The Estate Tax

[Matty]

I wrote this as an answer to a question in a take-home exam. Since it's a current topic I figure it might spark some discussion here:

Currently in the news is the issue of the national estate tax. As per the IRS, currently the estate tax exemption is $1.5 million, meaning estates smaller than that will not be taxed while being inherited (an amount that can easily be doubled if you have a spouse). Scheduled increases enacted by President Bush’s tax cuts will bring this exemption up to $3.5 million in 2009 which would affect 1% of the population. In 2010 the tax will be repealed, but due to a sunset clause it will be reinstated with the 2004 exemption amount of $1 million in 2011. The tax is estimated to bring in $300 billion in revenue for the federal government over a ten-year span.

However, in April of this year the House of Representatives voted to repeal the tax completely. The Senate has yet to vote on the issue, but a $15 million dollar lobbying campaign has recently been underway by well-funded groups whose only goal is to get the Senate to repeal the law before the Senate's August recess.

Opponents of the tax argue that it violates property rights. In their view a person should be able to do whatever he or she wishes to with his or her property, and that to impede this right undermines liberty as well. However, today many people commonly mistake capitalism and liberty to be synonyms, and use the terms interchangeably. One person I talked to recently, by taking this stance, was made to admit that our campaign finance laws, drug laws, some business laws, and many other laws which are regarded as essential to freedom were anti-liberty (he used the term anti-capitalist) as well.

Opponents also contend that estate taxes are double taxation. However, in many of the larger estates this is not completely true because stocks, bonds, and real estate can appreciate in value over the years and this appreciation is not taxed. Estates worth more than $10 million have almost 60 percent of their value in untaxed capital gains, and the average estate has around a third of its value in untaxed capital gains as per a study by economists James Poterba of the Massachusetts Institute of Technology and James Weisbenner, who was on the staff of the Federal Reserve Board when the study was published in 2000. This would make the double taxation claim partially false, and mostly false for large estates. This is not even to mention that virtually everything is “double-taxed” in some way.

There is also the claim that estate taxes give the government an incentive to see you die sooner. It is not a valid concern though because this does not lead to increased revenue for the government; only more immediate revenue which does not matter because the federal government is allowed to run deficits. As evidence of this, the federal government is currently reducing revenue while increasing spending. Also, a democratic state protects against gross abuses of the system. The tension that the aging population puts on the government is not added to in any way by inheritance taxes.

The lobbying groups also make the claim that the U.S. public supports repeal of the tax by misrepresenting misleading polling. They also make other claims which have absolutely no basis in reality so I will not include them. However I will include this link to a great nonpartisan site debunking most of them: http://www.factcheck.org/article328.html. This is a clear display of the purposeful furtherance of Gramsci’s cultural hegemony.

Pundits like Bill O’Reilly call the tax unconstitutional, although the Supreme Court in 1921 ruled otherwise, something the 5th U.S. Circuit Court of Appeals most recently upheld in 2001.

Proponents of the tax, like Warren Buffet, say that it is a key component in a successful capitalist system and that abolishing such a tax would lead to an “aristocracy of wealth”. Alan Greenspan, also an ardent capitalist, has very recently said that the growing trend of divergence of income and fortunes in this country not seen since the Great Depression "is not the type of thing which a democratic society - a capitalist democratic society - can really accept without addressing" during a congressional hearing. He has also called the recent income tax cuts which predominately favored the rich and initiated the rise of estate tax exemptions "wrong", although only in retrospect.

As Michael Walzer points out in our reading of In Defense of Equality, the distribution of wealth does not accurately coincide with the distribution of any sort or combination of talent or contributions to society. This is because inheritance enters luck into the equation of wealth. If you have rich parents, you can simply sit on your inherited estate and collect untaxed capital gains. Walzer and others make the argument that this system often causes those with exceptional ability to no longer strive for excellence. Equal opportunity does not exist under a system without inheritance taxes, and this causes a great deal of potential to be wasted. I feel compelled to mention that this system stifles creativity in the same way as well because I just realized I've already mentioned 3 of your 4 values.

It is my view that any familial inheritance of capital beyond what will provide dependent children the basic needs of life is anti-capitalist and also anti-democratic. I will use the writings of John Locke and Adam Smith to support this argument.

John Locke’s Second Treatise is notable for a number of themes that Lock develops within it. It begins with a description of the state of nature in which individuals are under no obligation to obey anyone but are each their own judge of what the law of nature requires. In Locke’s view the state of nature provides basic natural rights such as life, liberty, and property. Locke’s Social Contract theory holds that a government is formed only to protect these rights, and when they violate or fail to protect the rights, revolution is required.

Because property rights were one of the main and specific topics of Locke's writings, not much extrapolation from his main views is needed to discuss what his views on the topic would be. Locke’s “Natural Rights theory” is often regarded as the basis of our modern concepts of human rights and is well known to most.

However to Locke the right of property was more important than other rights, like that to participate in government and public decision making. Locke was clearly not a believer in democracy. He felt that giving power to the public would corrupt the sanctity of private property, and he was right. The stagnant untaxed concentration of wealth puts hereditary inheritance directly in competition with democracy.

Clearly Locke would be against the estate tax, as ardently as he would be against democracy. He considered the transfer free transfer of property to be an unalienable natural right.

