Resurrect the "Death Tax."

[stickdog]

A short discussion, with brainwashed Repuke commentary in italics:

There is no way that earned income should be taxed at a higher rate than gifted or inherited income. NO FUCKING WAY.

Earned income is the economic engine of this country. If we taxed assets and generational asset transfers (read: wealth & inheritance) instead of income, a hell of a lot more people would get to keep enough of their earnings to actually acquire assets.

Taxing the earned wages of hard working, boot strapping Americans at a FAR HIGHER rate than you tax unearned generational transfers of wealth is simply unconscionable!


But, but, estate taxation is bad for the economy and society!


And raising income taxes (or increasing the deficit) is good for the economy and society? Yes, all taxation is "bad" for the economy and society. But the argument isn't estate taxation vs. nothing. It's estate taxation vs. income taxation.


But, but, really rich people never paid any estate tax anyway.


Yes, the super-rich had long ago written the laws so they could cheat their way out of paying estate tax. So should we:

1) move this portion of the tax burden onto the shoulders of struggling, hard working wage earners

or

2) reform these unfair laws and close the loopholes?

Of course, estate taxation needs to be reformed. No trusts. No living wills. No untaxed transfers of wealth. No legion of other uber-rich tax attorney loopholes. Just reasonable exemptions and allowances for small to medium family businesses and residences.


But, but, estate taxation is just wrong!


Sure. Just like ALL taxation is wrong! But that doesn't make it unnecessary. When you advocate scrapping estate taxation, you effectively advocate RAISING income taxation. What is the argument for taxing hard earned income MORE than unearned income? Please explain why taxing earned wages is MORE desirable than taxing gifted income.


But, but, why should death be a taxable transaction?


Why should any transaction be a taxable transaction? Specifically, why should earning wages result in a taxable transaction? More specifically, why should I be taxed ZERO PERCENT when I receive an unearned gift for picking my navel, but 20 - 40 PERCENT when I work hard to earn wages?


But, but, it's DOUBLE taxation! DOUBLE!


"Double taxation" is the ultimate red herring.

For example, I work for a company that pays FICA, corporate taxes, sales taxes and property taxes on the same assets every year. When my paycheck from this company comes to me, about a dozen taxes come out of it. When I spend my paycheck at the store, I pay sales tax on items whose prices include a markup for all sorts of previous taxation. When I invest my paycheck into a house or home improvement, I get taxed on the house's value every year. If I invest it into something else, I have to pay cap gains tax on the money my investment makes.

But somehow we are supposed to feel sorry for rich dead people's sons and daughters -- many of whom are too lazy to earn their own livings -- because "double taxation is just wrong"? My God, rich people run clever PR campaigns. Don't they?


But, but, it's still DOUBLE taxation! That's just UNFAIR!


:eyes: Come on! :eyes:

Think of how stupid this "argument" is vis a vis income taxation. Suppose I fix up some self-made man's mansion, and he pays me $50,000 for my labor. Didn't he earn the $50,000 he's paying me at one time? Didn't he "already" pay taxes on it? So does this mean I don't have to pay any income tax on my earnings?

The grantor is dead. The grantor died stinking rich. What more does the grantor need? Does he or she really need tax shielding privileges that extend all the way from the beyond the grave to the OTHER side of his or her financial transactions? You know, the kind of tax shielding privileges that no LIVING person gets?

It's the grantee who is getting the money -- exactly like the guy who fixed up the mansion except that the grantee did NOTHING whatsoever to earn the money and nothing whatsoever to help the economy.

So the hard working, economy-driving man is "taxed twice" on his wages while the indolent navel picking rich kid collects 100% for sitting on his ass. Why is that OK? Aren't you ashamed of yourself for letting rich folks pull the wool over your eyes like that? Aren't you even smart enough to realize when you're getting ripped off?

[kiahzero]

1. Excellent

Damn, man... that was well thought out, and uses enough Republican premises (and valid inferences) that no logical Republican could reject it.

Kudos.

[library_max]

2. It's just like capital gains.

They want to lower taxes on everyone who gets something for nothing because he's rich (or his family is) and make up the difference on the backs of working people.

