A defeat for "death tax" propagandists.

June 8, 2006 3:31 PM

GOP Senators have lost their bid to kill the currently-defunct estate tax. This defeat of the permanent repeal effort is a major triumph for the 98% of Americans who've never been in danger of having to pay the tax.
posted by maud (164 comments total)

"Tax Breaks for Rich Murderers"?

I'm sure there were several non-murderers who also benefited from this as well.
posted by delmoi at 3:41 PM on June 8, 2006

Under President Bush's 2001 tax cut, the estate tax is gradually declining and due to be phased out in 2010. But under that law, it will return a year later.

Man, how crule. Better hope your grandma dies on the right day!
posted by delmoi at 3:42 PM on June 8, 2006

no shit, delmoi....Sr. and Bar had better watch their backs in 2010....
posted by troybob at 3:54 PM on June 8, 2006

How dare people save up money to make their kids' lives better!
posted by hoverboards don't work on water at 3:55 PM on June 8, 2006

And I was so hoping for a more thoroughly entrenched plutocracy.
posted by MasonDixon at 3:56 PM on June 8, 2006

"currently defunct"?

I don't think that word means what you think it means. It will be defunct when it's repealed.
posted by MrZero at 4:05 PM on June 8, 2006

hoverboards: If you're giving your kids a massive income via estate, they don't pay income tax on it, so either the estate tax needs to stay, or 98% of Americans need their income tax forms made more complex for no reason that affects them. I'd prefer to have an estate tax and simpler income tax forms each year :)
posted by -harlequin- at 4:05 PM on June 8, 2006

hoverboards don't work on water: How dare people save up money to make their kids' lives better!

Oh my god! Those poor parents won't be able to pass on more than 2 million dollars without being taxed! Their children will starve in the streets.

I'm sorry, but if you can't make a good life for yourself when you inherit over 2 million dollars (or some significant fraction thereof), YOU DESERVE TO FAIL. I don't think the fraction that the government takes will make a difference.

As for the small businesses that break up, well, my heart bleeds for those children who only get to inherit a fortune instead of a profitable business. If it's such a big freaking deal, make an exception for that case alone instead of tearing down the entire law.
posted by Mitrovarr at 4:06 PM on June 8, 2006

I've already made it quite clear that Mr. and Mrs. Justinian's Parents better go find a Saddamesque spider hole to hide in starting Dec. 31, 2009 and emergint Jan 1, 2011.
posted by Justinian at 4:06 PM on June 8, 2006

How dare people save up money to make their kids' lives better!

How dare people earn money rather than inherit it!
posted by fugitivefromchaingang at 4:08 PM on June 8, 2006

98% of Americans who've never been in danger of having to pay the tax

It's way, way higher than 98%. "Already, the number of taxable estates has dropped from more than 50,000 in 2000 to fewer than 13,000 in 2006, and it will fall to about 7,000 when the exemption level rises to $3.5 million ($7 million per couple) in 2009." Only 300 farm estates nationwide would have owed any estate tax in 2000 under the current exemption level of $1.5 million, according to a Congressional Budget Office survey [PDF].

It would save Vice President Cheney between $13 million and $61 million, though.
posted by kirkaracha at 4:11 PM on June 8, 2006

So the money these parents make is taxed when they earned it. Why must it be taxed a second time when they die? That doesn't sound just at all.

But since this doesn't affect 98% of us it really doesn't matter. Let's just take the same approach with the rest of government.

I'm assuming less than 2% of the population consists of homosexuals who want to marry, so let's just drop that whole issue. For that matter, do 2% of us suffer as victims of violent crime? Victim's rights for these measly 2% aren't worth the time, money or worry of the rest of us 98%. Sheesh.

So can someone explain the theory of the death tax here? Are we doing it because it's somehow morally decent to tax people again upon their deaths or because it's an easy way to get revenue from a small group of people?
posted by b_thinky at 4:13 PM on June 8, 2006

I find the whole estate-tax thing interesting--in fact I don't think either side is entirely comfortable with their justifications for their positions. It is, after all, a fairly natural position to say "this is mine, I'll do what I damn well want with it"; and if that means giving it to my wastrel children, so be it. Most of us, in fact, feel that what we choose to do with our money (give a big donation to the ACLU? Contribute to AIDS research? Give money to the NRA?) is our own decision, so we kinda "get" the resistance to the estate tax (even if we are aware that we'll never own enough to be affected by it).

On the other side, though, there's all those "get the damn goverment off my back" types who value "personal responsibility" and "individual rights" and so forth. It must, surely, seem odd to them to be fighting so hard for the right of a few absurdly wealthy individuals to live their lives entirely insulated from any responsibility whatsoever. Is Paris Hilton really the poster-child for rugged individualism?

