Stay Classy Cayman Islands.

[delusions of grandeur]

You haven't read a single word already posted. This isn't a rebuttal, it's a diatribe.

 

Tell us how the inherited dollars are taxed twice since two separate people are taxed.

Give us your considered opinion on why this massive influx of money should not be taxed when all other income is, even social security.

Tell us why this unearned income is good while other unearned income is not.

You and I seem to have very different views about the difference between an inheritance and a transaction.

 

Yes, a transaction gets taxed on both ends, both for the purchaser of service/good and the seller.

 

But there's no buyer in an inheritance, just a dead guy whose assets (property if you want to look at what the broad definition of property includes) floating out there... So inheritance to me is more akin to taking over what the inheritor is no long around to be able to have control over... It's not a transaction, because as you've highlighted by calling it "unearned", no good/service/commodity/currency was exchanged for control of the assets, and so it's clear that the intent of a will is to delegate who is responsible for what as far your assets and interests go, not to be considered a transaction, which it's clearly not.

 

And BTW, if you consider inflation and dollar devaluation as a tax, then that income actually ends up getting taxed 3 times.

Edited January 26, 2012 by delusions of granduer

[westvirginia]

No, I'm not missing his point, its just not very persuasive. You, however, are incorrect - funds are not "controlled" by the kids - the funds are transferred to the kids. And it is the right to transfer property at death that is being taxed without regard to whether or not that money was previously taxed. Carping mindlessly that the money was previously taxed doesn't help either because, even under your logic, money that has not been previously taxed (perhaps because dad inherited it from grandfather) should then be taxable when it passes from father to son.

 

And I'm not sure why you think I made Jimmy's point. Kid 1 win's lottery, he pays tax. Kid 2 inherits money, he doesn't. There is no reason to treat them differently because the lottery paid tax on the money it earned before paying that prize. Why doesn't your logic apply equally there? I'll tell you why - because the principle at issue is simply that folks want favorable tax treatment for their intended beneficiaries. That's human nature, which I understand, but it benefits only the very wealthy at the expense of wager earners who ultimately fund that benefit through higher rates of income tax and/or reduced government services.

 

There is a very real wealth gap and growing inequality between this haves and have nots. And that's *with* an estate tax. That gap isn't good for the country, and it would only get worse - faster - without an estate tax.

 

Do you really not get the argument that it's morally wrong to tax the same money twice? It doesn't matter if the money's been handed down five times, that money was taxed when it was earned, at whatever the prevailing rates and rules were. The lottery example is a red herring, because the lottery (assuming it doesn't get some special tax treatment as a state organ) would only pay tax on its profits. Those profits would not include the $10MM paid to kid 1, thus he's gonna pay the income tax on it. Kid 2's father, grandfather, whatever would have paid tax on that money when it was earned. Just like a ROTH IRA only gets taxed once, the inherited property should only get taxed once. You're cherry picking at things and making an argument you know damn well is disingenuous.

[yo mama]

You and I seem to have very different views about the difference between an inheritance and a transaction.

 

Yes, a transaction gets taxed on both ends, both for the purchaser of service/good and the seller.

 

But there's no buyer in an inheritance, just a dead guy whose assets (property if you want to look at what the broad definition of property includes) floating out there... So inheritance to me is more akin to taking over what the inheritor is no long around to be able to have control over... It's not a transaction, because as you've highlighted by calling it "unearned", no good/service/commodity/currency was exchanged for control of the assets, and so it's clear that the intent of a will is to delegate who is responsible for what as far your assets and interests go, not to be considered a transaction, which it's clearly not.

 

And BTW, if you consider inflation and dollar devaluation as a tax, then that income actually ends up getting taxed 3 times.

Your thoughtful analysis would be correct if, for example, the assets were held in a trust and the only thing happening was a change in who the trustee was. And in that scenario there would be no tax consequences because, as you correctly point out, the only thing that's happening is a change in who is responsible for management of the assets.

 

But an inheritance is different. Absolute ownership changes hands. It's like the beneficiary found a sack full of money on the ground and gets to keep it. And when you find a sack full of money on the ground and keep it, that called "treasure trove" and its taxable income despite the fact that there isn't anyone on the other side of the "transaction." The only difference between a treasure trove and an inheritance is that we know where the money came from and its usually a family member.

