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Budget Balancer of the Year: You
March 6, 2011 8:07 PM   Subscribe

The Program for Public Consultation carried out a different kind of budget poll -- they asked each of their respondents to generate a package of tax increases and spending cuts sufficient for substantial deficit reduction, then averaged the results. The outcome was not what you might expect. The mean package included twice as much tax increase as spending cut: big deficit-reducing moves included substantial income tax increases for the highest brackets and deep cuts in defense spending. Republicans cut less spending than Democrats, as did people who identified as "very sympathetic to the Tea Party." Hardly anybody likes the reduction of the estate tax. Why is the public consensus so different from the Washington consensus? Read the full report (.pdf) Or try the interactive budget exercise.
posted by escabeche (52 comments total) 21 users marked this as a favorite

 
Why is the public consensus so different from the Washington consensus?

Surely the fact that Congress is basically made up of rich people has something to do with it.
posted by moss at 8:16 PM on March 6, 2011 [19 favorites]


Cutting our outrageous military spending and asking the richest of the rich to pay more taxes are obvious solutions to our financial problems. I am not surprised that the average U.S. citizen is aware of this. Nor am I surprised that our politicians, who are both rich, and, worse, beholden to the rich for the continuation of their careers, do not carry out the will of the people in this regard.
posted by kozad at 8:23 PM on March 6, 2011 [10 favorites]




dr;td -- Didn't read. Too depressing.
posted by schmod at 8:36 PM on March 6, 2011 [4 favorites]


$-604 B deficit
125% of Soc Security Solved.

Easy Peasy - put the soldiers and prison guards to work building renewable resources, increase benefits to every day folks, and then tax the wealthy, with very minor tax increases for lower middle class income folks. Shit we could spend more and break even.

So - how biased is this quiz? Obviously, not all options are on the table. And it's easy to say one thing cut, spend here on another. But the ramifications of such things are much deeper than that.
posted by symbioid at 8:37 PM on March 6, 2011 [1 favorite]


-708 Billion. Which is a bit ridiculous.
posted by BrotherCaine at 8:38 PM on March 6, 2011


So - how biased is this quiz? Obviously, not all options are on the table. And it's easy to say one thing cut, spend here on another. But the ramifications of such things are much deeper than that.

Well, the methodology laid out in the .pdf link says that they broke the budget into 31 line items... That sounds like they tried to put as many broad category options in there as they could.

As far as bias... (it really wasn't a "quiz")... Here is the "about us" page from the group. Not sure if they have a bias or not, outside of the concept of public involvement in policy. That probably makes them quite liberal if you ask the right groups. I don't think it does, but then, I think that democracy should be a public-involved process.
posted by hippybear at 8:46 PM on March 6, 2011 [3 favorites]


I don't like the fact that they present the spending first, with that little box telling you how far over budget you are. After I'd carefully kept it in budget (mainly shifting from defense to social services), I got to the taxes part, and when I was done with that, I was $700 billion in surplus. If they did it the other way, people would realize that with slightly higher taxes on the rich, corporations and capital gains (and they didn't even provide the options to go as high as I wanted), we could double the budget of almost all the popular stuff (education, housing, food, research, environment, jobs transportation, etc), particularly if we were willing to cut defense as well. As it is, all that surplus just seemed like a mistake and an implicit argument against raising taxes.

As for Social Security, the only progressive option was to lift the cap, all the rest were cuts; but there are million ways to fix SS with just a minor hike in the rates paid by the richest people, let alone boosting it significantly with a somewhat higher hike in the top rates. But the options presented made it seem like that was not an option, and the only real choices were cuts of various sorts.
posted by chortly at 9:38 PM on March 6, 2011 [2 favorites]


As it is, all that surplus just seemed like a mistake and an implicit argument against raising taxes.