In contrast to John Locke stands Adam Smith, regarded as the father of classical economics. The prominent Scottish political economist is best known for his development of the ideas of free trade and capitalism. His The Wealth of Nations is widely regarded as the starting point for any defense or critique of forms of capitalism. Since capitalism is now commonly associated with unrestrained selfishness, modern thinkers commonly emphasize Smith’s moral philosophy with its emphasis on sympathy.

As an example of this there is an important but often overlooked passage in the second half of The Wealth of Nations. “In a market free from monopolies and self-serving public policies, competition among the self-interests of isolated consumers and producers produces a stable and expanding economy”. In my eyes the notion that a person has property rights after he is dead is a self-serving policy of the wealthy and all it serves is their egos.

In Smith’s The Theory of the Moral Sentiments, he proclaims that nature provides our basis in sentiment for virtue. When we take the role of impartial spectators, sympathy is our basis for moral judgments and acting out of a sense of duty corrects for any lack of appropriate sentiments. Smith held that a deity gave us powerful instincts or “passions” which lead us to behave in ways that ultimately increase everyone's wealth. Adam Smith focused on the role of enlightened self-interest or the “invisible hand” and specialization in making capitalism work and that is probably what he is best known for.

Again, with some research it is made apparent that he would clearly support the estate tax. In fact, he would support it in a much more extreme form than we see it today. Adam Smith used to say during his jurisprudential lectures that “there is no point more difficult to account for than the right we conceive men to have to dispose of their goods after death.” Adam Smith would have seen a problem with supplying billions upon billions of dollars in affirmative action to select people at the expense of the potential of many more, and ultimately the wealth of society as a whole.

Interestingly, as noted in a Salon article by Sam Fleischacker, the founding fathers despite relying so heavily on John Locke in writing our Constitution and Declaration of Independence seemed to make a special exception for property rights and possibly the estate tax. Instead of Locke’s “life, liberty, and property”, we got “life, liberty, and the pursuit of happiness”. Further, Thomas Jefferson described the Wealth of Nations as “the best book extant” on political economy and meanwhile openly wondered whether all hereditary privileges should be abolished. His argument was that “the earth belongs in usufruct to the living”.

In summation, the central moral principle in capitalist societies is that you deserve what you earn and inheritance erodes this value far more than any affirmative action, welfare, or public healthcare programs ever will.

As John Stuart Mill indicated in our reading of On Liberty, one of these views alone cannot hold the whole truth- only through a combination and competition of views can human beings ever understand anything close to an actual truth. Every view has an element of truth in it, however miniscule. This is due to our limited intellects which can only process a limited number of reasons, consequences, and qualifications at any time.

Whether 100% taxation of inheritance is best or can be effectively implemented today is debatable. Obviously gifting in the form of providing healthcare, education, and other necessities for a comfortable life would have to be allowed to protect the family unit and ensure familial concerns are still a motivating factor for excellence. But there is no doubt in my mind that technology, and the greatly decreased responsibility of the IRS regarding other taxes in such a system will eventually make a truly democratic and capitalist society possible.

President Bush has come out in support of repealing the estate tax. If his goal is to protect property rights, according to the views of Locke, then he is on the right track. However if his goals are to produce a stable expanding economy I believe, and the father of classical economics would believe that he is failing. His efforts may further property rights, but harm the pursuit of happiness, and go against ideals our nation was founded on.

[shots]

I find this to be a difficult issue on the one hand I don't think inherited wealth is good for anybody not the person getting the money or society in general. But on the other hand taxes have already been paid on that persons income so if we tax it again when they die that just seems fundamentally wrong. In the end I would have to say that I support the repeal of the estate tax on moral grounds but I hope more people will consider giving large portions of their estate to charity instead of setting up generational wealth so that their children and grandchildren grow up without a work ethic.

[Matty]

You may have time to read my post and then edit yours. On average 60% of the worth of estates totalling $10 million or more is from untaxed capital gains.

[shots]

since when are capital gains untaxed?

[Matty]

http://www.cbpp.org/6-17-05tax.htm

http://www.cbpp.org/6-3-02tax.htm

[shots]

This is just a cleverly worded trick as someone who buys and sells real estate frequently believe me tax is paid on all capital gains. What is being talked about is unrealized capital gains meaning that you don't pay taxes on your real estate appreciation (besides increased property taxes) until you sell the real estate this should be a pretty simple concept of course you can't tax appreciation until the person sells it.

[Matty]

Regardless of the wording, 60% of the worth of estates totalling 10 million or more has not been taxed.

[masse75]

[ QUOTE ]
However, in many of the larger estates this is not completely true because stocks, bonds, and real estate can appreciate in value over the years and this appreciation is not taxed.

[/ QUOTE ]

I'm no tax lawyer...not sure if I follow correctly. You mention that because something has appreciated, it should be taxed? Is the appreciation not truly realized until it is SOLD? At that time, proceeds (whether the original owner or the heir, if it is passed along at time of death) is responsible for taxes paid?

My dad owns 5000 shares of X. Value is $100/share. Passes along to me at his death. Say no estate tax. Company X hits the tank, stock price drops to $10/sh. Technically, it's a loss, but if I've received the stock via estate transfer, proceeds from sale are still taxable since my cost was $0.

