a question about the death tax

[[censored]]

who would and would not support this in theory and why.

Tax policy is changed to the following. While alive you pay zero income tax, but upon death all your wealth goes to the state. There would be some exceptions made for minors left without parents and widows.

ignore that in reality I don't think anything like this could work and the obvious loop hoes and deal with the theory involved which is basically shifting your tax burden during life to death.

Also what behaviors would this promote or discourage and would this be positive or negative affect on society.

[slickpoppa]

In theory, the so-called death tax is probably my favorite tax. The person who is paying it is dead, and therefore it does not affect them at all. I do not belive in a fundamental right to inheritance. Children have done nothing to earn their parents wealth other than being lucky enough to pop out of the right vagina.

Too bad the practical problems of death taxes are numerous.

[Dov]

[ QUOTE ]
I do not belive in a fundamental right to inheritance. Children have done nothing to earn their parents wealth other than being lucky enough to pop out of the right vagina.

[/ QUOTE ]

Why do you believe in a fundamental right of people who aren't the children of these parents getting the money?

What did they do that was so great other than being lucky enough that you decided to give them someone else's money?

So you don't believe in life insurance either, do you?

[Dov]

[ QUOTE ]
While alive you pay zero income tax, but upon death all your wealth goes to the state.

[/ QUOTE ]

I just don't get the whole concept of your right to lay claim to someone else's property. Is it because you are bigger and stronger? Have more weapons?

If you say no, then what will you do if I don't pay your tax? Throw me in jail? And if I refuse to go? Shoot me?

This whole concept is no different than getting mugged in the park, except that the only defense is to move to an island somewhere.

I can't believe that otherwise rational people who claim to have 'human rights values' support these kinds of policies.

I understand that the OP is simply trying to make a point, and may or may not believe this is a good policy.

Can someone please give me the rational explanation for why the state should have the right to someone's property after they die?

[slickpoppa]

[ QUOTE ]
Why do you believe in a fundamental right of people who aren't the children of these parents getting the money?

[/ QUOTE ]

I don't believe it is a fundamental right for other people to get the money; I think it is expedient. In order to maintain a government, we need money. Who better to pay that money than dead people?

[ptmusic]

First, why not let families take care of themselves and leave government out of it (as much as possible)?

Second, our primary biological urge in life is to create healthy children capable of creating healthy children(!). Many parents and grandparents derive great satisfaction in knowing that they will be taking care of their family even after they are gone. Thus, taking everything away from someone upon death would be a disincentive to making money while living. In turn, the government would get less tax revenue from the living.

-ptmusic

[bdk3clash]

Just wanted to point out that the phrase "death tax" is a right wing pollster's invention designed to make average Americans somehow support tax cuts (and tax elimination) on inheritance for the ultra-wealthy. (It worked, by the way.)

[tylerdurden]

[ QUOTE ]
who would and would not support this in theory and why.

Tax policy is changed to the following. While alive you pay zero income tax, but upon death all your wealth goes to the state. There would be some exceptions made for minors left without parents and widows.

ignore that in reality I don't think anything like this could work and the obvious loop hoes and deal with the theory involved which is basically shifting your tax burden during life to death.

Also what behaviors would this promote or discourage and would this be positive or negative affect on society.

[/ QUOTE ]

It would promote tax evasion.

It's incompatible with freedom - property rights include the right to dispose of it as you wish upon death.

Taking money from living people is better than taking it from the dead (for the people, not for the government) - at least the living can complain, and such complaints function as a check to keep the taking under some control.

If there's no tax on the living, what's to stop me from giving away all my earthly posessions on my deathbed? Why should those that die a slow death have an advantage over those that get hit by a bus? Those who die suddenly and unexpectedly are more likely to have dependents.

[[censored]]

[ QUOTE ]
Just wanted to point out that the phrase "death tax" is a right wing pollster's invention designed to make average Americans somehow support tax cuts (and tax elimination) on inheritance for the ultra-wealthy. (It worked, by the way.)

[/ QUOTE ]

Untrue. A tax is a liability that is incurred by an action.

The income tax is a result of earning income.