[kysrsoze]

3. I think there should be a death tax - but only on the incremental

income over a certain amount (none of the money below that amount would be taxed). Not sure if $600K is the perfect amount - just thinking of it being spread between potentially 3 or 4 people.

[stickdog]

4. Just add it to personal income for all I care.

Raise the exemption to 3 million in certain special cases (family home or business) for all I care. If it's a family business, you can let the heirs pay it off over 15 years for all I care.

Just stop taxing earned wages MORE than unearned gifts -- because there is no valid argument for doing so.

[govegan]

5. Great and informative section on this in Perfectly Legal

David Cay Johnston's book is the most insightful commentary on the sorry state of the US economy and taxation system that I have read. You may have read it, but if not, I (and it seems John Kerry as well) would highly recommend it. (website: http://www.perfectlylegalthebook.com/)

Anyhow, it turns out that a great deal of these "estates" that would be taxed by the inheritance or death tax have never even been taxed once. This due to the many loopholes and tax dodges employed by the very wealthy.

One of the great insights of the book is how the US is indeed highly socialistic, in the sense of a massive redistribution of wealth. The irony is the neofascist system massively redistributing the wealth from the bottom and middle rungs of the social ladder to the very top rungs. Maybe they should just call themselves National Socialists and get over the ruse.

The repeal of the death tax is for the moment only temporary (for one year in 2010, I think), but we know that the neofascists want to make it permanent. They just haven't figured out how to disguise the inevitable massive budgetary problems, yet.

Don't forget about the poor family farmer that the rethugs like to whine about! The one that couldn't be found, since no one knows of any family farmer who lost the farm due to the "death tax."

[mmonk]

6. I'm a Democrat

but I'm also for investment and being able to pass what you work hard for to your children and not be penalized for doing so. I'm also against depleteing the investments through high taxation getting it all at once instead of continual taxation over the years to come as it grows. I know alot of peple here will disagree with me on these points. But I'm against the bush administration's tax cuts and tax burden structures and federal deficit spending.

[ScreamingMeemie]

7. Then you are all for dropping taxes on lottery winnings I presume?

:hi:

[mmonk]

10. funny

I didn't realize lottery winnings were an inheritance. I guess my folks didn't do all they could have by winning a lottery.

[ScreamingMeemie]

32. If you didn't earn it...it's not yours taxfree. Sad to say.

Sorry.

[stickdog]

9. Why is taxing earned income preferable to taxing unearned income?

When you advocate scrapping estate taxation, you effectively advocate RAISING income taxation. What is the argument for taxing hard earned income MORE than unearned income? Please explain why taxing earned wages is MORE desirable than taxing gifted income.

[mmonk]

11. All I'm saying

if the tax on inheritance equates in the inheritor having to sell off alot of assets to pay the tax, then the income and income tax receipts those holdings could generate for years to come is lost for one big bang. I also like the idea of generations building on that money. The more they make, the more they pay in taxes (except under bush which needs to be corrected) and also the more disposable income they have. I'm not for continually lowering capital gains though.

[stickdog]

16. If I sell an asset, won't somebody else be using it?

I can see where you might want to make certain exemptions for family businesses and/or residences. I also don't think estate taxation should ever exceed 50%.

But let's take the favorite example, the family farm.

If my family owns 10 square miles of farm land and I get taxed 25% when I inherit it, why can't I take out a loan?

And if I don't want to take out a loan, why can't I just sell 2.5 squares miles of my land to pay the taxes?

And just because I sell the land to someone else, does that mean nobody can farm it or use it to generate any other form of commerce or employment?

Finally, if unearned estate transfers aren't taxed, then earned INCOME will be taxed more. And that's the kicker, no matter how you slice it.

[MadHound]

29. But I doubt that those who were subjected to an estate tax

Really would have to sell assests off to pay for it. Estate taxes applied to only the wealthiest member of our society, those passing on an estate worth a million or more. The Congressmen who voted to repeal the estate tax said that it was to help family farmers and small businessmen, but that is quite frankly bullshit. The vast majority of family farms are worth under the million dollar exemption limit, as are most small businesses.

The ironic thing is that by repealing the estate tax, family farmers are hit harder than ever. First due to budget shortfalls, programs designed to help such people are cut, and secondly since the wealthy are no longer paying estate taxes(among others), the budget shortfall has to be made up on the backs of family farmers and small businessmen.

