What is the moral case for the estate tax? Is their one?

[Lone_Wolf_Moderate]

I realize that a repeal of the current law will lead to problems that will actually increase the tax burden on middle class families, but why do we even have an estate tax in the first place? The justifications I always hear are that the estate tax prevents an aristocracy, and only the super-rich feel the pinch.

Two problems with that: Has that really worked? Does that really mitigate the government taking half your estate when you die? My point is, there are people crusading for this tax. Is this really a good idea? Is it just for the state ro take half your money, just because you're rich? Everybody who's rich didn't get there through evil deeds. Many people worked hard for their wealth.

I realize that the waelthier among us ought to pay their fair share, but is this tax really fair?

[dsc]

1. Yes

No one works hard for an estate. Maybe the person who died did but the person inheriting it merely got lucky to be born. More importantly, the estate tax is one of the few ways we keep wealth from getting concentrated in a wealthy class. The estate tax is really a democracy builder as much as anything else. I can think of few other things that is more destructive to the ideals of a democracy than permitting a class of people to obtain unlimited wealth and having it never be subject to taxation.

[Lone_Wolf_Moderate]

4. Good point, but don't people have the right to leave estates

to their children? Being born isn't luck. It takes a conscious choice of two people (or maybe you meant being born rich is based on luck).

As for the second point, I do agree about the over-concentration of wealth. Is the estate tax another tool, much like antitrust laws to prevent not socialism (as the Right argues), but reverse socialism?

[Warpy]

7. People shouldn't have the right to leave huge estates

to their descendants in perpetuity, which is what the repeal of the estate tax does. That tax was one of the few ways we could keep the money that had stagnated at the top moving through government and back down through the economy instead of leaving it concentrated into fewer and fewer hands with aspirations to aristocracy. The heirs did nothing to earn that huge fortune, after all.

Hoarded wealth is wasted wealth, especially when it is gathered on the backs of underpaid workers. No rich man ever gave you a job unless there were a lot of poor men who could afford the goods and services you'd produce for him.

The estate tax had another function, that of persuading tax-phobic plutocrats to endow charities to avoid taxes. That was the way they could direct how their wealth was to be spent from beyond the grave.

True, some of them set up dummy charitable foundations whose only real function was to pay their heirs huge salaries for life, but most were legitimate. That's where we get new wings for nonprofit hospitals, new labs for universities, and a whole range of arts.

This is one of the worst scams of all the scams this gang has pulled.

[phantom power]

14. We do have that right, it's just that they are taxed.

Also, they are only taxed above a certain threshold, which is about 1 million dollars.

So, you can leave your children an estate up to 1 million (+/-) with no taxes taken out.

[Warpy]

15. Surprise!

That 1.3 million is no longer tax free! As soon as you sell any of the assets, you'll be assessed a CAPITAL GAINS TAX on it, even though that tax has already been paid by the decedent, something brand new. Before this gang FUCKED IT UP, you'd get it all tax free.

This is just another TAX SHIFT onto the backs of the poor and middle class. If they sell Dad's house, they're gonna pay ful capital gains on it from the time Dad bought it. They'd have gotten it tax free before this gang SOCKED IT TO THEM yet again.

Be angry, be VERY VERY ANGRY.

[punpirate]

5. As you suggest...

... the estate tax is an acknowledgement that unrestrained wealth is contributory to a lopsided distribution of power in society.

If there's any one thing in favor of the estate tax, it's the rise of the corporation--there's an artificial entity with, now, all the legal rights of a human being, but in the normal course of events, it never dies. If it is managed properly, it continues to accrue wealth--and political power--generation after generation after generation. Removal of the estate tax creates the same situation for individual families.

People often forget that the estate tax was a direct response to the age of the robber barons--where the accrued wealth of a small group of families and individuals enabled them to wield the real power in society and government.

[tuvor]

2. I don't imagine it's more unfair than income+ sales taxes

They take it when you earn it, and they take it when you spend it.

:grr:

[whistle]

3. Well, this is a little dated but it covers the reasons quite well....

<snip>
FEATURES, WORK & MONEY
from the February 26, 2001 edition

Behind growing case for an estate tax - of some kind

David R. Francis Staff writer of The Christian Science Monitor

- Hands up, those content to pay estate taxes to Uncle Sam - and expecting in time to do so.

What do you know: Some 435 wealthy Americans have raised their hands.