Also, it makes the Baby Keynes cry, just now.
posted by pompomtom at 10:05 PM on March 6, 2011 [3 favorites]


No, that's pretty much what I expected. Pretty much all polling shows people want to fix the deficit by increasing taxes and cutting defense when those options are on the table.
posted by delmoi at 10:31 PM on March 6, 2011 [1 favorite]


But the options presented made it seem like that was not an option, and the only real choices were cuts of various sorts.

You're thinking of that money wrong. It's not 'a surplus', really, it's 'money you don't need to take'.

If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.
posted by Malor at 10:41 PM on March 6, 2011 [1 favorite]


If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.

If you don't count paying off the national debt, sure.
posted by Sportbilly at 10:50 PM on March 6, 2011 [2 favorites]


You're thinking of that money wrong. It's not 'a surplus', really, it's 'money you don't need to take'.

If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.


My understanding was that this was a tool for individuals to decide for themselves what they thought was a "compelling reason". Biasing the test in one way or the other, while tempting for various reasons, undercuts the utility of the tool as a measure of what people independently desire.
posted by chortly at 10:53 PM on March 6, 2011 [1 favorite]


I don't think it does, but then, I think that democracy should be a public-involved process. posted by hippybear

You sound like a troublemaker, son. Why don't you have a seat over there in that Free Speech Zone®.
posted by spacely_sprocket at 11:25 PM on March 6, 2011 [3 favorites]


These tools demonstrate nothing more than that people are happy to raise taxes they don't expect personally to pay and to cut spending from which they don't rerceive personal benefit.

Which is, at some level, fine, if you perceive politics as a contest of disparate self-interests. However, it certainly provides no principled basis for high income taxpayers or defense contractors to play along, and thus privides no tools to overcome the current fiscal impasse.
posted by MattD at 4:17 AM on March 7, 2011


I think that democracy should be a public-involved process

Good thing that America's a Republic then.
posted by rough ashlar at 4:31 AM on March 7, 2011


If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.

Used to be if I wanted to buy a computer off the retail shelf, today, I had to pay for Windows even if I didn't want Windows.

Oh wait. That's still the case.

Do explain how a wealthy corporation who doesn't have government fiat is able to confiscate wealth for a product I do not want, nor can I sell that Windows to someone else.
posted by rough ashlar at 4:36 AM on March 7, 2011 [1 favorite]


If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.

Which they earned all by themselves, with absolutely no direct or indirect contribution from public programs, institutions or resources, right?
posted by rocket88 at 4:55 AM on March 7, 2011 [11 favorites]


However, it certainly provides no principled basis for high income taxpayers or defense contractors to play along, and thus privides (sic) no tools to overcome the current fiscal impasse.

Why would they need to play along? They're a small minority.
posted by indubitable at 5:24 AM on March 7, 2011 [2 favorites]


Indubitable, in the battle between a diffuse majority, particularly one acting from the low-moral-authority standpoint of self-interest, and concentrated, highly motivated minorities, the latter usually win ... especially when there's nearly the same prevalence of the minorities (high income people, defense-appropriation sensitive legislators) in one political party as the other.
posted by MattD at 6:00 AM on March 7, 2011


The participants were given a number of policy options though as part of the process of picking their cuts. This suggests with proper framing a focus group of participants would choose a particular policy option, it does not show widespread support for tax hikes by itself. This is different from a motivated popular groundswell which is what we need. Perhaps we need the Soak the Rich party.
posted by humanfont at 6:03 AM on March 7, 2011


Wait...can someone explain to me why estate tax makes any sense? If I have a bajillion dollars in savings when I die, why should that money be taxed before being passed on to my theoretical daughter?
posted by lizzicide at 6:08 AM on March 7, 2011 [1 favorite]


Really, the big flaw here is that they are asking normal Americans. Some of the data is useful as is shows that the average American thinks we should increase taxes on the rich but that can be accomplished with a simple poll on that one issue. Other than that, they're asking some questions that should have some pretty complicated answers or at least a fair amount of expertise.

Most American's don't understand how government spending now can lead to increased tax revenues later or even how debts and deficits work on a Federal level where they can print more money.

If we polled a group of economists, we'd probably get different answers and that group still wouldn't have the military expertise to really know how much defense spending we could cut.