Me, I support the estate-tax. But I could imagine being persuaded that a reasonable capital-gains-tax regime might be more "fair" and achieve much the same ends.
posted by yoink at 4:16 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?
posted by JekPorkins at 4:17 PM on June 8, 2006

either the estate tax needs to stay, or 98% of Americans need their income tax forms made more complex

Taxing inheritance or taxing the income are exactly equivalent; I not a fan of either.

Oh my god! Those poor parents won't be able to pass on more than 2 million dollars without being taxed! Their children will starve in the streets.

It's the 98% figure I find objectionable: why should it matter how many or few people a penalty affects? If "only" 2% of the population were Hindu, would that make it OK to pass a law taxing only Hindus? The rich are a minority too, and I see a lot of hate directed at them that would silence a bar if uttered against other minorities.

Another thing I see a lot of is the idea that X million dollars is "enough". Let me assure you that there are many, many useful ways to employ vast sums of capital that don't involve being an obnoxious toff.
posted by hoverboards don't work on water at 4:18 PM on June 8, 2006

Because they can't use it when they're dead?
posted by lbergstr at 4:19 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?

Yes, stealing from the rich to give to the poor is a good electoral strategy if the poor outnumber the rich.
posted by hoverboards don't work on water at 4:22 PM on June 8, 2006

b_thinky: So can someone explain the theory of the death tax here? Are we doing it because it's somehow morally decent to tax people again upon their deaths or because it's an easy way to get revenue from a small group of people?

Well, I personally love the estate tax because it takes money from the best people to tax imaginable; those who can afford it (the rich) and those who least deserve it (people who didn't earn it themselves.) The tax codes are not designed to be fair, exactly, the are designed to be good; to result in the most improvement to society with the least cost. That's why we have variable tax rates; the rich can better afford taxes than the poor. This is just an extension of that principle.

I also despite wealthy dynasties, since they produce a lot of wealthy people with no merit. The estate tax hinders the continued existance of these and may encourage altruism.
posted by Mitrovarr at 4:23 PM on June 8, 2006 [1 favorite]

The rich are a minority too, and I see a lot of hate directed at them that would silence a bar if uttered against other minorities.

I don't think people generally stick up for minorities because they're minorities. They stick up for minorities who are oppressed minorities.

We might argue about which minorities are and aren't oppressed. And to what degree they are. But the rich? Really? I mean, that sounds hard to do. The oppressed rich.
posted by fugitivefromchaingang at 4:24 PM on June 8, 2006

b_thinky, it's taxed a second time when it's inherited. The burden of paying it falls on someone who never payed taxes on it in the first place.
posted by borkingchikapa at 4:29 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?

Why stop there? Can anyone give a good reason why the government should have the power to take people's money? At least dead people can't spend money, taxed or not. Live people have to survive through taxation. That's so unfair!
posted by Mr. Six at 4:30 PM on June 8, 2006

The oppressed rich.

I wouldn't call the rich oppressed. I wouldn't call Jews oppressed either, but that's no reason to start passing punitive laws directed at them.
posted by hoverboards don't work on water at 4:31 PM on June 8, 2006

Because they can't use it when they're dead?

But they can. and do. What, do you think they just bury the money with them?

Yes, stealing from the rich to give to the poor is a good electoral strategy if the poor outnumber the rich.

But what about stealing from the rich to give to the government? Robin Hood was the good guy, and the Government tax collector was the bad guy in that story, remember?
posted by JekPorkins at 4:32 PM on June 8, 2006

i love when people say 'death tax' because it's like saying 'marriage penalty' (which itself conveniently ignores there there are quite a few free government-established 'marriage benefits', like survivorship benefits and automatic legal privileges, not shared with the rest of us)...saying 'death tax' implies that the person dying is being taxed (how unfair!) and not the person who is receiving the money...

if i make enough money to hire a maid, then i can't very well get away with saying that the maid should not have to pay taxes on that money because i've already paid taxes on it (b-b-b-but that money is being taxed a second time...no fair!)
posted by troybob at 4:32 PM on June 8, 2006

How dare people save up money to make their kids' lives better!

People are taxed for receiving and spending money every day. Why should money acquired through inheritance be any different? The dead people are not taxed. The heirs are. You can make arguments against taxation in general, and I will understand your point of view completely. But singling out the estate tax (and not the taxation of gifts, for example) is either completely random or based on personal self-interest, neither of which are proper foundations for public policy.

Another thing I see a lot of is the idea that X million dollars is "enough". Let me assure you that there are many, many useful ways to employ vast sums of capital that don't involve being an obnoxious toff.

That's a strawman. Is anyone saying that rich people are assholes, and thus deserve to be taxed?
posted by brundlefly at 4:34 PM on June 8, 2006

So the money these parents make is taxed when they earned it. Why must it be taxed a second time when they die? That doesn't sound just at all.

Sigh. Because MONEY isn't taxed. People are taxed when they receive money. I make $10 at my job and am taxed $2. With my remaining $8, I pay someone to cook me dinner. They are taxed on that $8, even though that $8 was previously the remaining portion of "money that was already taxed." It's not that hard. Why should passing money upon death be different than passing money in other transactions?