Edited January 27, 2012 by yo mama

[Jimmy Neutron]

There is a very real wealth gap and growing inequality between this haves and have nots. And that's *with* an estate tax. That gap isn't good for the country, and it would only get worse - faster - without an estate tax.

 

This is the argument I really hate and cringed when Obama mentioned it the other night. "the country needs it" is not justification to raise taxes on anyone. Perhaps I'll go to my boss in the morning and explain that I bought a car that is too expensive for my budget, have too many maxed out credit cards and tell him he owes me a raise because I really need it.

That said, I do think Romney et al should be paying taxes at 30% or so and that all business and richy rich loop holes should be closed.

 

The Oracle of Omaha has been nicely compensated for being Obama's "Raise Taxes on the Rich" poster boy. Now that that pipeline is not being built, guess who's RR all of that oil will be shipped on???

Edited January 27, 2012 by Jimmy Neutron

[Big Country]

This is the argument I really hate and cringed when Obama mentioned it the other night. "the country needs it" is not justification to raise taxes on anyone. Perhaps I'll go to my boss in the morning and explain that I bought a car that is too expensive for my budget, have too many maxed out credit cards and tell him he owes me a raise because I really need it.

That said, I do think Romney et al should be paying taxes at 30% or so and that all business and richy rich loop holes should be closed.

 

The Oracle of Omaha has been nicely compensated for being Obama's "Raise Taxes on the Rich" poster boy. Now that that pipeline is not being built, guess who's RR all of that oil will be shipped on???

 

Well, to be fair, he was taxed at a rate of 33% for all income over $209,250 (assuming he filed as married filing jointly) and 35% on everything over $373,650.

 

But, as we all know, the bulk of his "income" came from interest earnings on investments, which is not considered "income" but is capital gains. I would also assume, as a savvy investor or at the advice of his tax professional, he probably also did a lot of tax loss harvesting last year to increase the amount of deductions he could take.

 

None of those things are unavailable to anyone. It may take a little legwork reading up on the IRS codes and giving one a greater than basic understanding of personal finance, and a little time doing more than filling out a 1040EZ and taking a standard deduction.

 

 

 

That said, what would you propose is a fair way to raise his effective tax rate to closer to 30% without also affecting the effective rate of everyone else? Are you suggesting that there be a progressive tax on capital gains?

 

It's not just rich people that pay these, but realisically anyone with an interest bearing bank account, a non tax-deferred or tax-free (ROTH) investment account, etc. that is paying capital gains. The only difference is that those with accumulated wealth derive a greater proportion of their income from the capital gains, so while they are NOT paying a lower percentage of income taxes than someone making much less than them, they do end up with a lower effective tax rate because of this. Raise the capital gains tax and sure you will increase their their effective tax rate, but I think an unintended consequence may be that more damage is done to the middle/lower class as you are increasing the tax on their savings, and I would dare to make the assumption that this is the same group that is less likely to put the time into researching the IRS codes and/or take advantage of tax loss harvesting opportunities within their investments, making the blow even greater to them.

[gbpfan1231]

Well, to be fair, he was taxed at a rate of 33% for all income over $209,250 (assuming he filed as married filing jointly) and 35% on everything over $373,650.

 

But, as we all know, the bulk of his "income" came from interest earnings on investments, which is not considered "income" but is capital gains. I would also assume, as a savvy investor or at the advice of his tax professional, he probably also did a lot of tax loss harvesting last year to increase the amount of deductions he could take.

 

None of those things are unavailable to anyone. It may take a little legwork reading up on the IRS codes and giving one a greater than basic understanding of personal finance, and a little time doing more than filling out a 1040EZ and taking a standard deduction.

 

 

 

That said, what would you propose is a fair way to raise his effective tax rate to closer to 30% without also affecting the effective rate of everyone else? Are you suggesting that there be a progressive tax on capital gains?