I'm saying politicians aren't biased by their wealth, they certainly are and I'm not saying they're necessarily more qualified to make these decisions but at the very least, they should have people on their staff or access to other experts who can research these things so the decisions are getting made with more and better information.
posted by VTX at 6:15 AM on March 7, 2011


These tools demonstrate nothing more than that people are happy to raise taxes they don't expect personally to pay and to cut spending from which they don't receive personal benefit.

Here I disagree. Most polls -- which ask yes-or-no questions in sequence -- come back with the finding that Americans are unwilling to cut taxes or cut fending spending, with the exception of the (already tiny) spending on foreign aid.

What's interesting is how strongly the results change when you change the method of aggregating people's preferences. It drives home the point that, with a few exceptions, it's very hard to talk sensibly about "what policies the average American wants."
posted by escabeche at 6:38 AM on March 7, 2011


Wait...can someone explain to me why estate tax makes any sense? If I have a bajillion dollars in savings when I die, why should that money be taxed before being passed on to my theoretical daughter?

At least partly because the revolution that gave birth to America was also a revolution against the dominance of inherited wealth and Old World notion's of aristocracy and institutionalized privilege by birth. And the American people broadly used to believe it should be our government's policy to discourage generational capital hoarding and the excess accumulation of inherited wealth, because such things are known to be economically damaging and to lead to anti-democratic outcomes over the long term with wealthy generational political classes emerging that eventually come to dominate economically and politically. Basically, hording large amounts of wealth to benefit your children comes with externalized costs to society. Estate taxes are way of balancing the books. But attitudes toward inherited wealth seem to have changed a lot in the US since we first started out on this adventure.
posted by saulgoodman at 6:56 AM on March 7, 2011 [15 favorites]


Wait...can someone explain to me why estate tax makes any sense? If I have a bajillion dollars in savings when I die, why should that money be taxed before being passed on to my theoretical daughter?

Because it would be income for the kid, essentially (although we tax the estate itself, not the child's inheritance as such). If you gave the money to your kid as a gift right before passing away it would be a taxable gift. The estate tax is basically a gift tax levied on your entire estate. But note that there are tons of exceptions, exemptions, and deductions. For example, any money you leave to charity isn't taxed.

That's apart from the problems saulgoodman mentions.
posted by jedicus at 7:02 AM on March 7, 2011 [3 favorites]


If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.

This is the same reason I eat steak while I feed my kids thin gruel. It is, after all, my money.
posted by DU at 7:15 AM on March 7, 2011 [1 favorite]


> If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.

Well, I'm pretty darned socialist, and I agree with this statement. I suspect where we'd disagree is on what a "clear and compelling reason" might be...
posted by lupus_yonderboy at 7:19 AM on March 7, 2011 [3 favorites]


Paying taxes != confiscating wealth
posted by desjardins at 7:26 AM on March 7, 2011 [5 favorites]


Malor: “If you don't have a clear and compelling reason to confiscate wealth from citizens, you shouldn't. It is, after all, their money.”

Money being a lie, and not generally a very noble one, I don't think this is something we should worry about as much as people seem to act like we should. We have a duty to the society that nurtured us, a duty that extends far beyond our supposed right to do whatever we want so long as we don't infringe on the rights of others. Sometimes that duty take material form.
posted by koeselitz at 7:30 AM on March 7, 2011 [1 favorite]


We "confiscate wealth from citizens" at the behest of the elected representatives of those same citizens. So it's really "citizens using a legitimate political process to agree, as a society, to voluntarily share their wealth to accomplish large projects and help their fellow citizens."