Taxing estates (even those that just barely meet minimum criteria) also tends to cause a burden on the inheritor. Dad passes along the family home...oops, I owe tax. I've gotta now sell the homestead to cover the tax bill. So how is that benefitting me or continuing the estate?

BTW...not picking a fight. See my comments in "Most useless forum" thread.

[shots]

this is the purpose of the carry over basis so now the appropriate tax is paid on everything and nothing is taxed twice unlike how it would be with estate tax.

[shots]

As for the financial numbers there is no question income to the treasury will be hurt as a resault of the repeal of the estate tax but just because you can make a lot of money doing something doesn't make it right.

[Matty]

[ QUOTE ]
As for the financial numbers there is no question income to the treasury will be hurt as a resault of the repeal of the estate tax but just because you can make a lot of money doing something doesn't make it right.

[/ QUOTE ]I didn't even use that as a justification for making it right.

[shots]

The second link you posted seems to make the conclusion that we'll simply lose to much tax revenue if we repeal the estate tax I was responding to that sentiment.

[lehighguy]

Though I'm finding your claim that Smith opposses inheritence hard to follow (I might understand it better if I was reading whole passages instead of just the quotes). But I'll give it to you.

Even so, I have to come down on Locke's side. For fear that the following is not possible:
"Whether 100% taxation of inheritance is best or can be effectively implemented today is debatable. Obviously gifting in the form of providing healthcare, education, and other necessities for a comfortable life would have to be allowed to protect the family unit and ensure familial concerns are still a motivating factor for excellence."
Who will amke these decisions? What will stop people from getting around them? What will stop government from abusing the powers its given? I just don't have enough faith in government that I am willing to give up my natural property rights to them. And the IRS isn't about asking me to give up my rights, its's about violating them at gunpoint.

That is why I like our current system. If you don't want to leave money to your kids because you feel they'll be spoiled you can donate it to charity. It gives you the choice. It respects your rights. I don't agree with people who do it, but I respect their right too. Just as I don't think doing drugs or having gay sex is a good idea I respect people's right to make those decisions.

When you start messing with people's property rights you get into a whole can of worms. The recent supreme court decision is enough to make me wonder where teh "common good" ends.

[tylerdurden]

[ QUOTE ]
since when are capital gains untaxed?

[/ QUOTE ]

I think he means gains which have not yet been taxed (i.e. stock that the deceased bought at $10 and is now worth $50 but hasn't been sold).

[ QUOTE ]
Adam Smith would have seen a problem with supplying billions upon billions of dollars in affirmative action to select people at the expense of the potential of many more, and ultimately the wealth of society as a whole.

[/ QUOTE ]

This wording frames NOT taxing estates as a form of welfare that the state is "giving" away. From this point of view, you might as well say that the government owns everything and just lets certain people have more than others.

BTW, how does taxing estates increase the wealth of society as a whole? Transfering money doesn't add to GDP or create wealth.

[Matty]

[ QUOTE ]
Who will amke these decisions?

[/ QUOTE ]As all other things political, specialized committees and politicians will make them within the boundaries of what public opinion will allow.[ QUOTE ]
What will stop people from getting around them?

[/ QUOTE ]The same things that stop people from cheating on taxes and stop illegal campaign contributions now.[ QUOTE ]
What will stop government from abusing the powers its given?

[/ QUOTE ]Elections.

[tylerdurden]

[ QUOTE ]
Regardless of the wording, 60% of the worth of estates totalling 10 million or more has not been taxed.

[/ QUOTE ]

I don't see this as a justification for taxing estates in bulk. If you inherit stock worth $50/share, but it was originally purchased at $10/share, then when you sell it, just tax the gains above the $10. Then, no capital gains are being untaxed. Or if you're really greedy, just make the heir pay tax on the gains up to the day of death or something. There's no need to go after the entire estate to fix this one "problem."

[Matty]

[ QUOTE ]
Transfering money doesn't add to GDP or create wealth.

[/ QUOTE ]Oh really? So our public education system is just an exercise in selfless charity?

[lehighguy]

None of those things are working now.

Edit: Do popular elections legislate morality, justice, or truth? Or do they have little to do with these things? What are the limits of popular elections? What things should you not be allowed to do because you have a majority?

[mmbt0ne]

If you ever answered one of my questions with an essay like that I would kick your ass. The last thing we need in this world is more overachievers.

[tylerdurden]

[ QUOTE ]
[ QUOTE ]
Transfering money doesn't add to GDP or create wealth.

[/ QUOTE ]Oh really? So our public education system is just an exercise in selfless charity?

[/ QUOTE ]

Selfless chairity? It's financed by forcing people to pay for it.

Even if it does generate positive results (the results indicate otherwise), it's still overwhelmingly likely that the money would have made more of a positive impact to the overall "wealth of society" had the original owners been able to decide how to spend it.

Is it OK to steal from someone if you have a "really good reason"?

[shots]

[ QUOTE ]
Or if you're really greedy, just make the heir pay tax on the gains up to the day of death or something. There's no need to go after the entire estate to fix this one "problem."

[/ QUOTE ]

That is exactly what the carry over basis does which will be implemented when the estate tax is repealed.

[Matty]

Excellent. Another anti-government ideologue who knows better than Alan Greenspan what creates wealth for a nation.