 

It's not just rich people that pay these, but realisically anyone with an interest bearing bank account, a non tax-deferred or tax-free (ROTH) investment account, etc. that is paying capital gains. The only difference is that those with accumulated wealth derive a greater proportion of their income from the capital gains, so while they are NOT paying a lower percentage of income taxes than someone making much less than them, they do end up with a lower effective tax rate because of this. Raise the capital gains tax and sure you will increase their their effective tax rate, but I think an unintended consequence may be that more damage is done to the middle/lower class as you are increasing the tax on their savings, and I would dare to make the assumption that this is the same group that is less likely to put the time into researching the IRS codes and/or take advantage of tax loss harvesting opportunities within their investments, making the blow even greater to them.

[Jimmy Neutron]

That said, what would you propose is a fair way to raise his effective tax rate to closer to 30% without also affecting the effective rate of everyone else? Are you suggesting that there be a progressive tax on capital gains?

 

If it were up to me I'd blow up the whole tax code and start from scratch - eliminating the income tax altogether. Unfortunately, I think we're too far down the rabbit hole to consider a reasonable tax revenue level - at least for the next 50-60 years. In the interim, I could probably go for a progressive tax on capital gains - with mega credits for those taking the proceeds and investing in domestic business resulting in either jobs or US made equipment.

[yo mama]

Do you really not get the argument that it's morally wrong to tax the same money twice? It doesn't matter if the money's been handed down five times, that money was taxed when it was earned, at whatever the prevailing rates and rules were. The lottery example is a red herring, because the lottery (assuming it doesn't get some special tax treatment as a state organ) would only pay tax on its profits. Those profits would not include the $10MM paid to kid 1, thus he's gonna pay the income tax on it. Kid 2's father, grandfather, whatever would have paid tax on that money when it was earned. Just like a ROTH IRA only gets taxed once, the inherited property should only get taxed once. You're cherry picking at things and making an argument you know damn well is disingenuous.

We tax the same money twice all the time, usually when it changes hands. And that's what happens here - the estate and gift tax are "transfer taxes." If it operated like my property taxes (i.e., taxing the same value year after year) then I would have a problem with it.

 

The law abhors double taxation and so do I. But I don't think the estate tax constitutes double taxation, and neither does the Supreme Court.

 

And it's not really an "argument" when you resort to polemic allegations of morality.

[Jimmy Neutron]

We tax the same money twice all the time, usually when it changes hands. And that's what happens here - the estate and gift tax are "transfer taxes." If it operated like my property taxes (i.e., taxing the same value year after year) then I would have a problem with it.

 

Yeah, it's taxed when exchanged for a service or commodity - when commerce takes place.

[yo mama]

This is the argument I really hate and cringed when Obama mentioned it the other night. "the country needs it" is not justification to raise taxes on anyone. Perhaps I'll go to my boss in the morning and explain that I bought a car that is too expensive for my budget, have too many maxed out credit cards and tell him he owes me a raise because I really need it.

That said, I do think Romney et al should be paying taxes at 30% or so and that all business and richy rich loop holes should be closed.

 

The Oracle of Omaha has been nicely compensated for being Obama's "Raise Taxes on the Rich" poster boy. Now that that pipeline is not being built, guess who's RR all of that oil will be shipped on???

Then we agree. Taxing investment income at roughly half what we tax wages isn't particularly fair. I'm not saying we should raise taxes on anyone because the country needs it. I'm saying we should equalize taxes in a way that doesn't blatantly favor passive investments income over wages. Guys like you and me have *already* had our taxes raised so guys like Romney can pay less than a 15% effective rate. But I'd also subject estate and gifts taxes to that same rate, which would actually be a tax cut versus current law.

 

I feel like the guys who are arguing the hardest with me don't seem to appreciate that I'm actually trying to lower their taxes.

[yo mama]

Yeah, it's taxed when exchanged for a service or commodity - when commerce takes place.

While commercial transactions are obviously subject to taxation, taxation is not limited to commercial transactions. Did you see my treasure trove example? When you find money, its taxable. When you steal money nothing is exchanged, but that's still taxable income. Forgiving a personal debt is taxable. Government condemns your property and you don't reinvest it, that's taxable.

 

The examples are fairly limitless because, as a general rule, everything is taxable income unless there is an exception. Inheritances and gifts are specifically exempted from income BECAUSE they are subject to an alternate system of taxation. Absent that system, they would constitute income too.