Can anyone give a good reason why the government should have the power to take people's money when they die?

Only if you think that the government should have the power to take people's money while they're alive. And if you don't, I think you're going to have a very tough time finding anywhere to live. At any rate, it's not really the dead's money; it belongs to their heirs, who are taxed on it just as they would be taxed if they received the money through any other (legal) means.
posted by LittleMissCranky at 4:34 PM on June 8, 2006

I also despite wealthy dynasties, since they produce a lot of wealthy people with no merit. The estate tax hinders the continued existance of these and may encourage altruism.
posted by Mitrovarr at 4:23 PM PST on June 8 [+fave] [!]

But why assume all those who qualify for the tax are "wealthy dynasties"? Surely not every kid who receives an inheritance is Paris Hilton.

What about a guy worth about $5m, with 4 kids and 8 grandkids? By the time you take out the death tax, these kids and grandkids may not even have enough to buy a house. The estate tax isn't bothering someone like Paris Hilton (take away $500m of her $1b and she wouldn't even notice), but it really hurts the pocketbooks of the families worth $5m-$10m, a class of largely self-made business owners.

Don't forget the critical fact that you already taxed this money when it was earned to begin with.
posted by b_thinky at 4:35 PM on June 8, 2006

Taxing inheritance or taxing the income are exactly equivalent; I not a fan of either.

Woop! Woop! Libertarian alert! Libertarians love old money. It's the only way they can survive. If everyone on the planet had to start from an equal level of wealth, then the free market utopia they dream of would be overly complicated and nasty. It's much easier to be able to start off with daddy's money to pay for your education and help you through while you claim "poor people are just lazy".

Well, I personally love the estate tax because it takes money from the best people to tax imaginable; those who can afford it (the rich) and those who least deserve it (people who didn't earn it themselves.)

Here here.

Are we doing it because it's somehow morally decent to tax people again upon their deaths

Well, as they say, you can't take it with you when you go.
posted by Jimbob at 4:36 PM on June 8, 2006

Mo money mo problems.
posted by stinkycheese at 4:36 PM on June 8, 2006

William Randolph Hearst was a cruelly oppressed minority! I like it!
posted by blucevalo at 4:37 PM on June 8, 2006

Don't forget the critical fact that you already taxed this money when it was earned to begin with.

umm...all money being paid/received anywhere at this point has already been taxed somewhere along the line...the tax is applied at the point of financial transaction...inheritance is a financial transaction--the biological status of the payor makes no difference here...and that's the only difference here...unless you're going to argue that the same financial transaction taking place when the payor is alive should not be subject to tax...in which case no transactions should be taxed...
posted by troybob at 4:42 PM on June 8, 2006

b_thinky: So the money these parents make is taxed when they earned it. Why must it be taxed a second time when they die? That doesn't sound just at all.

Nor is that an accurate depiction.

The dead don't pay taxes...their heirs pay upon receipt, and only above a certain level. A taxable event happens nearly every time money charges hands.

You could extend this "double taxation" argument to the ridiculous...why should I pay taxes on my wages...my employer already paid taxes on that money! Why should the buyer of my used car pay sales tax on the purchase...I already paid sales tax when I bought it!

And so on, ad nauseum. Before long, once taxed, a dollar bill can never be taxed again? It's a ridiculous argument.

In practical terms, this proposal would have reduced receipts by $1 trillion or so over the next decade. This would occur in a time of unprecedented debt levels and consistently unbalanced budgets. To push for heiress tax relief (who least need relief, and potentially are the least meritorious for it), and deprive the Treasury of revenue in such times is irresponsible in the extreme and has it's priorities in the wrong place.

The working class is struggling to pay for gas, to pay for college, to pay for healthcare, and this doesn't help them with those things one iota. This is NOT a priority for anyone but idealogues and rightwing thinktanks.

Oh, and let's not forget how irresponsible it is to cut taxes while we're at war. Since the right is so quick to remind everyone at every chance...let's not let them forget it now. We're at war. We're in debt. The budget is not balanced. They need to get their priorities straight, as they are so fond of telling their opponents.

Yoink: in fact I don't think either side is entirely comfortable with their justifications for their positions

I'm entirely comfortable with my position. It's a progressive tax that serves (in a small way) to prevent the rise of a hereditary elite in a land where merit is supposed to matter more than fortunate birth. So I'm fine with it philosophically as well as practically. I'm glad it went down in defeat.
posted by edverb at 4:42 PM on June 8, 2006 [1 favorite]

Don't forget the critical fact that you already taxed this money when it was earned to begin with.

As has been said, you're not being taxed on it again. The inheritors are being taxed on it. And they didn't earn it, other than through being kids who grew up in a rich family to begin with.

If instead of giving it to your kids, you paid it to your employees, they would be taxed on it. And they actually DID earn it.