[tylerdurden]

[ QUOTE ]
Excellent. Another anti-government ideologue who knows better than Alan Greenspan what creates wealth for a nation.

[/ QUOTE ]

Great, another Statist that thinks Alan Greenspan walks on water. Good argument.

[lehighguy]

Alan Greenspan criticized our public schools as failures partially responsible for the growing income gap.

[masse75]

Is that the purpose of all taxes? Create wealth for the country? Or allow government a means to operate?

[Matty]

[ QUOTE ]
Alan Greenspan criticized our public schools as failures partially responsible for the growing income gap.

[/ QUOTE ]He criticized the performance of our schools- not specifically public schools. And nowhere did he advocate getting rid of public education.

[Matty]

[ QUOTE ]
Is that the purpose of all taxes? Create wealth for the country? Or allow government a means to operate?

[/ QUOTE ]The second, and the purpose of government is to protect its citizens, for which increased wealth is essential.

[shots]

It's no secret that private schools and even charter scholls are blowing away public schools in terms of the knowledge of their students.

[Matty]

[ QUOTE ]
It's no secret that private schools and even charter scholls are blowing away public schools in terms of the knowledge of their students.

[/ QUOTE ]It's also no secret that only certain students go to those schools.

[lehighguy]

You accused him of being an ideologue because he suggested the money could be better spent then it currently is. I for one think public education would be best served through a voucher system, one I have personal experience with and has a good track record in many European countries.

[Matty]

[ QUOTE ]
You accused him of being an ideologue because he suggested the money could be better spent then it currently is. I for one think public education would be best served through a voucher system, one I have personal experience with and has a good track record in many European countries.

[/ QUOTE ]No, he said that 'wealth of society' would best be served if there were no government assistance for education by the taxpayers or "original owners" (whatever that means) spending their money on whatever they want.

[masse75]

Taxes create wealth? I'm not even approaching this as "money out of my pocket means less wealth."

More money to an entity who is bound by no fiscal responsibility does not create wealth.

[shots]

[ QUOTE ]
It's also no secret that only certain students go to those schools.

[/ QUOTE ]

What's your point? All you need to send your kid to the vast majority of private schools is money and charter schools don't even require that. Are you trying to say that children of families with money are inherently smarter?

[Matty]

[ QUOTE ]
What's your point all you need to send your kid to the vast majority of private schools is money and charter schools don't even require that. Are you trying to say that children of families with money are inherently smarter?

[/ QUOTE ]There is a positive correlation, yes.

[Matty]

[ QUOTE ]
Taxes create wealth? I'm not even approaching this as "money out of my pocket means less wealth."

More money to an entity who is bound by no fiscal responsibility does not create wealth.

[/ QUOTE ]I'm not even going to summarize Adam Smith or any other economists, or pretend one sentence can explain what you claim it can. Go play with wikipedia.

[shots]

I agree there is a correlation but it's mainly in the quality of their education I don't believe that children of wealthy parents are naturally smarter.

[masse75]

Great. The standard Politics "Only the enlightened clearly understand this" response.


Just why I hate this forum.

[Ray Zee]

its a taking of property as all taxes are. but if you dont tax estates then the living must pay more in taxes as that income is gone.
which is better for all. to tax the living, or those that were stupid and worked extra hard and wouldnt spend their money. if they tax estates almost the full amount of its value then people would spend their money and give to good causes and maybe even take time off and enjoy the world. plus there would be less power in individual hands which always leads to corruption.

[Matty]

[ QUOTE ]
Great. The standard Politics "Only the enlightened clearly understand this" response.


Just why I hate this forum.

[/ QUOTE ]No, it's just the "It's -EV to try and discuss economics with someone who thinks it can be summed up in one anti-government sentence." response.

If you give me something to work with I'll be glad to work with it.

[masse75]

Ray, I would take issue with what you say. If I've earned the money, is it not my right to do with it as I please? Give it all to charity, blow it at the casino, save normally for retirement, or bury it in the backyard.

I would say that the more you take from a man in taxes, the less incentive to excel.

Should we do the things you suggest? Sure. But then again, why don't we give government all the wealth and they can apportion accordingly?

[MMMMMM]

[ QUOTE ]
In summation, the central moral principle in capitalist societies is that you deserve what you earn and inheritance erodes this value far more than any affirmative action, welfare, or public healthcare programs ever will.

[/ QUOTE ]

"You deserve what you earn" is NOT the same as "You deserve ONLY what you earn". You seem to be confusing the two.

Inheritance does not conflict with the value that you deserve what you earn; rather, it conflicts with GREY'S VALUE that you deserve ONLY what you earn.

Not everyone shares that value judgment, Grey.

[MMMMMM]

[ QUOTE ]
You may have time to read my post and then edit yours. On average 60% of the worth of estates totalling $10 million or more is from untaxed capital gains.

[/ QUOTE ]

Well, there shouldn't be a capital gains tax either.

[Ray Zee]

thats the whole idea. when you are living you get to keep more to do with it as you want. when you die you cant spend it anyway.

[andyfox]

Maybe. But poster's point, I believe, is that the argument of double taxation is mitigated by this fact.

[shots]

It's true that dead people can't spend money but if the reason you worked so hard was so that your children could have what you percieved to be a better future then the government should not be taking that away from you using the justification that you're dead and therefore can't care about it anymore.

[masse75]

Point taken.