Now, perhaps you run into problems when you have a poor majority voting to tax a wealthy minority and the minority doesn't agree with it. But to that I say: it's democracy and them's the breaks.
posted by jedicus at 7:31 AM on March 7, 2011 [3 favorites]


In other words: no, it's not "their money." It's not anybody's money. And the sooner we disabuse ourselves of such ridiculous notions, the sooner we'll have a world where it's obvious to all how inane (and avoidable) it is for individuals to control enough wealth to purchase whole nations.
posted by koeselitz at 7:34 AM on March 7, 2011 [3 favorites]


I found Michael Moore's speech from Madison over the weekend (entitled America Is NOT Broke!) to be pretty illuminating about how I want to think about income disparity in this country and what should be considered "fair" versus what is being sold to us as "correct". A link to it can be found here, for those who are interested.
posted by hippybear at 7:42 AM on March 7, 2011 [2 favorites]


hippybear, I was AT that speech and it was incredible, not only for what he said but for the energy in the crowd. I was next to firefighters and teachers and nurses and ironworkers - and we were all united. Working people are really waking up to the fact that they have been voting against their own interests. We're almost certainly not going to get rich; the cards are stacked against us on purpose. But we've been led to believe that we too could win the lottery, so we've been worshiping at the altar of the rich, praying they'll let us into their club. People are finally waking up to the fact that They. Do. Not. Care. About. Us.
posted by desjardins at 7:57 AM on March 7, 2011 [1 favorite]


rough ashlar: " I think that democracy should be a public-involved process

Good thing that America's a Republic then.
"

Oh. That ol' bit of rhetoric. Heh.
posted by symbioid at 7:58 AM on March 7, 2011


...why should that money be taxed before being passed on to my theoretical daughter?

Because one Paris Hilton is already one too many.
posted by rocket88 at 8:14 AM on March 7, 2011 [3 favorites]


I raised taxes to 30% over $200,000, cut defense in 1/2, and tweaked things in general.

I ended up with a 333 Billion SURPLUS in 2015, and solved 135% of Social Security.
posted by MikeWarot at 9:44 AM on March 7, 2011


The interactive game makes it seem like the problem is easy to solve. Lets take MikeWarot's example. He defense spending in half, great, half the military is now unemployed. That is something around one million people now jobless. Not to mention the equipment that isn't being manufactured so now the people who make that stuff are out of jobs and I'm guessing that those are jobs that are U.S. based at a higher rate than manufacturing as a whole.

These things don't exist in a bubble, it isn't just X affects Y. I know I've made some assumptions here. You don't have to cut military spending uniformly and fire half the military and there are other affects such as decreased spending for the GI bill and VA benefits but this little game grossly over-simplifies things.

For me, it just points out how important it is to base who you vote for on how they do their jobs (consult experts, evaluate and analyze as much as possible, etc.) and not what ideology they subscribe to. Sticking to an ideology leads dumb ideas like:

Step 1: Balance budget
Step 2: ???
Step 3: Economic growth!
posted by VTX at 10:02 AM on March 7, 2011 [1 favorite]


VTX: "The interactive game makes it seem like the problem is easy to solve. Lets take MikeWarot's example. He defense spending in half, great, half the military is now unemployed. That is something around one million people now jobless. Not to mention the equipment that isn't being manufactured so now the people who make that stuff are out of jobs and I'm guessing that those are jobs that are U.S. based at a higher rate than manufacturing as a whole.

These things don't exist in a bubble, it isn't just X affects Y. I know I've made some assumptions here. You don't have to cut military spending uniformly and fire half the military and there are other affects such as decreased spending for the GI bill and VA benefits but this little game grossly over-simplifies things.


I agree in general, but...

What portion of the military budget is actually soldier pay and things like that?

OK, so now what can we do to put them to work? Increase spending on green energy. Working with social programs. You now have a lot more resources that can be poured into a new "green race".

Yes, there are a LOT of issues with simply slashing the budget.