The sales tax is a result of selling something (notice how it is the seller who is ultimately responsible for paying it to the government.

it was liberals who mislabeled he death tax as the estate tax for it is not the act of having as estate but the act of dying that results in the liability.

thus the death tax is a result a death.

[bdk3clash]

"it was liberals who mislabeled he death tax as the estate tax for it is not the act of having as estate but the act of dying that results in the liability."

This is not true. In his book "Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes," William H. Gates, Sr. (you may have heard of his son) writes:

[ QUOTE ]
“DEATH TAX”: WHAT’S IN A NAME?

The proponents of estate tax abolition have a good thing going for them with the moniker “death tax.” Language is essential to enlisting popular support. After President Reagan’s missile defense program was dubbed “star wars,” proponents had difficulty regaining control over the terms of the debate.5

Defenders of the estate tax lost the battle of shibboleths early on. We knew we were in trouble in 2000, when major television news networks, such as CNN, abandoned objectivity, using “death tax” rather than estate tax in their news coverage.

The derivative of the “death tax” phrase is disputed, with several individual pollsters and lobbyists taking credit for coining the successful tag. As it turns out, the phrase “death tax” has been around for several decades, but it came into popular use in the mid-1990s, thanks to concerted efforts to focus the repeal campaign message.

California congressman Christopher Cox (R-Calif.), lead sponsor of repeal legislation, notes that there were many references to “death taxes” in professional tax journals dating back to the 1970s. Californians, who repealed their state inheritance tax in 1982, deployed the “death tax” phrase throughout the campaign. President Reagan first used the term in a Minnesota speech in 1982.

One significant player in advancing the “death tax” tag was Jim Martin, a longtime activist who founded “60 Plus,” a conservative Washington beltway alternative to the American Association of Retired Persons. Although mostly concerned with privatizing Social Security, 60 Plus jumped headlong into the crusade against the estate tax.

Martin has the distinction of having given President George W. Bush his first political job. When Bush was twenty-two years old, Martin hired him to work on the 1968 campaign in Florida to elect Ed Gurney to Congress. The president, distinguished for his unique nicknames of friends and colleagues, calls Martin “Buddha.”

"Martin is credited with having brought the “death tax” coin back into wider circulation in 1993. He gained an ally in political mastermind Frank Luntz. Luntz, who conducted focus groups for conservative caucuses and politicians, understood the importance of language. He even wrote a rhetoric primer for conservative politicians with the Orwellian name “Language for the Twenty-first Century.”

Luntz’s message research found that “death tax” kindled voter resentment in a way that “inheritance tax” and “estate tax” didn’t. Luntz shared his findings with Republican leaders and included the phrase in the GOP’s 1994 “Contract with America.”

In a strategy memo to GOP lawmakers, the media-savvy Luntz suggested that legislators stage press conferences opposing the estate tax “at your local mortuary” to dramatize the issue. “I believe this backdrop will clearly resonate with your constituents,” advised Luntz. “Death is something the American people understand.”

The first challenge of any campaign is to have a good message. But it is another hurdle, as the media spin masters will tell you, to enforce “message discipline” (i.e., getting everyone to say the same thing). Enter the pizza fund.

Across Washington, D.C., by water coolers in lobbying organizations, the hard-won battle for message discipline was waged. Woe to the innocent office intern or researcher who referred to the “death tax” as “the estate tax” or by it’s proper name, “the Federal Estate and Gift Tax and Generation-Skipping Transfer Tax.” For this transgression, a one-dollar fine was levied to the pizza fund. The amount collected would pay for a periodic pizza party.

“Death tax pizza funds” first appeared at Jim Martin’s 60 Plus organization. Then, across the Potomac, a pizza fund was instituted by Jack Faris, the president and CEO of the National Federation of Independent Businesses. Soon the idea spread to Capitol Hill, where then House Speaker Newt Gingrich and other pro-repeal lawmakers instated pizza funds in their offices.

Slowly the powerful “death tax” phrase worked itself out from these lobbying groups into advertising, talk shows, and into the title of legislation, the “Death Tax Elimination Act of 2000.” A powerful message catapulted the repeal cause forward.