The government takes a disproportionate share of rich people's money because we have a non-flat tax system. If you want to replace that with Steve Forbes' fill-out-your-income-tax-on-a-postcard dump-the-IRS flat-tax system, fine. Just picking out the estate tax to focus on and bemoan seems a little disingenuous.
posted by fugitivefromchaingang at 4:45 PM on June 8, 2006

You can make arguments against taxation in general

Believe me, I would like to :-) But I do think there are additional reasons why inheritance taxes are bad, so I don't wish to be run out of town by expanding my complaints to general taxation.

Is anyone saying that rich people are assholes, and thus deserve to be taxed?

The implication of the "enough money" argument is that people can have no legitimate use for any amount of money above X million dollars, other that enjoying the widely despised rich lifestyle. This is not true.
posted by hoverboards don't work on water at 4:45 PM on June 8, 2006

Sigh. Because MONEY isn't taxed. People are taxed when they receive money. I make $10 at my job and am taxed $2. With my remaining $8, I pay someone to cook me dinner. They are taxed on that $8, even though that $8 was previously the remaining portion of "money that was already taxed." It's not that hard. Why should passing money upon death be different than passing money in other transactions?

Well when taxes are assessed on other transfers of money, we pay equal rates more or less. You and I pay the same amount of sales tax (if we're in the same state). We pay the same FICA tax and while there are different tax brackets, we still all have to pay, with very few exceptions.

In the case of the death tax, only a tiny minority is paying the tax. The death tax taxes people, and not dollars. This is wrong.
posted by b_thinky at 4:45 PM on June 8, 2006

So the money these parents make is taxed when they earned it. Why must it be taxed a second time when they die?

Let's apply that logic to every other tax. Let's say I work for Widget's Inc. My company paid tax on the income it generated by selling widgets, why should they pay payroll tax on my paycheck? That money's already been taxed once. If they pay payroll tax on my paycheck, why should I then have to pay income tax? Now that money's been taxed twice. I go and buy a nice big flatscreen TV and I pay sales tax! Now my money's been taxed three times! And why should Circuit City now have to pay tax on the profit they got from my flatscreen? That money's now been taxed four times! And the fellow who sold me the TV? Payroll tax... five times! Income tax! Six times! (Yes, I'm using my Sesame Street 'The Count' voice here.) Mr. TV salesman goes out and buys a genuine Widget-brand widget... and then the whole cycle starts over. We can keep counting "taxes" on the same "money" ad absurdum.

The idea that we've taxed a given sum of money X times isn't meaningful because, with very few exceptions, we tax money when it changes hands. We tax transactions, not discrete sums of money. In this case, the transaction in question is a transaction from a dead person who doesn't need the money to a living person who didn't do anything to earn the money. I don't see any good reason why this particular transaction should be sheltered any more than any other type of transaction.
posted by Feral at 4:45 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?

On the upside, you can think of it as a tax deferment.
posted by bobo123 at 4:45 PM on June 8, 2006

This is NOT a priority for anyone but idealogues and rightwing thinktanks.

Wrong! You're forgetting people who stand to inherit... Oh. Yeah. Never mind.
posted by brundlefly at 4:46 PM on June 8, 2006

Hmm. Lots of good arguments for both sides. I guess I'm sitting pretty, because someday (hopefully not for a long while) I'll inherit a chunk of change from a moderately succesful relative, but he's nowhere near wealthy enough to qualify for the estate tax. Pretty damn wealthy though, from my perspective.

And say what you will about the rich, but there are plenty of currently upper-middle class, formerly middle-class folks out there sitting on a few mil they never thought they'd have (most of it's probably in their house and land, as long as the bubble holds, but still). You need far more than a mil to live the "millionaire" lifestyle these days. You probably busted your ass to get it, too.
posted by bardic at 4:50 PM on June 8, 2006

What right do those kids have to the money, anyways? They didn't do anything to earn it, at all.

The estate tax was specifically instituted to avoid creating a noble class in America, and it has worked very well for that purpose for quite a long time now. Why change that?

What about a guy worth about $5m, with 4 kids and 8 grandkids? By the time you take out the death tax, these kids and grandkids may not even have enough to buy a house.

So? So what? They didn't do anything to earn that house at all. Why do they deserve it? Because they are born into a certain family? This is an America concept?

Don't forget the critical fact that you already taxed this money when it was earned to begin with.


Unless of course you got it from your parents when they died, who got it from theirs, who got it from theirs. Which is entirely the point of the estate tax.

Proponent of the repeal are also notorious for being unable to find examples of the Estate tax actually hurting people's lives one iota.

I tend to think of the Estate tax as society's way of getting back what it gave to the super-rich. Without society (the social contract, government and all that jazz) there would be no super-rich, other than brutal dictators. The super rich owe their fortune in a very real way to the society which allows them to get so rich, and the society deserves to get a part of this back when they are dead and no longer have a use for it.