What if my desire is to give it to my children? It is a natural human response to want to give to ones family.

[Ray Zee]

some exemption for that would be reasonable. plus you would have more to give them as your taxes alive would be less. and you would give them things while you were alive rather than hoarding it.

its all a thought. i am not advocating this as a cure all for anything. but why should the living pay now and the dead get to beat the taxes(kinda)

[[censored]]

No.

[Zeno]

[ QUOTE ]
but why should the living pay now and the dead get to beat the taxes(kinda)

[/ QUOTE ]


What kind of drivel is this Ray?!! You will need an extra size bib if you continue dribbling nonsense like the above.

I (and everyone else) have been hounded and forced by the government (State and Federal) into paying taxes on not just income but almost every damn item purchased or commodity owned for my entire life and then when I finally die the rat bastards ream you up the ass even more! Necrophilia is simply going too far. And all for what, so some idiot congressman can burned it all away on mostly frivolous and moronic expenditures to buy votes so he can spend even more money that is not his.

What kind of thinking is this anyway? What little money I can make is mine to do with as I wish while living and to dispose of as I wish at death, and if I wish to hoard it or drink it away or gamble it away or burn it or lose it all in the stock market, or spent it on drugs and prostitutes, or fishing gear, or buy 100 acres of worthless desert, or give it all to Uncle Fred or Aunt Jenny or my Sister or Brother or Children or my dad or Cousin Duke in China, or my mistress, that is MY FUKING BUSNESS and the RAT FUKING government can KISS MY ASS.

When are people going to wake the FUK up and realize that the government does not own you or your money?

Le Misanthrope

[Zeno]

The intelligent man, when paying taxes, certainly does not believe that he is making a prudent and productive investment of his money; on the contrary, he feels that he is being mulcted in an excessive amount for services that, in the main, are useless to him, and that, in substantial part, are downright inimical to him. He may be convinced that a police force, say, is necessary for the protection of his life and property, and that an army and navy safeguard him from being reduced to slavery by some vague foreign Kaiser, but even so he views these things as extravagantly expensive - he sees in even the most essential of them an agency for making it easier for the exploiters constituting the government to rob him. In those exploiters themselves he has no confidence whatever. He sees them as purely predatory and useless; he believes that he gets no more net benefit from their vast and costly operations than he gets from the money he lends to his wife's brother. They constitute a power that stands over him constantly, every alert for new chances to squeeze him.

- H.L. Mencken

[wacki]

[ QUOTE ]
[ QUOTE ]
but why should the living pay now and the dead get to beat the taxes(kinda)

[/ QUOTE ]


What kind of drivel is this Ray?!! You will need an extra size bib if you continue dribbling nonsense like the above.

I (and everyone else) have been hounded and forced by the government (State and Federal) into paying taxes on not just income but almost every damn item purchased or commodity owned for my entire life and then when I finally die the rat bastards ream you up the ass even more! Necrophilia is simply going too far. And all for what, so some idiot congressman can burned it all away on mostly frivolous and moronic expenditures to buy votes so he can spend even more money that is not his.

What kind of thinking is this anyway? What little money I can make is mine to do with as I wish while living and to dispose of as I wish at death, and if I wish to hoard it or drink it away or gamble it away or burn it or lose it all in the stock market, or spent it on drugs and prostitutes, or fishing gear, or buy 100 acres of worthless desert, or give it all to Uncle Fred or Aunt Jenny or my Sister or Brother or Children or my dad or Cousin Duke in China, or my mistress, that is MY FUKING BUSNESS and the RAT FUKING government can KISS MY ASS.

When are people going to wake the FUK up and realize that the government does not own you or your money?

Le Misanthrope

[/ QUOTE ]

You are the coolest old guy I know.

[MMMMMM]

Yeah Zeno I agree with your sentiments.

I've also been wondering a bit about Ray lately. Seriously, I mean.

[Ray Zee]

the point i was making you numbskulls is that you would have more money to spend when you were alive. the govt. is going to get so much anyway. you can pay it while you are alive and not get to compound it or spend it. or pay it after you are dead which is better for you. its not like you are going to beat the taxes by them not taxing estates.
plus as i said the powerful will be reduced which has to be good as they do all the things we complain about.
nobody thinks the govt spends our money wisely nor thinks our taxes are going to be reduced. they only go up until people revolt. but where do we want our taxes taken. the younger you are when they get them means the poorer you will be when older.

[masse75]

This entire post brings Harrison Bergeron to mind.

[MMMMMM]

[ QUOTE ]
the point i was making you numbskulls is that you would have more money to spend when you were alive. the govt. is going to get so much anyway. you can pay it while you are alive and not get to compound it or spend it. or pay it after you are dead which is better for you.

[/ QUOTE ]

Point taken, but five objections:

1) Doubts it will really save taxes in other areas; government generally just keeps adding/increasing taxes anyway

2) Not very comforting to think that government would have a high vested interest in seeing me die

3) Shouldn't you be able to give your money or house to anyone if you wish to: whether alive--or about to die?

4) Widescale government liquidations of property would be inefficient and probably easily corruptible

5) A 100% estate tax would diminish the concept of private property. It would also diminish the value of private property.

[ QUOTE ]
its not like you are going to beat the taxes by them not taxing estates.