 

In any event, the estate tax isn't going anywhere. It's almost pointless to bicker about it.

[Ursa Majoris]

It's not a transaction, because as you've highlighted by calling it "unearned", no good/service/commodity/currency was exchanged for control of the assets, and so it's clear that the intent of a will is to delegate who is responsible for what as far your assets and interests go, not to be considered a transaction, which it's clearly not.

And there we must agree to disagree. I believe the transfer of money from one person (now a non-person) to another is most certainly a transaction for all intents and purposes. It is income (though as YM pointed out, it is not subject to income tax because it is subject to a different taxation system). If estate tax was not in existence, the money would be subject to income taxation.

[bpwallace49]

I wish I could vote in rajn's huddle awards.

 

Yo mama's conributions to these board should get a nod for most respected. I absolutely love reading his posts and how he brings logic to bridge the rhetoric-mongers.

 

 

[bushwacked]

I wish I could vote in rajn's huddle awards.

 

Yo mama's conributions to these board should get a nod for most respected. I absolutely love reading his posts and how he brings logic to bridge the rhetoric-mongers.

 

 

 

 

Yo mama kicks some serious knowledge on these boards....Fo sure...

[Jimmy Neutron]

I feel like the guys who are arguing the hardest with me don't seem to appreciate that I'm actually trying to lower their taxes.

 

I understand the legality of the estate tax, I simply disagree with it - vehemently. Many of you agree with me about recent USSC rulings - something may be the law, but that doesn't make it right. The estate tax strikes that chord with me.

[Ice1]

You haven't read a single word already posted. This isn't a rebuttal, it's a diatribe.

 

Tell us how the inherited dollars are taxed twice since two separate people are taxed.

Give us your considered opinion on why this massive influx of money should not be taxed when all other income is, even social security.

Tell us why this unearned income is good while other unearned income is not.

 

It is not a diatribe, it is a point of view.

 

I am astonished you lack the capacity to see these dollars are not double taxed. I can certainly understand you belief system but I reject it.

Edited January 27, 2012 by Ice1

[Ice1]

I'm sticking up for people who work for a living, you idiot.

 

These are the type of posts that truly show your colors. Redistribution philosophies no matter how you describe them do not help in my opinion. If you want to help working people then the primary goal should be to get monies into the economy, not take it out of the economy to give to the federal government. That is what helps working people. If your goal is to increase entitlements then that goal would be to grow the federal government through revenue which further increases government power and the expense of citizenry which grow more dependent on government.

 

If you are going to call me an idiot, at least have the acumen to understand your position.

 

I am a working person and you are not sticking up for me in anyway. What you are sticking up for is a system that allows working people to work all their lives and pay taxes on all those wages and investments and then allows the government to take a very high percentage of this money again when they pass it on to their heirs.

 

While I am not against a simple and more effective tax code and understand the need to fund, double taxation simply doesn't help the working people as you put it. It does help the government grab revenue again from monies they have already taxed once. It doesn't help the economy, it doesn't increase jobs, it doesn't circulate cash flow. Taking monies out of the economy reduces all of the above.

 

What it does, is increase revenues to the government at the expense of the economy.

 

So while you think I am an idiot for a viewpoint, to me you are simply misguided thinking somehow this government deserves to double tax families life savings. Your position is simply not provable when compared against the incredible waste of the government.

________________________________________________________

 

BTW, the one that states Social Security is being taxed; While it is taxed it is only taxed when used one time> Secondly, when we pay in for lifetime and then die that money doesn't go to our heirs even though we paid in for decades, for the most part it stays with the government. That is an entirely different discussion.

[Square]

Personally, it appeals to me to leave my kids money without the government having another chance to tax it. I'd probably try to find away to accomplish that. But I understand the world we live in and that since everything pretty much gets taxed, it isn't that strange when you take the paternal instincts out of it.

 

It is not a diatribe, it is a view point.

I think people stop taking you seriously when you go on to tinfoil hat ravings like this.

 

Many liberals seem to think that the government deserves your hard earned money and you should not be able to give it away as you see fit.

 

Liberals really believe this is the governments money and want every control measure possible over the citizenry.