I have no pity for the rich whatsoever.
posted by Cycloptichorn at 4:50 PM on June 8, 2006

FLIP: Don't forget the critical fact that you already taxed this money when it was earned to begin with.

...FLOP: The death tax taxes people, and not dollars.
posted by troybob at 4:50 PM on June 8, 2006

My daughter didn't do anything to deserve the food or toys I buy her either. Should she have to pay some type of tax for receiving these gifts that only came upon her because she's my offspring?

Forgive me, but I feel the money I earn is family money. Tax my earnings, tax my income, tax my purchases, my property, etc, but the money I bring home should be used as I please, including giving it to the people I love. Maybe you can say they don't deserve it, but the rest of society doesn't either. I'm the one who earned it, let me decide how to use it.
posted by b_thinky at 4:52 PM on June 8, 2006

But why assume all those who qualify for the tax are "wealthy dynasties"

Because, as has been pounded to the ground already, this only applies when the inheritance is exceeding 2 million. Are you seriously telling me that people inheriting 2 million dollars are middle-class? This must be how the neocon philosophy is born.

People who inherit 5 million dollars are 'Joe-Sixpack' and 'small businessmen'. No wonder this country is consuming it's own tail.
posted by lumpenprole at 4:53 PM on June 8, 2006

hoverboards don't work on water: The implication of the "enough money" argument is that people can have no legitimate use for any amount of money above X million dollars, other that enjoying the widely despised rich lifestyle. This is not true.

That's not it exactly. The implication of 'enough money' arguments is that tax revenue should be taken from those able to afford it. Tax a poor person and they may not be able to have health insurance, which is very bad. Tax a middle class person, and they may not be able to send their kids to college, which is less bad but still a big deal. Tax a rich person, and they may not be able to afford a fifth yacht. Minimal damage at best.
posted by Mitrovarr at 4:54 PM on June 8, 2006

The implication of the "enough money" argument is that people can have no legitimate use for any amount of money above X million dollars, other that enjoying the widely despised rich lifestyle. This is not true.

You're right. That isn't true. But I'm not seeing that implication in those comments. I see no assumptions there about how the money is going to be spent.

A person could win the lottery and spend all the money supporting family and donating to charity. Does that mean the winnings shouldn't be taxed?
posted by brundlefly at 4:54 PM on June 8, 2006

What about a guy worth about $5m, with 4 kids and 8 grandkids? By the time you take out the death tax, these kids and grandkids may not even have enough to buy a house.

But what have those kids done that merits "having enough money to buy a house"?

JekPorkins: But what about stealing from the rich to give to the government?

JP, who do you think "the government" are? What do you think they do with the money that is "given" to them? Do you picture a large room like Unca' Scrooge's full of coins and dollar bills that Senators and Representives get to swim in when the mood takes them? Money that is given to "the Government" is given to all of us. Sometimes it is used to do stuff you think is terrifically important and useful, some of it is used to do stuff you think is a waste of time. It is (almost) all used, however, according to decisions that are made publically and openly by people who represent you and serve at your pleasure.
posted by yoink at 4:55 PM on June 8, 2006

My daughter didn't do anything to deserve the food or toys I buy her either. Should she have to pay some type of tax for receiving these gifts that only came upon her because she's my offspring?


Depends...when you say "toys" are you talking "speak and spell", or a professional basketball team?
posted by edverb at 4:55 PM on June 8, 2006

What about a guy worth about $5m, with 4 kids and 8 grandkids? By the time you take out the death tax, these kids and grandkids may not even have enough to buy a house. The estate tax isn't bothering someone like Paris Hilton (take away $500m of her $1b and she wouldn't even notice), but it really hurts the pocketbooks of the families worth $5m-$10m, a class of largely self-made business owners.

What a shame. Guess those kids will have to get jobs. Or, better yet, discover the same joy of self-made business ownership and become profitable small business owners with a $5m-10m bankroll. With nearly a quarter-million bucks of grubstake, that's a reasonable approach and one hell of a way to start.

"Hurting" is listening to folks whine that Daddy's inheritance won't buy them a house, while we continue to step over the hungry and the dying.

Besides, I'm not certain what the whine is about - the Bush administration has gradually stepped down the estate tax until 2010. Until that time, you have the opportunity to:

- Set up a retained life estate with a nice charity, so that your house can't be touched by the IRS and you can live there until you die.
- Liquidate any non-resident holdings.
- Set up a deferred charitable gift annuity and slam the vast majority of your liquid assets in it, so that your money can't be touched by the IRS but your kids and grandkids can get paid from it on a regular basis.
- Have the charity, at a significantly later date, sell the mansion back to your kids at an agreed-upon loss - the "fee" the charity gets for sheltering the house.

Sure, you don't get to keep 100%, but you get to keep far more than you would if you just let the feds take their cut, right?

I don't see the hardship here.
posted by FormlessOne at 5:00 PM on June 8, 2006

Proponent of the repeal are also notorious for being unable to find examples of the Estate tax actually hurting people's lives one iota.