[/ QUOTE ]

Also see "Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth" by Michael J. Graetz and Ian Shapiro and "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else" by David Cay Johnston.

[[censored]]

that does nothing to change the FACT that the tax is incurred upon the action of dying.

[bdk3clash]

[ QUOTE ]
that does nothing to change the FACT that the tax is incurred upon the action of dying.

[/ QUOTE ]
Dying triggers the transfer of the estate to someone else, at which point a tax is incurred by the recipient.

When an estate is transferred to someone else by another mechanism (like being given to one's heir as a gift prior to death) then the exact same tax is triggered.

EDIT: Was triggered. The estate tax has since been abolished.

[DVaut1]

[ QUOTE ]
EDIT: Was triggered. The estate tax has since been abolished.

[/ QUOTE ]

It hasn't been abolished. Since 2002, the top rate has dropped from 50% by one percent per year; it is scheduled to drop to 45% in 2009, then to 0% in 2010, but as of 2005, if no further changes in the law are enacted, the tax will be re-imposed at a top rate of 50% in 2011.

Long story short, the Republicans sunset all the estate tax provisions, meaning the rate isn't permanent and has to be consistently revisited.

And if you're asking yourself, "1% a year isn't that drastic of a tax cut; why would the Republicans choose to sunset all of their provisions (meaning there is constant, ad hoc revision to the tax rates) rather than make them permanent?" -- I'll let you guys have fun with that, but I'm willing to bet [censored] knows why.

[[censored]]

The Death/Estate tax reduces the incentive to save.

true or untrue?

and if true is this a good or bad thing?

[tylerdurden]

[ QUOTE ]
Dying triggers the transfer of the estate to someone else, at which point a tax is incurred by the recipient.

[/ QUOTE ]

Wrong. The *estate* is taxed before the property is disbursed to the heirs. Otherwise, you could loophole the exemption by giving $1M (or whatever the exemption amount is this year) each to several different people.

[ACPlayer]

The concept is likely not practical (but it can be explored) but is a sound one.

Dont tax productive work (income) but tax the crap out of non-productive inheritance.

In addition to the obvious benefit of rewarding work, it has the added benefit of pushing the kids of the rich to get off their bums and perform. Performing assets add great wealth to the country.

[El Barto]

[ QUOTE ]


And if you're asking yourself, "1% a year isn't that drastic of a tax cut; why would the Republicans choose to sunset all of their provisions (meaning there is constant, ad hoc revision to the tax rates) rather than make them permanent?" -- I'll let you guys have fun with that, but I'm willing to bet [censored] knows why.

[/ QUOTE ]

You got it wrong. Permanent changes are subject to the filibuster, while temporary (up to 10 years) changes are not (just like the appropriations bills). It was the lack of votes available from the Democrats to support the tax changes that forced them to have a 10 year sunset provision.

[tylerdurden]

[ QUOTE ]
In addition to the obvious benefit of rewarding work, it has the added benefit of pushing the kids of the rich to get off their bums and perform. Performing assets add great wealth to the country.

[/ QUOTE ]

Inherited wealth does more for the benefit of the country being invested by the heirs than it ever would in goverment coffers.

[sam h]

Taxes are levied on assets or they are levied as adjuncts to financial transactions.

Income tax = A tax on income earned
Property tax = A tax on value of property
Import tax = A tax on value of goods crossing borders
Captial gains tax = A tax on asset appreciation

Death is not an asset or a financial transaction. And the estate tax is obviously not paid by the person who dies, since that person is dead. It is paid by the institutional entity that is known as the estate of that person, ownership of which is held by his or her inheritors.

[ACPlayer]

Inherited wealth does more for my benefit as I take the trust funds of the 20 somethings trying to play poker. /images/graemlins/grin.gif

In any event, given the choice of taxing income vs inheritance it should be obvious that taxing income reduces the overall efficiency of the work.

The comparison of the inherited money in the hands of the private person or the govt coffer is an invalid one. I am of couse assuming that some money will flow from the population to the govt by way of taxes -- I just think that income taxes are more punitive to the society.