 

The majority of the sane people think the government is wrong and double taxation on dollars already taxed is wrong on principle.

Only the Rush Limbaugh crowd of knuckleheads would really sign off to this level of nonsense. If you want to be taken seriously, you can drop some of the rhetoric and discuss the issues. Saying people are trying to control every measure, only the sane think the way I do, blah blah blah shows that you are deeply entrenched into la la land and there is no reason to discuss an issue with you.

[yo mama]

These are the type of posts that truly show your colors.

Magenta?

[Big Country]

I am a working person and you are not sticking up for me in anyway. What you are sticking up for is a system that allows working people to work all their lives and pay taxes on all those wages and investments and then allows the government to take a very high percentage of this money again when they pass it on to their heirs.

 

While I am not against a simple and more effective tax code and understand the need to fund, double taxation simply doesn't help the working people as you put it. It does help the government grab revenue again from monies they have already taxed once. It doesn't help the economy, it doesn't increase jobs, it doesn't circulate cash flow. Taking monies out of the economy reduces all of the above.

What it does, is increase revenues to the government at the expense of the economy.

 

Perhaps the estate tax is the government taking a passive aggressive approach to encourage you to spend your money while you are alive and circulate it into the economy rather than to have you simply pass it down to your heirs. Either way, the government gets their piece, whether through estate tax or through the income you spending the money generates for someone else.

 

Just a thought.

[Ursa Majoris]

I am astonished you lack the capacity to see these dollars are not double taxed. I can certainly understand you belief system but I reject it.

It is a simple disagreement on the nature of a transaction, on the nature of a transfer and on the principle of taxation itself. I completely disagree that there is double taxation in here at all. In fact, I think the term "double taxation" is a simple anti-tax pejorative to stir people up.

 

I think people stop taking you seriously when you go on to tinfoil hat ravings like this.

 

Only the Rush Limbaugh crowd of knuckleheads would really sign off to this level of nonsense. If you want to be taken seriously, you can drop some of the rhetoric and discuss the issues. Saying people are trying to control every measure, only the sane think the way I do, blah blah blah shows that you are deeply entrenched into la la land and there is no reason to discuss an issue with you.

Sadly, this. I usually welcome thinking right wing opponents to these boards but long-winded anti-liberal diatribe rather than reasoned coherent discussion based on references and logic isn't argument.

[Yukon Cornelius]

Sadly, this. I usually welcome thinking right wing opponents to these boards but long-winded anti-liberal diatribe rather than reasoned coherent discussion based on references and logic isn't argument.

ditto head's of the world unit!

[bushwacked]

If you want to be taken seriously, you can drop some of the rhetoric and discuss the issues.

 

 

Word. I've simply stopped reading him, because not only is he long-winded it's obvious he is just repeating what he heard from the EIB network the day before.l

[yo mama]

I understand the legality of the estate tax, I simply disagree with it - vehemently. Many of you agree with me about recent USSC rulings - something may be the law, but that doesn't make it right. The estate tax strikes that chord with me.

Jimmy - I both understand and respect your position. What I don't understand is why guys like you and me would volunteer to pay more in income tax so the uber wealthy can pay less in estate tax. If your core motive is to protect and share the the fruits of your lifetime efforts with your family, then your position is actually counter productive to your intent. (Unless you have in excess of $10mm that I don't know about, in which case PM me and I'd be happy to represent you). Guys like you and me would be better off with lower income tax rates and higher estate tax and capital gains tax rates. Lower income tax rates would give wage earners more spending power, and spending would be the single greatest catalyst to our nation's economic recovery and future growth. And Corporate America and its stockholders would directly benefit from those things.

 

And let me help you in your future debates. IMO, the most compelling argument against the estate tax is that is not authorized by the Constitution. The income tax is authorized by the 16th Amendment, but the estate tax is purely a court creation. There are not supposed to be federal property taxes, so the court called the estate tax a "transfer tax" that is measured by the value of the property being transferred. How is that not a federal property tax? In any event, there have been no major challenges to the underlying constitutionality of the estate tax largely because its been around so long no one thinks that argument would prevail.

[Ice1]

Magenta?

 

More like dull gray, but whatever.