1. The super-rich who you so despise don't pay that much tax anyway; they have access to complicated financial instruments which avoid a great deal of it. This further expands an unneccesary tax-avoidance industry.

2. It discourages savings.

3. It distorts investment in exempt assets.

Explanations of how these macroeconomic effects can actually hurt peoples' lives can be found in any economics textbook.
posted by hoverboards don't work on water at 5:01 PM on June 8, 2006

My daughter didn't do anything to deserve the food or toys I buy her either. Should she have to pay some type of tax for receiving these gifts that only came upon her because she's my offspring?

watch your step there...i know plenty of people who don't appreciate paying more to support the the how-many-years of tax deductions you got to claim simply because of your personal decision to add to the population...
posted by troybob at 5:01 PM on June 8, 2006

Tax my earnings, tax my income, tax my purchases, my property, etc, but the money I bring home should be used as I please, including giving it to the people I love.

Sure. And noone is saying that you can't do that.

In fact, one of the best ways around the estate tax is through the giving of progressively larger gifts as you grow older, setting up trusts, and generally handing out money as you please.

But you can't give money to anyone when you are dead. You can only have your will executed and that legally is subject to taxes, the same way that other transfers of money between individuals are subject to taxes.

This whole 'sympathy for the rich' thing is ridiculous. Comparing millions of dollars to toys for your kids, is also ridiculous. But of course you already knew that.
posted by Cycloptichorn at 5:01 PM on June 8, 2006

Because, as has been pounded to the ground already, this only applies when the inheritance is exceeding 2 million. Are you seriously telling me that people inheriting 2 million dollars are middle-class? This must be how the neocon philosophy is born.

People who inherit 5 million dollars are 'Joe-Sixpack' and 'small businessmen'. No wonder this country is consuming it's own tail.
posted by lumpenprole at 4:53 PM PST on June 8 [+fave] [!]

Say I bust my ass my whole life to make $2m and provide for my family. I have 4 kids. The money I've earned, which has already been taxed, is now taxed yet again before I can give it to my kids, which was my dream to begin with.

This kind of defeats the whole purpose of working and earning in the first place.
posted by b_thinky at 5:02 PM on June 8, 2006

We can pretend that the truth is something more theoretically appealing, but the real alternative to the estate tax is a society where the scions of the rich grow richer with each passing generation through no effort of their own. They suck up all of society's wealth and grow fatter and more arrogant, right up until the moment they are murdered in their beds, their homes looted, and their estates burnt to the ground.

The estate tax is one of the best ways of insuring the social stability of a democratic society when the world is almost universally tilted toward increasing the power of the powerful. Sometimes I want to shake people: do you think you're untouchable? Make a big enough target of yourself and eventually someone's going to be desperate enough take a shot.
posted by 1adam12 at 5:02 PM on June 8, 2006

...nope...the money is taxed after you give it to your kids...that's the point...if you give it to a charity, it won't be taxed...
posted by troybob at 5:03 PM on June 8, 2006

"Underlying most arguments against the free market is a lack of belief in freedom itself."
Milton Friedman
posted by b_thinky at 5:04 PM on June 8, 2006

It's simple: when you get a windfall gift of millions of dollars of unearned income, you pay tax on it.

Doesn't matter who gave it to you.

Dead people aren't taxed by the estate tax. Living people who gain from a huge unearned gift are the ones taxed.
posted by darkstar at 5:04 PM on June 8, 2006

I'm not sure why this is a big deal. Any time you receive money, for whatever reason, the government wants a cut.
posted by Brandon Blatcher at 5:04 PM on June 8, 2006

JP, who do you think "the government" are?

Millions of overpaid jackasses with too many benefits and time on their hands. Bureaucrats, mostly. And their bosses are mostly Republicans.

Money that is given to "the Government" is given to all of us.

What a complete load of crap. Unless you work for Halliburton.
posted by JekPorkins at 5:05 PM on June 8, 2006

b_thinky: Say I bust my ass my whole life to make $2m and provide for my family. I have 4 kids. The money I've earned, which has already been taxed, is now taxed yet again before I can give it to my kids, which was my dream to begin with.

This kind of defeats the whole purpose of working and earning in the first place.

Strawman.

This is only true if you assume the following:

A. You consider valueless the money left remaining after taxes (it's not a 100% tax rate, after all.)

B. You did not use any of the money you worked for during your lifetime.
posted by Mitrovarr at 5:06 PM on June 8, 2006

edverb: I'm entirely comfortable with my position. It's a progressive tax that serves (in a small way) to prevent the rise of a hereditary elite in a land where merit is supposed to matter more than fortunate birth. So I'm fine with it philosophically as well as practically. I'm glad it went down in defeat.

Well, except that the actual tax you're supporting in no way prevents "the rise of a hereditary elite." This country has "a hereditary elite" and the pitiful little estate tax is little more than a nuisance to them--one more reason to keep a good team of tax-lawyers on retainer.