Sorry, but the repeal of the estate tax is nothing more than another giveaway to the very wealthy in our society. When my father passed, his estate included two houses, the family farm, insurance policies, and some investments. His total estate tax was $0, for the estate falls well under the million dollar cutoff.

It is time to stop handing the obscenely rich even more money, while balancing the budget on the back of the poor and working class. This was one objective of the estate tax to begin with. It is time it was brought back. Hopefully the Dems will do this if Kerry takes office. Otherwise, you and I are going to see our taxes going up, while the rich and well off will continue to wallow in their untaxed gains.

[Blue Wally]

14. What is the amount.............

That the government takes in each year from estate taxes?? How much would income taxes be affected if the estate tax stays as it is or is completely deleted?? Currently, the peak estate tax rate is still higher than the peak marginal income tax rate.

[stickdog]

17. I'm talking about closing ALL trust, living will, etc loopholes.

If we close all of the generational transfer loopholes, we can give a healthy exemption for family businesses and residences, tax estates at the highest marginal income tax rate AND get rid of most of our ever ballooning deficit without raising income tax rates.

98-99% of working Americans win. The richest 1% and a few trust attorneys lose.

[Blue Wally]

20. I call bullshit on that......

Intergenerational transfers (gifts) reduce the exemption on the estate tax. Since the current marginal estate tax rate exceeds the current marginal income tax rate, the answer is "no effect". You could tax estates over say, $2 million, at 100% and not make a dent in the income taxes. There just isn't that much money in estates each year. You could tax incomes over $2 million at 100% and wouldn't get that much money in the treasury. There is a big difference between "feel good" taxation and "efficient" taxation when it comes to raising funds.

[stickdog]

23. The total wealth of US households is estimated at $27 trillion.

http://www.worldrevolution.org/Projects/Features/Inequality/USInequality.htm

The top 1% owns about 40% of this wealth -- say 11 trillion.

Assuming this demographic is skewed older, let's say 3-4% of these millionaires die each year.

That's 330 to 440 billion a year in generational transfers of wealth.

At an effective rate of 25%-33%, that's 80 to 145 billion a year.

If you apply this towards the deficit, its effect is even greater.

In any case, it's pretty damn "efficient" "feel good" taxation compared to taxing earned income more to make up for the revenue loss.

[Blue Wally]

31. Estate Tax Income t o Governemnt

In fiscal 2000 when the estate tax was 48% of everything over $600,000, the federal government received $29 billion in estate and gift taxes compared to over $1 trillion in individual income taxes, $207 billion in corporate income taxes, and $412 billion in FICA taxes. Estate taxes may be deferred under a Q-tip trust, but never eliminated.

[stickdog]

33. If there is no way to sheild wealth transfers from the IRS, why are there

so many estate tax attorneys?

And, in any case, what is your argument for RAISING income tax to make up for ANY shortfall?

[Blue Wally]

36. Plenty of reasons........

1. Deferral of taxes due to a trust is worth money to the individual, yet evens out govt tax collections in the long run.

2. Avoidance of state probate fees through a trust (no effect on fed taxes).

3. In a second marriage, assures that assets gowhere you want them to go (i.e. kids from first marriage), yet provide income for second wife.

I was the executor for both my mother and my father. Their estates, while not large, exceeded the "unified credits". Truly amazing how much the lawyers, accountants, state, and feds ate up before it got split five ways. It took seven years to settle my mother's estate and five to settle my father's estate. IRS just will not give you a rapid resolution.

I am for "efficient" taxation (i.e. raising money necessary to run the govt at the least possible admin cost to the govt and the least hassle to the tax payer). The amount of accountant, lawyer, individual, and IRS effort needed to settle even a simple estate is unreal. Lots of indiv income tax could be simplified (i.e. tax the banks and corporations more and let interest and dividends pass tax free to the individual). How much effort does the IRS, taxpayers, and banks/corportations spend chasing around all of those little 1099s?