They responded to a campaign by a Boston advocacy group, United for a Fair Economy, aimed at blocking repeal of the estate tax, as proposed by President Bush. They got more than 200 signers and ran an ad in The New York Times Feb. 18, headlined: "If the estate tax is eliminated, someone else will pay. YOU."

This campaign, plus a growing awareness of the tax and revenue consequences of repealing the estate tax, have made it increasingly unlikely that Congress will eradicate the tax fully. It may be left partly in place for the larger estates that provide the bulk of its revenues, Washington reports indicate.

Repeal, the ad says, "would be bad for our democracy, for our economy, and our society ... enrich the heirs of ... millionaires and billionaires while hurting families who struggle to make ends meet."

Among names at the bottom of the ad were William Gates, Sr., David Rockefeller, George Soros, and Paul Newman.

Since then, more than 200 others have signed on at www.responsiblewealth.com.

Less than 2 percent of the nation's families currently pay any estate tax at all. That amounts to about 48,000 estates per year.

As the stock market boom progressed, however, more and more Americans began to suspect their heirs would be subject to the tax. At present, an estate must exceed $675,000 to be subject to the tax - the price of a handsome house in some neighborhoods. This exemption level rises to $1 million by 2006. Estates of any size bequeathed to a spouse are estate-tax free.

As of 1998, there were 4.8 million people with net assets worth more than $1 million, 755,000 with assets exceeding $5 million, and 239,000 worth more than $10 million, according to Edward Wolff, a New York University expert on wealth.

Many in Congress may want to please this prosperous group. They provide the bulk of political campaign contributions.


But as the tax-cut debate heats up, more and more problems with estate-tax repeal are becoming widely known:

* It would be costly - $294 billion over 10 years.

* Most tax savings would go to the wealthy - an average $3.5 million windfall for those 2,400 estates with assets exceeding $5 million in 1997.

* Heirs acquire stocks, real estate, and whatever at their value at the time of death and pay no capital gains on appreciation prior to that time. The so-called "death tax" - which also covers large gifts - is in part substitute for the capital- gains tax. With repeal, a wealthy taxpayer could maneuver to escape capital-gains taxes entirely. He could give tax-free $9 million of, say, appreciated stock to an elderly relative who would will it back to him tax-free at death.

* The end of estate taxes would hit charitable giving. A Treasury Department analyst calculated giving by the wealthy would shrink about 12 percent.

The "Responsible Wealth" ad speaks of a "devastating impact" on charities, including colleges.

Advocates of repeal of the estate tax say it makes it difficult for owners of family farms and businesses to pass on these assets to their children.

But only a "teensy-weensy" number of such estates are actually affected, says Betsy Leondar-Wright, spokeswoman for Responsible Wealth. There already are special provisions to help these asset-rich families.

Indeed, Chuck Hassebrook, program director of the Center for Rural Affairs in Walthill, Neb., charges that repeal would make it harder for modest-size family farms to survive. That's because the heirs of large farms, many closely held corporations, would not be slowed down by the estate tax burden in their efforts to acquire more acreage by taking over smaller family farms.

Mr. Wolff opposes repeal of the estate tax on grounds of "fairness." Taxes should be apportioned according to the ability of people to pay. "Even if an individual warrants the amount of wealth he has acquired, there is no reason their children deserve that wealth. The children of the rich have less incentive to work."

Many disagree. One reason some work so hard is to accumulate wealth for their kids.


Wolff would rather see the estate tax replaced by a "wealth tax." He sees the estate tax as "too porous" - too avoidable. Most Western European countries have wealth taxes. Switzerland imposes an annual 0.05 percent tax on net worth above $100,000, 0.3 percent above $1.5 million.

That's less than what most mutual funds charge in annual fees, he notes. But it would raise about twice as much as the estate tax. Chances of Congress substituting a wealth tax, though, are slim.


(c) Copyright 2001. The Christian Science Publishing Society

http://csmonitor.com/cgi-bin/durableRedirect.pl?/durable/2001/02/26/fp17s1-csm.shtml

<and this more currently>

http://www.smartmoney.com/tax/homefamily/index.cfm?story=estatetax

<even bankruptcy doesn't exempt one from estate taxes>

http://www.smallbusinessnotes.com/fedgovernment/irs/908/estate.html

It is a mess out there folks
:wtf:

[bemildred]

6. Fair to whom?

They may have worked hard for what they got, but nobody is taking
it away from them, and the kids never did shit for it. I am willing
to allow reasonable passage of money from parent to child, but
eventually - within a generation or two - it all needs to go back
in the public kitty. To balance that we need a decent public safety
net so the wealthy need not worry that their feckless offspring
may starve either, while waiting for another worthy scion to come along.