But if you notice. You can raise a LOT of money merely by raising taxes on the wealthiest, along with some simple reforms of things like the estate tax, the hedge-fund tax thing, and small "sin taxes" on carbon and sugar. Not fully sold on those (especially since they seem kind of regressive in some ways) and a VAT (another thing I'm not fully sold on, but if it excludes food and such things, then I'm a little more for it). Point being, I had a 600 billion SURPLUS after cutting the military budget by 500 billion (yes, insane, I know). That was including a lot of spending increases in other places. Maybe you'd have to pour more into these other programs than I did.... But our adamant refusal to raise taxes on the rich while insisting on spending cuts only is the biggest issue that's causing the problem...
posted by symbioid at 11:05 AM on March 7, 2011 [1 favorite]


What portion of the military budget is actually soldier pay and things like that?

OK, so now what can we do to put them to work?


I'll bet we could shift half of the military work force to more productive infrastructure and disaster relief projects at a massive savings. Not only would we actually get something tangible for our money, but we could cut a lot of costs without firing anyone: no (or less) hazard or combat pay, far less equipment cost, and less spent on health care since the soldiers wouldn't be shot at or blown up.

The US has (basically) 2.5 million soldiers and according to the budget simulation it spends $651 billion per year on its military. That's $260,400 per soldier. If we cut that in half we could still spend an average of $130,200 per soldier without firing anybody, which is ~$23,000 more per soldier than Germany spends, for a sense of scale. That seems pretty reasonable to me.

Yes, we would have to give up procurement projects and a lot of R&D. Yes, we would have to scale back a lot of our overseas bases. Yes, we would have to leave Iraq and Afghanistan. Yes, we would have to end our nuclear weapons program completely (an unambiguous good, if you ask me). But we could basically maintain our existing troop levels and equipment, thus ensuring we still have by far the most sophisticated military in the world as well as one of the largest. We'd also still be spending more than Russia, China, Iran, North Korea, Venezuela, and pretty much every other remotely imaginable enemy combined.

Not fully sold on [carbon and sugar taxes] (especially since they seem kind of regressive in some ways)

The regressiveness is somewhat fixable by increasing the personal exemption on income tax. The main reason to have such taxes is to internalize the external costs of pollution and obesity & diabetes, not to produce revenue as such. Note that the same argument can't be made for a VAT or other national sales tax. Sales taxes are horribly regressive but exist solely to produce revenue.
posted by jedicus at 1:10 PM on March 7, 2011 [1 favorite]


I do find this an interesting exercise, because I have a little fantasy about how to realign the budget of the country more with what the people want.

Everyone already has to file an income tax return. So, what if that tax return had something similar to the first part of this, where each taxpayer, along with filing taxes, actually submits the broad budget breakdown they would like to see happen with the money they've paid in taxes for that year.

There would be broad categories. Maybe even the same 31 line items as in the link from this FPP. People could fill it out however they want. If they think the space program is important, they can put 100% down for that, and 0 for everything else. If they love the military, they can put all their money into that.

Or they can be more thoughtful about it. Trying to work out what they think the real final budget of the US should be for that year.

Each political party could publish their "budget", and those who want to follow those guidelines would just copy the numbers into their form. Likewise, churches, Greenpeace, the library association, whoever wanted to could also publish a budget, and people could just copy over the numbers for whatever group they consider themselves aligned with.

Then, all these numbers can be applied one of two ways. Either everyone's budget breakdown, duly submitted by each taxpayer, could be somehow run through a giant number crunch to come up with the final actual budget, which is then passed along to Congress for them to work out the details within the large categories... Or (in a less fair world) everyone's budget breakdown is actually applied to the money THEY have paid into the system, so the budget Congress gets to disburse is created from each person actually allocating their tax dollars in the way they wish, creating a large aggregate budget out of 200 million micro-budget.

Either way, Congress still keeps "the power of the purse", sets the taxation rates themselves, etc., but the people as a whole have a much greater say in the way the country spends its collective monies.

I know, it's a pipe dream. But if I were starting a country and an income tax system up today, that's what I'd like to see.
posted by hippybear at 3:02 PM on March 7, 2011 [4 favorites]


That is point exactly. Its a good idea in theory but frankly, I don't want the average person have that much say in our budget. I've studied more econ and poly sci than most and I learned enough to know that I'm far from qualified to have a say in the matter. Especially when it comes to defense spending, some elected officials and the president in particular have access to information that the public doesn't and probably wouldn't be able to properly analyze it if they did.