[DVaut1]

[ QUOTE ]
[ QUOTE ]
And if you're asking yourself, "1% a year isn't that drastic of a tax cut; why would the Republicans choose to sunset all of their provisions (meaning there is constant, ad hoc revision to the tax rates) rather than make them permanent?" -- I'll let you guys have fun with that, but I'm willing to bet [censored] knows why.

[/ QUOTE ]
You got it wrong. Permanent changes are subject to the filibuster, while temporary (up to 10 years) changes are not (just like the appropriations bills). It was the lack of votes available from the Democrats to support the tax changes that forced them to have a 10 year sunset provision.

[/ QUOTE ]

I don't know how I could be 'wrong', since I didn't claim anything...

I'll go ahead and claim something in a moment, though. But first, YOU got it wrong (at least partly). It's not the filibuster rule that's preventing the Republicans from making their tax cuts permanent; it's that the Senate has imposed upon itself a super-majority rule, requiring 60 votes for any tax cuts that lose revenue more than ten years into the future. And when Bush’s 2001 tax bill was up for a vote, fewer than 60 Senators were willing to make the tax cuts permanent. The Bush team/Republicans in the Senate were forced to sunset everything in the bill after 10 years. Some provisions of that law have since been made permanent by super-majority votes, but many others —including repeal of the estate tax — have not.

Now, here's my claim (and the answer I had hoped to get from my earlier question): while attaining a super-majority is surely one stumbling block to making the repeal of the estate tax permanent, I'm suggesting that it's not in the Republicans interest to make tax changes permanent - doing so would prevent any current/future member of Congress from bragging to their constituents that they voted to cut taxes - and would prevent them from demonizing their opponents as having voted against tax cuts. The Republican party reaps enormous benefits from uncertainty in the tax code; sunsetting tax cut provisions means having taxes constantly on the front burner - which, in turn, means that every member of Congress will be faced with a seemingly endless series of votes to cut taxes. If the Republicans were truly interested in making the repeal of the estate tax permanent, they could go on an offensive and ensure its abolishment. There's apparently widespread support for the abolishment of the estate tax. (http://www.heartland.org/Article.cfm?artId=14919)

I'm not going to pretend there's some over-arching, Republican conspiracy here; but I am suggesting that there may be, just may be, a few Republicans who fear permanent change because of the political gold-mine they'd be losing.

[[censored]]

[ QUOTE ]
Inherited wealth does more for my benefit as I take the trust funds of the 20 somethings trying to play poker. /images/graemlins/grin.gif

In any event, given the choice of taxing income vs inheritance it should be obvious that taxing income reduces the overall efficiency of the work.

The comparison of the inherited money in the hands of the private person or the govt coffer is an invalid one. I am of couse assuming that some money will flow from the population to the govt by way of taxes -- I just think that income taxes are more punitive to the society.

[/ QUOTE ]


obviously I don't support the death tax. But from a purely theorectical standpoint I can't see how this system would not be superior to the income tax.

IMO the best arguement against the death tax, is that the wealth was already taxed when it was earned and that the government should not punish those who choose to save.

[[censored]]

Pretty much my thoughts after your firt post.

[tylerdurden]

[ QUOTE ]
In any event, given the choice of taxing income vs inheritance it should be obvious that taxing income reduces the overall efficiency of the work.

[/ QUOTE ]

You're still taxing "income" - you're just delaying the payment - and effectively making lifetime spending a big fat deduction.

The money is still "earned" at some point. Also note that heavy estate taxes DO have a negative effect on productivity. People realize that their estates are going to be stolen and adjust their activities accordingly. Productive members of society may choose early retirement, and will definitely choose consumption over production and savings.

Also note that for many "wealthy" people, the bulk of their wealth isn't liquid assets, but capital assets - the means of production. Do you really think that government confiscation of private businesses is going to be a net positive?

[mackthefork]

Heh nice, everyone would have a live for today approach to life, they would all have more money and material possessions, and the government would have less tax, a lot less taxes, that means less government, and when it comes to government less is more.

My 2 cents. FWIW

Regards Mack

[mackthefork]

Sure there would be many workers in the Department of Euthansia though. /images/graemlins/tongue.gif

Mack