where the wealthy are villains and the poor are virtuous.

[Jurgis]

As for being taxed at 5 million.

 

Whining about being estate taxed at 5 million forgets that though 5M might be just a house in Los Altos or a condo in NYC, it is enough to retire and not work for the rest of your life in the rest of the country.

 

I somewhat agree that this could be adjusted a bit depending on the number of people inheriting.

[ERICOPOLY]

As for being taxed at 5 million.

 

Whining about being estate taxed at 5 million forgets that though 5M might be just a house in Los Altos or a condo in NYC, it is enough to retire and not work for the rest of your life in the rest of the country.

 

I somewhat agree that this could be adjusted a bit depending on the number of people inheriting.

 

I have 13 other cousins.  Had my grandmother left us each an equal amount, that would be $17 million divided by 14.

 

That would be $1.2m each. 

 

Damn, I can't even appoint myself as mayor with that much money.

 

This is being driven by jealousy more than logic.  "It's not fair that he got something without working for it -- jeez, it must be nice to have a rich grandmother!"

 

With a bunch of specious logic to call it something other than envy:  "No, the very fabric of democracy is at stake here!  The mayors race can be swayed!" 

 

Which is completely ridiculous.  I don't even remember if I'm registered for a political party, and don't really give a crap who the mayor of my town is.  Therefore, I should be taxed because "What if I did care and was a total crook!".

 

That's like punishing somebody for a crime that they might be tempted to commit.

 

 

 

 

[stevevri]

As for being taxed at 5 million.

 

Whining about being estate taxed at 5 million forgets that though 5M might be just a house in Los Altos or a condo in NYC, it is enough to retire and not work for the rest of your life in the rest of the country.

 

I somewhat agree that this could be adjusted a bit depending on the number of people inheriting.

 

I have 13 other cousins.  Had my grandmother left us each an equal amount, that would be $17 million divided by 14.

 

That would be $1.2m each. 

 

Damn, I can't even appoint myself as mayor with that much money.

 

This is being driven by jealousy more than logic.  "It's not fair that he got something without working for it -- jeez, it must be nice to have a rich grandmother!"

 

With a bunch of specious logic to call it something other than envy:  "No, the very fabric of democracy is at stake here!  The mayors race can be swayed!" 

 

Which is completely ridiculous.  I don't even remember if I'm registered for a political party, and don't really give a crap who the mayor of my town is.  Therefore, I should be taxed because "What if I did care and was a total crook!".

 

That's like punishing somebody for a crime that they might be tempted to commit.

 

The irony is people overly concerned with "fairness" of this sort end up making everyone but those same elites they claim is the reason for policy, worse off. Those people avoid the policy or are less affected while your grandmother in the example pays it all.

 

The super rich are used in the examples yet the policies go lower and lower and widen the gap between others and those super rich.

 

[adesigar]

As for being taxed at 5 million.

 

Whining about being estate taxed at 5 million forgets that though 5M might be just a house in Los Altos or a condo in NYC, it is enough to retire and not work for the rest of your life in the rest of the country.

 

I somewhat agree that this could be adjusted a bit depending on the number of people inheriting.

 

I have 13 other cousins.  Had my grandmother left us each an equal amount, that would be $17 million divided by 14.

 

That would be $1.2m each. 

 

Damn, I can't even appoint myself as mayor with that much money.

 

This is being driven by jealousy more than logic.  "It's not fair that he got something without working for it -- jeez, it must be nice to have a rich grandmother!"

 

With a bunch of specious logic to call it something other than envy:  "No, the very fabric of democracy is at stake here!  The mayors race can be swayed!" 

 

Which is completely ridiculous.  I don't even remember if I'm registered for a political party, and don't really give a crap who the mayor of my town is.  Therefore, I should be taxed because "What if I did care and was a total crook!".

 

That's like punishing somebody for a crime that they might be tempted to commit.

 

All you have done on this thread is complain and whine about the poor little people living in tiny little 7 million dollar homes  and inheriting paltry 1.2  million dollars being grouped with the billionaires. For most of the U.S. population a 7 million home is more than most will earn in their entire life. So maybe you can come down to earth (just a little).

 

Care to actually comment on how to fix the tax code?  I am ok to drop the estate taxes down to 500,000 from 5 Million instead of the government running deficits. I had a suggestion which said get rid of all income and corporate taxes and replace with VAT on all non basic necessities (not going to happen because fixing taxes isnt as easy as the Rand Paul idea).  Maybe you can find some article on Forbes/FOX and regurgitate on how democrats/liberals are destroying the country by taxing everything and how wonderful trickle down economics work. 

 

 

 

 

 

 

[adesigar]

One other thing about the Rand Paul plan. Its all about taxes but nothing about the reason for the taxes. High medical costs, Oil Imports etc.