So...is your philosophical position that it's nice to have a sop to the vague idea of preventing hereditary elites? Or would you actually support really doing something about it? Would you support a law that actually said--"when you die, it all goes back to the state"--and that ensured that all children in the state receive an equal stipend from the state to ensure than the playing field is actually "fair"?

Perhaps you see my point, now? Those of us who think "estate tax good" probably also find ourselves thinking "I wonder if I should invest the [modest non-estate-tax amount of] money when Mom dies, or splurge on that trip to Europe..."; but as a matter of "principle" it's not clear to me why I should get to keep that, say, $20,000, but Mrs Richy McRichypants kids have to cough up a percentage of their's.
posted by yoink at 5:07 PM on June 8, 2006

My daughter didn't do anything to deserve the food or toys I buy her either. Should she have to pay some type of tax for receiving these gifts that only came upon her because she's my offspring?

She will as soon as you give her something of real value, like cash in a bank account.
posted by Hildegarde at 5:09 PM on June 8, 2006

Well guys, it's kinda late now, so it looks like I'm going to go to bed without a chance to clear my name... if you want to think of me as some kind of right-wing maniac, then there's nothing I can do about that. But if you are considering the possibility that my intentions are good, spend some time pondering the fixed quantity of wealth fallacy and you might see where I'm coming from. Good night.
posted by hoverboards don't work on water at 5:13 PM on June 8, 2006

b_thinky:

In the case of the death tax, only a tiny minority is paying the tax. The death tax taxes people, and not dollars. This is wrong.

Not really. It's the same as income tax - everyone pays the same tax on the first $100K of their inheretence income, everyone pays the same tax on the next $1M of their inherentence income, everyone pays the same tax on the next $10M, and so on.

For income tax, the level of earnings at which you pay nothing is $10,000. Is that so terrible also? Are you suggesting that people earning $5000 a year should pay income tax because that would be more "fair"?
posted by -harlequin- at 5:23 PM on June 8, 2006

Cycloptichorn writes: I have no pity for the rich whatsoever.

And they probably don't care. I don't have a lot either, but someday I hope to out of basic self-interest. Which can be pretty ugly in certain lights, but can also serve as the basis for liberal democracy. Just ask John Locke.
posted by bardic at 5:24 PM on June 8, 2006

"Underlying most arguments against the free market is a lack of belief in freedom itself."
Milton Friedman

This ought to have an American flag waving in the breeze next to it. Maybe an eagle, too.


I don't think being against the estate tax makes one a right-wing maniac. It can be made part of a classic libertarian argument on taxes in general.

But arguing that the rich, as a minority, or something, deserve pity makes me ill.
posted by fugitivefromchaingang at 5:25 PM on June 8, 2006

For what it's worth, hoverboards, I don't think you're any kind of maniac. Don't know your various positions well enough. I just fail to see a difference between this tax and any other tax. I'll be sure to read your link, btw.
posted by brundlefly at 5:26 PM on June 8, 2006

b_thinky is just afraid the big bad government will take away his money.

not money he has, mind you, just money he wishes he had.

and the idea that a tax that only kicks in at levels over $2 million - soon to be $3.5 million - discourages savings is utterly ridiculous.

the only people that support repealing this are those that stand to benefit from its repeal, and those that wish so desperately to be in that group that they distort logic to any end necessary.

the fact that its repeal would save dick cheney's heirs more money than most of us can ever dream of having is disgusting.
posted by flaterik at 5:27 PM on June 8, 2006

I don't think being against the estate tax makes one a right-wing maniac. It can be made part of a classic libertarian argument on taxes in general.

Exactly. And that isn't an argument really being made here (or elsewhere). That it isn't is telling. So much for the libertarian right.

on preview:
and the idea that a tax that only kicks in at levels over $2 million - soon to be $3.5 million - discourages savings is utterly ridiculous.

I was trying to figure that out, myself. Do people really think, "Since my kids won't inherit 100% of my money, I'll blow it all on hookers and coke?"
posted by brundlefly at 5:31 PM on June 8, 2006

Tax a rich person, and they may not be able to afford a fifth yacht. Minimal damage at best.

other than to yacht builders...

Economics is an interesting topic. To me, to have a meaningful discussion we need agreement on terms like wealth, property, land, production, etc.

"Wealth" is simply useful shit like a couch or a municipal subway system. Capital wealth is wealth useful for making more wealth, ie tooling and factories.

We think of land holdings as capital wealth but really they are more like a claim to the productivity of the people who labor or live on it.

The hereditary wealthy, upon putting their wealth into land, become a parasitical class extracting tolls from all who labor. I saw this happen first-hand in the bay area boom 1999-2002, but lacked the perspective between naive marxism and free-marketeerism to understand this subtlety.