[stickdog]

37. There are plenty of loopholes. I say get rid of them and all the lawyers.

http://www.nolo.com/lawcenter/ency/article.cfm/ObjectID/4235B773-388C-4833-9918F3BD1D5CAD43/catID/2500BA76-4093-49B9-9E02EFE2E570D10C

One way to reduce these taxes is to give away property before your death. After all, if you don't own it, it can't be taxed. Gifts larger than $11,000 per year per recipient are subject to gift tax, at the same rate as estate tax. Still, an annual gift-giving plan can reduce the size of even a big estate, especially if you have a covey of kids and grandkids. Gifts to your spouse (as long as he or she is a U.S. citizen), direct payment of tuition or medical bills and gifts to a tax-exempt organization are exempt from gift tax.

Another way to cut taxes is with trusts. Many older couples use an AB trust to leave property to each other for life, and then to their children. The surviving spouse can spend trust income and, in some circumstances, principal. An AB trust can shield up to twice the exempt amount from estate tax.

Charitable trusts, which involve making a gift to a charity and getting some payments back, can also save on both estate and income tax. There are many other complex trusts; learn about them on your own and then have an experienced estate planning lawyer draw up the documents you want.

[library_max]

39. We've got to get past the RW rhetoric of taxes-as-punishment.

Estate taxes no more "penalize" people for leaving money to their children than income taxes "penalize" people for earning an income or sales taxes "penalize" people for buying stuff. The simple fact is that government costs money and has to be paid for somehow. So the question is, why should working people have to pay for all of it and the idle rich pay none, or as close to none as possible?

[redqueen]

40. Thank you

This really is a very important point.

[Beaker]

8. I think I smell a good topic for a michael moore film...

exposing the truth about the tax system.

the sheeple need to know.

[ContinentalOp]

12. The death tax should be a flat fee.

If we're going to tax death it should be a flat fee paid by anyone who dies. This should result in an increase in the average life expectancy over several years. :)

But seriously, are you using right-wing memes and talking points on purpose? First of all it's not a death tax it's an Estate Tax. And I have to strongly object to your repeated assertion that "all taxation is wrong". I'm guessing that you mean for this to be an argument to use against republicans while speaking in their own terms. But the result is that you're simply perpetuating right-wing myths and reinforcing the basic assumptions behind their anti-tax ideology.

It would be much more effective to argue against this basic assumption that "all taxation is wrong". If you can get the freeper to admit that some taxes are neccessary and beneficial to society then you can slowly strike down all of their anti-tax plans. On the other hand, if you were somehow able to convince a freeper that the "death tax" was beneficial he would simply project his anti-tax ideology elsewhere.

[stickdog]

18. No. My point is simply that almost EVERY argument against the so-called

"death tax" can be said about every other tax as well. It's makes fo a far shorter and much more convincing argument to just accept the premise that on some levels all taxation is "bad" and focus on the fact that replacing estate taxation with higher income taxation is simply goign from bad to worse.

On the other hand, I just skipped over the typical start of this discussion which goes something like this:

Wrong, evil Repuke. Taxation does not equal wealth redistribution unless you are an anarchist.

Government allows the free and lawful congress of society. Without government, life for the richest people would be like the Wild West. They'd have to hire their own standing armies to keep people from taking their stuff and moving on to their land.

Rich people benefit and have benefited most from the free and lawful congress of society. Therefore, rich people should pay more. Get more -- pay more; it's the American way.

***

FICA is highly REGRESSIVE ~13% income tax on just the first ~$80,000 people make. If you make a million a year, your effective FICA liability is about 1%, not 13%. Since FICA is pooled with all other government revenues and we STILL run a huge deficit, it's no more than a highly regressive income tax.

Nobody in this country pays a higher percentage of total federal taxes than the single person with little property, inheritance or investment income who earns wages between $50,000 and $125,000. Why can't people who earn modest wages deduct "business" expenses in the same way that people who incorporate themselves can? Why are capital gains often taxed less than earned income? And why is inherited and gifted income ALWAYS taxed FAR less than earned income?

The US pays for the defense of the entire Western world on the backs of our overworked, underpaid and rapidly shrinking middle class. And who benefits most from the aggressive and ridiclously expensive manner by which we "preserve our interests" around the world? Yes, everything about our tax code favors the upper class elite over the middle class and even the upper middle class.

And even with our enormous and enormously wasteful spending on defense, police, prisons, "homeland security" and corporate welfare and bailouts, there's no other first world country in the world in which the superwealthy get anywhere near the cushy tax deal that they get right here in the good old USA. How did we let the rich write all of our tax laws to benefit them while robbing us?