[/ QUOTE ]

I think the fewer ways government has to raise revenue, the better. More ways invariably lead to more revenues. Government must be kept on a diet of thin gruel if it is to remain a manageable size.

[ QUOTE ]
plus as i said the powerful will be reduced which has to be good as they do all the things we complain about.

[/ QUOTE ]

I don't know if reducing the powerful is good or not. I'm inclined to think perhaps it wouldn't be. Also, personally speaking, I tend to gripe more about young crackheads who blast rap music out of their car windows than about whatever the powerful might be doing.

[ QUOTE ]
nobody thinks the govt spends our money wisely nor thinks our taxes are going to be reduced. they only go up until people revolt. but where do we want our taxes taken. the younger you are when they get them means the poorer you will be when older.

[/ QUOTE ]

True, but a 100% estate tax could also mean that you are poorer when you are younger, since your parents might not have had that nice house they inherited from their parents, and you are instead growing up in a crappy apartment in a bad neighborhood. Or they might not have inherited that down payment so again you have to grow up in a lousy neighborhood (this could be especially true if they are young parents who have not had time to save a down payment).

[andyfox]

"Mulcted"

I learned a new word today. And it's only 9:00. Thanks. I love the sound of it.

[Zeno]

[ QUOTE ]
"Harrison Bergeron"


THE YEAR WAS 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal every which way. Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution, and to the unceasing vigilance of agents of the United States Handicapper General.



Some things about living still weren’t quite right, though. April, for instance, still drove people crazy by not being springtime.


[/ QUOTE ]

/images/graemlins/smirk.gif /images/graemlins/smirk.gif /images/graemlins/smirk.gif

[Zeno]

[ QUOTE ]
the point i was making you numbskulls is.....

[/ QUOTE ]

/images/graemlins/grin.gif

Aside to all:

I have always liked Mr. Zee, ever since I first started posting on this silly Forum. I liked him even more after we met. The above statement (and subsequent prose) illustrates one of the reasons why.

Ray,

I understand your points and grant they are worthwhile ones. It is still irksome to me (and others) that the government gets away with so much taxation and for reasons that, more often than not, border on the frivolous or inane. Not that I think this will ever change. But the perverse psychology that seems to permeate some individuals thinking on this is hard to fathom. To put it succinctly: Governments are, at best, only mildly evil institutions run by scoundrels, frauds, idiots, morons, and outright criminals, whether elected or appointed. This is the root of most disagreements about here because others see governments as an overall good and run by people that have the interest of all at heart. Thus, most discourse becomes somewhat futile. I leave it to you on which side of the ledger I fall.

Now, I think I need to go fishing or hiking. Either will still involve some inimical governmental interference – most likely some tax or fee or other type of extortionist activity.

Le Misanthrope

[Ray Zee]

okay i relent. but its because of your last lines. that sways me to your side of the fence. but i originally said somewhere that some amount would be excluded. i realize that the tax wouldnt work but i do believe their should be one of some kind on larger amounts. it only makes sense as my views on not being much good dead.
still i agree with the govt stuff whole heartedly with you.
i am against all new taxes until they get their spending and waste in order. that i am with everyone on. cut their pocket and they will cut the fat.

[Ray Zee]

zeno , govt. is as you say in most cases. so we cant give them new extra revenue. that i agree with. but changing the way that same amout is taken may have merit. it doesnt mean i or anyone is for bigger govt. or like the creeps out there.
if they are going to take X dollars from me or you, i want to find the way it is the less painful

the forums are not silly silly

[WillMagic]

[ QUOTE ]
As an example of this there is an important but often overlooked passage in the second half of The Wealth of Nations. “In a market free from monopolies and self-serving public policies, competition among the self-interests of isolated consumers and producers produces a stable and expanding economy”. In my eyes the notion that a person has property rights after he is dead is a self-serving policy of the wealthy and all it serves is their egos.

[/ QUOTE ]

Adam Smith is rolling in his grave.

Will

[ACPlayer]

Not really. The tax basis of inherited property is reset to the current market value and does not remain the same as the actual cost of acquireing the propert.

[ACPlayer]

[ QUOTE ]
It is my view that any familial inheritance of capital beyond what will provide dependent children the basic needs of life is anti-capitalist and also anti-democratic. I will use the writings of John Locke and Adam Smith to support this argument.

[/ QUOTE ]

I completely agree with this position.

I would support higher estate taxes and lower income taxes. In one case you are taxing wealth increase by non-productive methods and in the other you are taxing productive work. Productive work should not be taxed (or should be taxed as little as possible).

I hope you got a good grade.

[HtotheNootch]

I used to work in the field.

Now since I'm fairly new here, I'll give a little background. I believe the 16th ammendment was a disaster. I believe our federal government is a bloated monstrosity.

That said, I don't hate the estate tax. I do however think that we as a people have to get a better handle on the definition of rich. I'm from Westchester County, NY. At the time of his death, my auto mechanic grandfather, and telephone operator grandmother would have been considered rich for the purposes of the estate tax. They were far from wealthy, just by virtue of owning some property, and my grandmother's participation in an employee stock program they were "rich".

Personally, I think $10 million or so would be a good starting point, with annual indexing for inflation.