 

IMO the first thing the U.S. needs to do is tax all automotive Fuel costs so it costs the equivalent of $10 per gallon of gasoline.

[Tim Eriksen]

In terms of estate tax.  It is absurd IMO for the tax rate to be higher than the long term capital gains rate.  I would have no problem with heirs paying the LT rate in exchange for the stepped up cost basis, including farmers.  (Having no estate tax AND getting the benefit of a stepped up cost basis doesn't make sense to me.  That ends up allowing for tax avoidance). A three to five year payment option could even be given for less liquid assets.

 

For example, the LA Lakers owner died recently.  Ignoring there are some minority owners.  He bought the team about 40 years ago and had a 2 billion unrealized gain.  Should the children be forced to sell 55% in order to pay estate tax?  Or forced to lever up the business?  I don't think that makes sense.  (By the way, high estate taxes distort economics such that wealthy buy expensive life insurance because it makes financial sense only because of a large estate tax). 

 

 

[Tim Eriksen]

One other thing about the Rand Paul plan. Its all about taxes but nothing about the reason for the taxes. High medical costs, Oil Imports etc.

 

IMO the first thing the U.S. needs to do is tax all automotive Fuel costs so it costs the equivalent of $10 per gallon of gasoline.

 

What do oil imports have to do with taxes???? 

[stevevri]

One other thing about the Rand Paul plan. Its all about taxes but nothing about the reason for the taxes. High medical costs, Oil Imports etc.

 

IMO the first thing the U.S. needs to do is tax all automotive Fuel costs so it costs the equivalent of $10 per gallon of gasoline.

 

So you want to harm the people making less that can't afford newer cars with better gas mileage, whom also drive further to work because they can't afford to live in the expensive cities?

[ERICOPOLY]

All you have done on this thread is complain and whine about the poor little people living in tiny little 7 million dollar homes  and inheriting paltry 1.2  million dollars being grouped with the billionaires. For most of the U.S. population a 7 million home is more than most will earn in their entire life. So maybe you can come down to earth (just a little).

 

Jealousy looks a lot like that.

 

People with assets that don't want to be seized are just whiners.

 

Call the cops because you are being robbed.  Ah, whiner...  there are people who don't have televisions.

 

You provided a list of reasons why they need to be seized, and those reasons are wrongheaded.  A person inheriting $1.2m is not getting a dynasty and is not tipping elections.  Exasperated and defeated, you instead switch to name calling... "whiner".  Don't you have a logical argument you can present in lieu of character assassination?

 

Let's say it was $6m divided 14 ways... what is the social goal of limiting someone from inheriting $428k?  Does it "unfairly" get his children admitted to private school?  There must be something left you can argue after that pathetic mayoral race comment.  Can't you just live with the fact that life isn't fair and if your family wasn't frugal/lucky/etc... you may not have the same as everyone else?  Or is it absolutely necessary to take from other families what they may have amassed from 94 years of frugality and compounding (my grandmother is that person... died three months short of 94 with paint peeling from the ceilings because she couldn't justify the cost of repainting). 

 

I mean, you should have seen the stuff we had to go through -- horse hair mattresses brought over from England after WWII.  They even had an old brown upholstered couch that was inherited from my great-grandmother... and no, not the valuable type of antique, but rather the falling apart kind.  The kids playhouse in the yard was built from the packing crates that were used to bring their goods over from England when they moved.

 

Nothing but thrift and holding onto shares, reinvesting the proceeds.

 

Oh, and it's "too much" you say.

 

Okay, well it wouldn't have been "too much" if she had given it away to us all 30 years ago before it ballooned in size. 

 

But....

 

She....

 

Didn't...

 

Want....

 

To....

 

Ruin....

 

Us....

 

So she let us wait until we were graduated from college, married, 35+, etc...

 

And then left each grandchild $100,000 Australian, with the rest going to her children who had to wait until 65+.

 

 

[ERICOPOLY]

But if they had a gift/estate tax she would have been motivated to gift it to us earlier to whittle away her estate and that would have screwed us up perhaps.

 

The gift/estate tax laws create the very kind of entitled/spoiled children that you hate -- gettting the annual gift exclusion from their parents when they are 18 because the parents don't want to pay the estate tax.

 

Not having an estate tax lets us rich evil people keep it from our children for longer until we make sure they turn out right.  But I'm sure you know much better than we do.

 

Do I want my kids to find out they have this big amount of money socked away in a trust when they turn 18?

 

No, I want to keep it a mystery and pretend they're not getting any of it.

 

But that's going to cost my family a lot of money, because I can't make use of the annual gift exclusion if I try to bring them up that way.

 

[ScottHall]

Don't you all think you're going a bit overboard here? Maybe politics isn't polite conversation for an investing forum.