[ContinentalOp]

24. I totally agree with everything you're saying.

I just don't think this is an effective angle to argue.

You said:
"It's makes fo a far shorter and much more convincing argument to just accept the premise that on some levels all taxation is "bad" and focus on the fact that replacing estate taxation with higher income taxation is simply goign from bad to worse."

First of all, I don't accept the premise that all taxation is bad because it's that very premise that we're fighting against! The flaw in your argument lies in your second statement that shifting the tax burden onto income tax is "going from bad to worse". The problem is that they don't want higher income taxation, they want to cut budgets until they can "drown the government in a bathtub." So your argument will fall on deaf ears because the republican will simply argue for more budget and program cuts and go away still thinking that taxes are inherently evil.

[stickdog]

25. Yes and no.

Republicans want to spend more on defense even though we spent 50% of the money the entire world spends on defense.

Republicans want to spend more on "Homeland Defense" even though is the largest pork barrel bureaucracy ever created.

Republicans want to spend more on police, intelligence, jails and prosecution costs even though we already spend more on this stuff per capita than any other first world nation.

Republicans pay lip service to the idea of small government. The only thing they want smaller are any programs that actually help anyone less fortunate than themselves.

I don't want MY TAX DOLLARS spent on all the evil shit the Republicans want anymore than they want THEIR TAX DOLLARS spent helping people or society or our environment. So I never try to convince Repukes that "government isn't wasteful" because I truly think that most of their favorite boondoggle programs ARE a complete waste of money. I simply turn their own arguments against their own shitty programs when it comes to their "smaller government" rants.

I mean, taxation is a necessary "evil" compared to the freedom of utopian anarchy. So I don't really feel compelled to argue that taxation is all great and noble.

[stickdog]

26. Yes and no.

Republicans want to spend more on defense even though we spent 50% of the money the entire world spends on defense.

Republicans want to spend more on "Homeland Security" even though it's the largest pork barrel bureaucracy ever created.

Republicans want to spend more on police, intelligence, jails and prosecution costs even though we already spend more on this stuff per capita than any other First World nation.

Republicans pay lip service to the idea of small government. The only thing they want smaller are any programs that actually help anyone less fortunate than themselves.

I don't want MY TAX DOLLARS spent on all the evil shit the Republicans want anymore than they want THEIR TAX DOLLARS spent helping people or society or the environment. So I never try to convince Repukes that "government isn't wasteful" because I truly think that most of their favorite boondoggle programs ARE a complete waste of money. I simply turn their own arguments against their own shitty programs when it comes to their "smaller government" lip service.

I mean, taxation is a necessary "evil" compared to the freedom of utopian anarchy. So I don't really feel compelled to argue that taxation is all great and noble.

[Dookus]

13. actually

most assets vulnerable to an inheritance tax have never been taxed even once. If you buy a house for 10k, and it's worth 200k when you die, nobody has ever paid taxes on the 190k delta. Ever.

The double-taxation argument is a canard.

NOTE: the numbers are just examples. The estate tax never even applied to a 200k estate.

[Blue Wally]

15. I think......

The "unified credits" which is the "deductible" from the estate tax is currently somewheres around $700,000. This deductible may be taken at death or earlier used for untaxed gifts. Once a person has given away his "unified credits", future gifts pay a "gift tax" at estate tax rates. At death,any unused unified credits are taken as a deductible against the size of the estate.

[stickdog]

19. You are correct. But I've found this argument to be more effective:

But, but, it's still DOUBLE taxation! That's just UNFAIR!

Come on!

Think of how stupid this "argument" is vis a vis income taxation. Suppose I fix up some self-made man's mansion, and he pays me $50,000 for my labor. Didn't he earn the $50,000 he's paying me at one time? Didn't he "already" pay taxes on it? So does this mean I don't have to pay any income tax on my earnings?

The grantor is dead. The grantor died stinking rich. What more does the grantor need? Does he or she really need tax shielding privileges that extend all the way from the beyond the grave to the OTHER side of his or her financial transactions? You know, the kind of tax shielding privileges that no LIVING person gets?