Your idea about simply copying the numbers from larger groups deals with most of that. They could consult some experts and analyze more information than the average tax-payer but you can bet that most of them would end up getting funded by corporations and conglomerates and would have their opinions biased. The companies with the most to gain from the federal budget would spend the most and end up with the most influence.

Our representatives aren't supposed to do what we want, they're supposed to do what's good for us. I know that in some situations, I should pay more in taxes (and I'm aware that in your system, the government still sets tax rates, I'm just illustrating a point) but I'd never do it if it were up to me.

I'd rather we find a way encourage our representatives to govern better and for voters vote based on who does a better job rather than who does what they want.
posted by VTX at 5:27 PM on March 7, 2011


Um... what? Our representatives aren't supposed to represent our wants and desires in government, but are supposed to be some kind of national in loco parentis body, deciding for us what is somehow best for us?

That certainly wasn't in any civics class I ever took.
posted by hippybear at 6:49 PM on March 7, 2011 [3 favorites]


Well, in some very limited ways, yes. Otherwise no one would ever under any circumstances do things like raise taxes on the majority of Americans.

I know that in an economic growth cycle, raising taxes is a good way to slow down that growth to help prevent a speculative bubble from forming and to help pay down the national debt and build a reserve so you can lower taxes to stimulate the economy later if there is a recession. I know that and I know that it means that at some point it will be better for society if taxes are raised across the board including on myself. I also know that if a candidate for office explained that to some people, they would be okay with voting for someone who wants to increase taxes.

I have no doubt that you, Hippybear, would be one of those people. I would like to think that I'd have the same reaction and maybe I would but I know that all most people would hear is, "I want you to pay more taxes" and then they'd vote for the other guy who tells them what they want to hear.

Elected officials should have more leverage to do things that the majority of people don't want but would be better for them in the long run. Sometimes they have more and better information. They need to be able to do things that are unpopular and right. It shouldn't matter if most Americans are in favor of a constitutional amendment that defines marriage as a union of one man and one woman, our government should be free to do the right thing legalize gay marriage for example.
posted by VTX at 6:12 AM on March 8, 2011


Okay, thanks for your clarification there, VTX.

From what you wrote at first, my reaction was that it's people who are doing "what they think is best for us" who have brought us things like Prohibition (alcohol and drug), mandatory sentencing for drug crimes, DOMA, and increasingly repressive laws about reproductive rights.

And I was going to rail against that, but now that I see what you have written further, I see that probably isn't what you mean at all.

Yes, I'd like to see our leaders lead more. Sadly, since the day Jimmy Carter sat down and told everything the hard truth about the state of the world and what we really needed to do back then in order to have a good, solid now... and then was totally slapped down for it... We really haven't seen many politicians stand up and try to steer the ship the nation in an unpopular yet ultimately best-outcome-headed direction. We just lurch a bit here, and list a bit there, all the time drifting vaguely starboard due to the machinations of those who truly DO want to be our substitute moral parents.
posted by hippybear at 8:53 AM on March 8, 2011


I kind of think of it like a big corporation. The voters are the board of directors and give the CEO and other top level executives some broad goals like, "Make the company more better!" The CEO and his team get to determine how to execute that vision. The board doesn't care all that much how the CEO gets things done so long as their goals are being met and mostly let the CEO do his job. The analogy is kind of weak since the board of a corporation rarely have goals that aren't related to making their investment grow while the goals that voters have a much more broad and the influence of board members is determined in large part by how much money they've put into the company but generally, as long as the CEO is getting his job, even if members of the board think they should be doing it a different way, they let him do it. It isn't until the CEO isn't getting the job done that he gets fired by a vote from the board.