[tylerdurden]

[ QUOTE ]
[ QUOTE ]
It is my view that any familial inheritance of capital beyond what will provide dependent children the basic needs of life is anti-capitalist and also anti-democratic. I will use the writings of John Locke and Adam Smith to support this argument.

[/ QUOTE ]

I completely agree with this position.

[/ QUOTE ]

How do you guys propose to determine "what will provide dependent children the basic needs of life"?

[ QUOTE ]
I would support higher estate taxes and lower income taxes. In one case you are taxing wealth increase by non-productive methods and in the other you are taxing productive work.

[/ QUOTE ]

Wealth increase? Inheritance is a wealth transfer, not an increase. Using the correct terminology is actually beneficial to you argument.

[ QUOTE ]
Productive work should not be taxed (or should be taxed as little as possible).

[/ QUOTE ]

Productive work should NOT be taxed, agreed. What do you think *should* be, besides inheritance? What do you consider "productive" work?

[HDPM]

[ QUOTE ]
[ QUOTE ]
but why should the living pay now and the dead get to beat the taxes(kinda)

[/ QUOTE ]


What kind of drivel is this Ray?!! You will need an extra size bib if you continue dribbling nonsense like the above.

I (and everyone else) have been hounded and forced by the government (State and Federal) into paying taxes on not just income but almost every damn item purchased or commodity owned for my entire life and then when I finally die the rat bastards ream you up the ass even more! Necrophilia is simply going too far. And all for what, so some idiot congressman can burned it all away on mostly frivolous and moronic expenditures to buy votes so he can spend even more money that is not his.

What kind of thinking is this anyway? What little money I can make is mine to do with as I wish while living and to dispose of as I wish at death, and if I wish to hoard it or drink it away or gamble it away or burn it or lose it all in the stock market, or spent it on drugs and prostitutes, or fishing gear, or buy 100 acres of worthless desert, or give it all to Uncle Fred or Aunt Jenny or my Sister or Brother or Children or my dad or Cousin Duke in China, or my mistress, that is MY FUKING BUSNESS and the RAT FUKING government can KISS MY ASS.

When are people going to wake the FUK up and realize that the government does not own you or your money?

Le Misanthrope

[/ QUOTE ]



OK, I may have to make an exception to my only posts with porn content can be post of the year rule.

[ACPlayer]

[ QUOTE ]
How do you guys propose to determine "what will provide dependent children the basic needs of life"?

[/ QUOTE ]

I am sure, if there is agreement on the principle, something can be worked out.

[ QUOTE ]
Inheritance is a wealth transfer, not an increase. Using the correct terminology is actually beneficial to you argument.

[/ QUOTE ]

Whatever. It is however an increase for the recipient, which is what I meant.


[ QUOTE ]
Productive work should NOT be taxed, agreed. What do you think *should* be, besides inheritance? What do you consider "productive" work?

[/ QUOTE ]

What should be taxed? As little as possible. Which is why I said, tax inheritance but reduce income taxes.

It was fascinating to read the OP's essay and the background he collected as I had independently reached the same comclusion as Locke recently (in one post I recently suggested a 100 percent inheritance tax as good public policy). I do believe that inheritance (like welfare) kills the soul, entrepreneurial spirit, fire in the belly that is the engine for a capitalist system. I also have a long held belief that income taxes are deterimental. So to me this is a good marriage, raise the inheritance taxes and reduce the income taxes.

Practically, I realize that given the chance the dems would raise both and the reps would lower both (while both will spend like crazy).

Capitalism in its last throes? /images/graemlins/grin.gif

[shots]

While it may be true that inherited wealth is bad for society if someone wants to save all of there money to give to their children the government has no right to penelize them for it. That's the thing about living in a free society sometimes people do things you don't agree with but that doesn't take away their right to do them without government interference.

[tylerdurden]

[ QUOTE ]
[ QUOTE ]
How do you guys propose to determine "what will provide dependent children the basic needs of life"?

[/ QUOTE ]

I am sure, if there is agreement on the principle, something can be worked out.

[/ QUOTE ]

Boy, that makes me feel better. Just trust those government guys, they'll do the right thing.


[ QUOTE ]
[ QUOTE ]
Productive work should NOT be taxed, agreed. What do you think *should* be, besides inheritance? What do you consider "productive" work?

[/ QUOTE ]

What should be taxed? As little as possible. Which is why I said, tax inheritance but reduce income taxes.

[/ QUOTE ]

Again, leaving government with a vague "do the right thing" mandate is a recipie for disaster.


[ QUOTE ]
Capitalism in its last throes? /images/graemlins/grin.gif

[/ QUOTE ]

You can't fault capitalism for failing under the weight of massive government interference.

[ACPlayer]

Look -- the same argument is made against all taxes by those same people ready to spend billions on Iraq. Read Zeno's self centered diatribe against taxes in this thread for a good example. However, we recognize the the govt must have money to spend "for the greater good". So, lets get beyond feel good rhetoric and focus on what and how to tax.

The point I am making is that given the choice of taxing productive work and taxing transfer of wealth the latter should be the obvious choice.

[shots]

But you are taxing productive work somebody worked to aquire all that stuff in their estate you're just waiting until they're dead to rob them because then they can't do any thing about it. There's no question taxes are neccessary but the liberal philosophy of 'Take it all from the rich they can afford it' is contrary to the basic principals of capitalisim.

[ACPlayer]

Again with the emotive "rob".