It's the grantee who is getting the money -- exactly like the guy who fixed up the mansion except that the grantee did NOTHING whatsoever to earn the money and nothing whatsoever to help the economy.

So the hard working, economy-driving man is "taxed twice" on his wages while the indolent navel picking rich kid collects 100% for sitting on his ass. Why is that OK? Aren't you ashamed of yourself for letting rich folks pull the wool over your eyes like that? Aren't you even smart enough to realize when you're getting ripped off?

[camero]

21. While I definitely see your argument

CEO pay to a repuke can be classified as "earned" income. The real argument of the estate tax is also to correct inequalities in wealth and to keep wealth from getting into fewer and fewer hands.

Taxation in and of itself also helps to level the playing field and create opportunity.

Other than that that is a great argument. The inequality of wealth is the next step in this argument since money is power in our society and the two go hand in hand.

[Warren DeMontague]

22. Want to know what I'd Like To See?

Now, I'm pretty solidly left-libertarian. Left, Yes, but somewhat Libertarian as well. I fully believe in a social safety net, and I think it's positively criminal that the most advanced nation on earth can't get off its ass to insure 40 million people who don't have health insurance, preferably with a SPHC system. And I think that anyone who makes over a Million dollars a year, for example, merely by virtue of decent investing in our capitalist system which heavily slants the playing field towards the wealthy, can damn well afford to pay a helluva lot more, percentage-wise, in taxes, than most poor shlubs barely scraping by. Yes, Yes, all well and good.

But before we start scrambing around for ways to come up with new taxes or bring back old taxes or raise death taxes and whatnot.. here's a modest proposal:

How about we start trying to spend the %^&#$@ing tax money we already take in a socially responsible, decent fashion?!?!?!... Eisenhower warned us about the military industrial complex in, what, 1959? So 45 years later, the bastard has continued to grow like an out-of-control fungus, to the point where we spend... what... how many trillions of dollars a year on ever-increasingly technologically advanced methods of killing people? And, in years hence, we've added a prison-industrial complex unrivalled worldwide, which allows us to incarcerate non-violent offenders at a rate no other first world nation can match. Tied in with that is a $400 Billion Dollar a year Drug War, for which the largest expense is fighting that insidious weed marijuana. Maybe some of you consider that money well spent, but I sure as hell don't. You know, go ahead- tweak the tax rates so the burden falls more on the super-wealthy than on the middle class, by all means.. If the death tax really makes sense, bring it back. But, personally, I'd like to see a massive re-evaluation of our fiscal priorities before we run around willy-nilly sticking all kinds of new taxes and double taxes and bringing back other taxes. Frankly, I think if we really got our fiscal house in order, ended the stupid drug war (maybe legalizing and taxing marijuana in the process), brought the military's expenses in line with what is reasonable in this post-cold war world where the "enemy" is armed with box cutters, we would be able to afford most of the things that are important while still cutting some taxes as well.

edit: speeeeelink

[Lestatdelc]

27. "Death Tax"...?

You mean that multi-million dollar plus, unearned income windfall to the still living person tax...?

If they insist on repealing the estate tax, I demand that they repeal the "I just won a shit load of money in Vegas" tax-withholding as well.

But then again I wouldn't like that either because I like the idea of having roads and schools, and stuff... kinda makes a society function.

(grinning sarcasm)

[ClassWarrior]

34. Agreed - CALL IT THE ESTATE TAX!!!

Don't use the RepubliCONs' deceitful language - speak the language of TRUTH.

[Lestatdelc]

28. BTW, I am stealing this

Stealing this to post over on the AAR blog.

Great Socratic argument.

[Lestatdelc]

30. Hmmmm

Got this response over on dKos:

In response to:

Yes, the super-rich had long ago written the laws so they could cheat their way out of paying estate tax.

This is totally untrue. It is a lie told by those trying to undermine support for the estate tax. Don't buy into it.

The estate tax is actually very well enforced. The only way the super-rich avoid paying the estate tax is by giving their money away.

The average estate above 20 million:

40% Charity
30% Heirs
30% State & Federal Government

[stickdog]

35. It's not the strongest part of the argument.

However, turning this argument against them cancels out their "well, it's just a drop in the bucket" argument.

[GreenPartyVoter]

38. Send them to

http://responsiblewealth.org/