I think it would take two major changes. First, voters would need to be able to trust that politicians are doing their jobs and let them do it even if they don't agree with how they're doing. They need have more focus on the goals and trust that those in office are pursuing those goals. Second, there would need to be major changes to how those in office govern. Maybe it would mean a cap on net worth for those who run for office and those offices would have much higher salaries with harsher penalties and stricter guidelines on taking funds from anywhere else. Maybe it would involve a claw-back feature on that salary or something.

I really don't have the answers to how to solve that problem, I just know what I think the goal should be.
posted by VTX at 9:36 AM on March 8, 2011


If I have a bajillion dollars in savings when I die, why should that money be taxed before being passed on to my theoretical daughter?

Because a bajillion dollars someone gave to your daughter in any other situation would be taxed.
Because she has done nothing to earn it.
Because the society you live in provided the stable environment in which you could earn the money, and deserves a share of it.
Because concentration of inherited wealth leads to concentration of power, and hurts democracy.
Because inheriting wealth destroys individual initiative.
Because when you die, whatever natural ownership you had of that money dies with you.
Because everyone needs some of the things taxes pay for, nobody wants to pay for it, and your daughter can afford it better than most.

Seems to me it's kind of an obvious thing to do, though I'm admittedly far out on the anti-inheritance side of the spectrum--I think the estate tax ought to be substantially higher than it is. Alternately, why shouldn't it be taxed? Are you opposed to taxes in general, or do you see something different about that particular situation?
posted by moss at 7:36 PM on March 8, 2011 [5 favorites]


Because a bajillion dollars someone gave to your daughter in any other situation would be taxed. ... Alternately, why shouldn't it be taxed? Are you opposed to taxes in general, or do you see something different about that particular situation?

moss, I'm definitely not opposed to taxes in general. I'm unsure if I'm opposed to taxes in this situation, which is the reason why I asked for clarification. And I agree with at least some of the points you made (namely inheriting wealth destroys individual initiative), and I'm curious about others (namely that your ownership of money should die with you).

But since you asked, my main objection to estate tax stems from the fact that this money had already had taxes paid on it by me. Like, I earned 900 dollars, I paid 300 or so in taxes, I died with 600 in my pocket. That 600 wouldn't go to my daughter without getting taxed again, and I think that's weird.
posted by lizzicide at 8:14 PM on March 9, 2011


Like, I earned 900 dollars, I paid 300 or so in taxes, I died with 600 in my pocket. That 600 wouldn't go to my daughter without getting taxed again, and I think that's weird.

As mentioned above, if you were to give that $600 to your daughter while you were alive, it would be taxable income. Why should your passing change this?
posted by pompomtom at 9:44 PM on March 9, 2011


Actually, the first $13000* of a gift is excluded from gift tax, and if you are married, you and your spouse can give a donee $13,000 each.

*IANACPA,IANYCPA, TY2010 only, personal gifts do not put on schedule C, etc...

As to the double taxation question, it's not like your income wasn't taxed as income for the payer when they earned it, and so on ad infinitum. Gift and Estates have to be taxed otherwise people would be "gifting" each other salary all the time.
posted by BrotherCaine at 12:48 AM on March 10, 2011


Actually, the first $13000* of a gift is excluded from gift tax, and if you are married, you and your spouse can give a donee $13,000 each.

I presumed that the $600 we're talking about is marginal - I gather the threshold for estate tax is a fair bit more than $13k.
posted by pompomtom at 8:16 PM on March 10, 2011


Like, I earned 900 dollars, I paid 300 or so in taxes, I died with 600 in my pocket. That 600 wouldn't go to my daughter without getting taxed again, and I think that's weird.

Yes but this is always true. Money is always taxed more than once. In general, your employer paid you that money and they get to deduct it as an expense but that money likely came from a consumer who paid taxes on it when they're employer gave it to them, their employer got it from a consumer who paid taxes on that income, etc.

I don't know that estate should get taxed at any special rate but when money changes hands the new party counts it as income.

Even your employer still pays taxes. If they didn't, they'd be able to pay you the CEO more. The corporate taxes aren't as direct but in a sense they paid taxes on the money their paying you with too.
posted by VTX at 6:22 AM on March 11, 2011


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