I guess you dont want to read the content of my post.

[tylerdurden]

[ QUOTE ]
However, we recognize the the govt must have money to spend "for the greater good".

[/ QUOTE ]

I don't recognize that at all.

[tylerdurden]

[ QUOTE ]
Again with the emotive "rob".

[/ QUOTE ]

Emotive? That's what it's called when you take something from someone by coersion. The word "tax" is used to *disguise* what is really happening, and you accuse someone of rhetorical tricks when they call a spade a spade?

[ACPlayer]

Well, if you really believe that NO government is the answer then you are right it is robbery and taxes should be zero.

I disagree with that. To me no govt is a recipe for anarchy.

Now, if we are talking about small govt perhaps we can have a discussion.

[tylerdurden]

[ QUOTE ]
To me no govt is a recipe for anarchy.

[/ QUOTE ]

To you? It's not a "recipe" it IS anarchy. Duh.

[MMMMMM]

[ QUOTE ]
[ QUOTE ]
To me no govt is a recipe for anarchy.

[/ QUOTE ]



To you? It's not a "recipe" it IS anarchy. Duh.

[/ QUOTE ]

ACPlayer sometimes likes to pretend he is a cook. You understand.

[shots]

[ QUOTE ]
Again with the emotive "rob".

I guess you dont want to read the content of my post.

[/ QUOTE ]

First of all I don't believe I ever used the word rob before so I don't know what you mean by again. More to the point saying that you'r takeing someones money for the greater good doesn't give you the right to take it. Once you've made the conclusion that we'll just take from the rich to give to everyone else, you're getting dangerously close to communisim and we all know how well that worked out for everyone .

[Zeno]

[ QUOTE ]
Look -- the same argument is made against all taxes by those same people ready to spend billions on Iraq. Read Zeno's self centered diatribe against taxes in this thread for a good example. However, we recognize the the govt must have money to spend "for the greater good". So, lets get beyond feel good rhetoric and focus on what and how to tax.

[/ QUOTE ]

You deliberately missed my somewhat more serious follow up post to Ray Zee didn't you?

It is not self-centered to point out the plan fact that throughout my entire life up to (and past!) the moment of death, I have to pay what I consider to be an inordinate amount of tax to a government that is grotesquely massive, wasteful, and inefficient. I pay a large sum of money in taxes and I think they should be reduced. In no way did I state that I should not pay any taxes at all. But I do think the government should have no right to tax transfer of wealth between certain family members especially close relations. That is insidious and wrong and I do not care if it is $1,000,000 or $10,000,000,000.

Everyone agrees that taxes are necessary; the conundrum has always been how much to tax and from where the taxes should be collected.

[ QUOTE ]
The point I am making is that given the choice of taxing productive work and taxing transfer of wealth the latter should be the obvious choice.

[/ QUOTE ]


Better to tax productive work? Who decides what is productive, what are the measures and standards? Rich people can't be productive? Could transfering wealth to someone else prove to be more fruitful it the other person happens to be more productive than the previous one? If production is a worry then the government should reduce taxes on wages earned after individuals put in the standard 40 hour work week. Think of that, if you work longer hours then you get to keep more of what you earn. Social engineering at its best.

Anyway, what right do you have to declare that members of society must be productive? Individual freedoms mean that many members of society will choose to be unproductive and wasteful Citizens. Individual freedoms means that the lazy rich can lay around and drink expensive scotch, gamble on the horses, or even own a stable, play golf, and travel to Europe to view art. How revolting.

You worry so about transfer of wealth from individual to individual as if this were some great sin that the government must curtail by taxing. Why are economic freedoms so disturbing to you? Why so envious of rich people? Part of this, I think, stems from some basic cultural facts about America having ‘Christian Roots’. The very notion that money is evil and those that have a lot of it are thus evil also is deeply rooted in our cultural. Add to this the pernicious envy that always clouds many individuals judgment when money is discussed and the skies start to clear about how all this silly thinking got started.

-Zeno

[tylerdurden]

[ QUOTE ]
Everyone agrees that taxes are necessary

[/ QUOTE ]

Sorry, wrong. I liked the rest of your post, though.

[tylerdurden]

[ QUOTE ]
Look -- the same argument is made against all taxes by those same people ready to spend billions on Iraq.

[/ QUOTE ]

Let's flip that around. Many of those that are against aggression in Iraq are just fine and dandy with aggression against those living in the US - stealing (though they call it taxes).

[tylerdurden]

[ QUOTE ]
I would support higher estate taxes and lower income taxes.

[/ QUOTE ]

What are you going to do when everyone catches on to this and comes up with a way of disposing of all of their assets before they die? I know if I have a big estate, and I'm about to pack it in, and I know the government is going to take it all, I'd do whatever it takes to get rid of everything so the government doesn't get one red cent. I'll dump everything to chairity, a foundation, or a homeless guy on the street corner.

I could just sign a paper every morning that says "I hereby give all my worldly possessions to chairity X" every morning. When I wake up the next day, I shred that one and sign a new one. That way, if I get run over by a truck on the way to work, my executor can just show the government the contract and say, "sorry, there's no estate for you to confiscate, he just gave it all away this morning. Too bad."

Gee, we thought we could fund everything by stealing from dead people, now I guess we'll just have to go back to stealing from the living.