[modgirl16]

8. arrogant

It's really arrogant to assume that all descendants of self-made millionaires are "feckless" just because Bush and Trump are. If I become I billionaire, I have every right to pass on everything I made to my children, to other family members, or to charities. Who is someone else to say that the money I worked hard for should "return to the public kitty," where it'll do no good. Maybe my kids will be "feckless" and lazy, but it's THEIR money! They won't be on the public dole!

[bemildred]

9. I agree, it's arrogant of you to assume all of them are feckless.

Property is created and enforced by the government, and if you become
a billionaire you have a right to do whatever the government says you
can with your property, neither more nor less.

[girl gone mad]

18. So, tax money does no good?

I take it then that you don't think public schools, roads, police, public parks, etc. are any good?

Who is to say that the money you worked hard for should be taxed? Well, the government says exactly that every year to every single documented worker.

Why should heirs have a special privelege? You could call it double taxation, but that seems a bit of a stretch. When people buy things from me, chances are they pay for it with income that has been taxed. Yet I still have to pay taxes on the money I earn. My customers may have to pay state sales tax on an item. Then, if I take the money I earned from the sale of that item and go out to eat, I have to pay sales tax, too, with the same money.

[idlisambar]

10. Is a tax on earned income moral?

If I win the lottery tomorrow would it be fair for me not to be taxed on the winnings while someone who earns a salary through working is taxed on their income?

Once one accepts that some taxation is necessary for the functioning of government and society why is the estate tax so questionable compared to the other forms of taxation?

Personally, I would prefer an inheritance tax to an estate tax because though practically equivalent the double taxation argument would fall flat. It makes sense that income from inheritance should be taxed just like any other source of income.

[IrishDemocrat]

11. Like the Swiss idea

If I were to repeal the estate tax, I think exploring the "wealth tax" could be a fair and feasible option.

[struggle4progress]

12. Who wants a hereditary class of plutocrats, who consume without ...

... working? The Republicans are always busily screaming that ordinary people need the motivation of possible starvation in order to lead productive lives: why shouldn't this same work ethic apply to the descendents of the wealthy?

[FormerDittoHead]

13. Hate chiming in so late, but here's the reason...

Say I buy a house or stocks and they appreciate in value. One day I sell them. I'd have to pay tax on the gains of the transaction, right?

The estate tax considers death and the transfer of the wealth as a transaction.

OK, now say I don't sell those things. They become part of my estate.

Under the current system, my heirs inherit my property at TODAY'S MARKET value.

Therefore, without an estate tax, no tax would ever be paid on the gain.

As it is, the first $8 MILLION can be transferred TAX FREE. The whole point about the "government taking half your estate when you die" is pure fiction. Read the first sentence of this paragraph again so you never repeat that lie again...

There aren't many who actually pay a significant amount of inheritance tax.

Has it really worked to prevent a financial aristocracy? No. Why? Trust law is what accounts for how the rich get out of this tax, and I'm all for eliminating the trust laws (and "foundations").

[sendero]

16. I'd prefer to live in a meritrocracy...

... and I'd don't happen to believe that being born into a wealthy family is a "merit".

As far as I'm concerned, estate tax should be 100% of everything over a few hundred thousand dollars.

[girl gone mad]

17. As someone who got an inheritance which was taxed..

I think it's a good thing.

I didn't work for the money I inherited. In fact, I didn't even meet this relative until she was on her deathbed. So why should a person who spent all year working 40 hours a week to earn 60K (about what I inherited) have to pay taxes, but not me?

The bottom line is, it's a fair tax. It may be the most fair of all taxes, for reasons Bill Gates Sr. can elucidate much better than I.

[ArmHayseed]

19. Depreciation

Many of the wealthiest have huge investments in depreciable assets such as real estate and equipment. The part that has been depreciated has had no income tax paid on it. To encourage business investment the IRS makes a you a deal, you don't owe the taxes on the depreciable part until you sell it or die, then you owe the taxes. The deal is with the original investor, not their kids, relatives or girl friends.