I could go into my Georgian thing but I'll limit my commentary to the point that discovering Georgist thought really opened my eyes to how the world really works (it's not pretty, either).

So, long story short I think income and gift taxes are still barking up the wrong tree, since we are ignoring the immense wealth the wealthy are keeping as land.
posted by Heywood Mogroot at 5:36 PM on June 8, 2006

Yoink: Well, except that the actual tax you're supporting in no way prevents "the rise of a hereditary elite."

I did say "in a small way".

So...is your philosophical position that it's nice to have a sop to the vague idea of preventing hereditary elites?

$1 trillion in revenue over ten years is well beyond the realm of "vague idea", it's real money.

My philosophical position is that I don't cry for the ultra rich when they pay some taxes. I do cry a little when I see how much of the federal budget is allocated to debt payments, as they get round after round of tax cuts.

The same people who buy into the thinktanks privately funded studies (where they invent buzzterms like "double taxation" and "death tax") don't seem to mind the debt they're passing on to their kids as a result of this lunatic policy. How is that not a "birth tax"? I bear no ill will to b_thinky, not at all -- but I can't fathom how he or anyone else can see their kids born into debt, so that some heiress who didn't need it and didn't deserve it could get a tax cut. It makes no sense to me.

Speaking of moneyed elite though...I also cry a little to think a smart working class kid worked their ass off academically (but who's family couldn't afford to send him to college) and wound up drafted into a jungle war...and at the same time some Senator's kid went to Andover, Yale, Harvard Business School, coasted on a gentleman's C and avoided Vietnam, by the virtue of his birth and his father's accomplishments. I was raised by the former.

If I have to settle for a sop for now, I'll take it. Would that it were more. And that's proportionate to my opponents on this issue. I have no illusions that the rich sponsors of these plutocrats want anything less than all they can take and more, at my expense, yours, b_thinky's (and his kids). Their greed seems to know no bounds, and they're pretty clever with the language to sell it to the masses and the well-heeled lobbyists who push it on Capitol Hill.
posted by edverb at 5:38 PM on June 8, 2006 [1 favorite]

Remember:
"It's a privilege to die for your country. It's a burden to pay taxes."

Make sense to you? Just curious.

Only estates _above_ these values are taxable (numbers from Wikipedia):
2006 $2 million
2007 $2 million
2008 $2 million
2009 $3.5 million
2010 repealed
2011 reinstated at 2002 level
posted by hank at 5:41 PM on June 8, 2006

Say I bust my ass my whole life to make $2m and provide for my family. I have 4 kids. The money I've earned, which has already been taxed, is now taxed yet again before I can give it to my kids, which was my dream to begin with.

This kind of defeats the whole purpose of working and earning in the first place.

Except that you were able to give your kids: (a) a comfortable upbringing, (b) a first-rate education, and, crucially, (c) access to a network of professional contacts which will make it much easier for them to find their own way in the world. These are advantages that many people don't have--advantages for lack of which they have little hope of ever being in your situation themselves.

But it doesn't seem to be enough for you that your children will enter adulthood so well prepared to fend for themselves. Will you be satisfied at nothing short of their never having to lift a finger? I don't think it should be a priority for the government to allow you to create four leeches.
posted by Epenthesis at 6:09 PM on June 8, 2006 [1 favorite]

b_thinky

honestly, STFU. It's one thing to believe the estate tax, but you've already admitted in multiple threads that you get off on trolling and playing devil's advocate. So stop pushing beliefs you don't stand behind because you have nothing better to do.


As for the estate tax, boo fucking hoo for the millionaires. As someone whose family is actually affected by this, it's not hard to get around with time and an estate planner. Additionally, what many of you may not recall is the Waltons and three other billionaire families have spent roughly half a billion so their families can save 80 billion and basically make themselves an aristocracy. If that doesn't scare the crap out of you you don't deserve to call yourself an American.

And spare me the Family farms/small business angle. If we were truly interested in helping them we'd just exempt them. But this whole thing is about saving 5 families worth many billions money.
posted by slapshot57 at 6:21 PM on June 8, 2006

Say I bust my ass my whole life to make $2m and provide for my family. I have 4 kids. The money I've earned, which has already been taxed, is now taxed yet again before I can give it to my kids, which was my dream to begin with.

This kind of defeats the whole purpose of working and earning in the first place.

That's the stupidest fucking thing I've read all week...
posted by SweetJesus at 6:23 PM on June 8, 2006

From Hoverboard's link:

"The recent proof of this is that the price of the earth's allegedly scarce and disappearing resources - such as oil and metals - has actually been going *down* in recent years, that is, *usable* supplies of them have been becoming *more abundant*"

(I'll leave the oil graph to the reader's imagination.) So much for the, uh, value of that viewpoint. The author wails on the Marxist strawman while ignoring reality around him, that an immense quantity of wealth -- eg. oil, copper, aluminum, was essentially stolen from the 3rd world over the past century. PNAC is all about continuing this run (against our main competitors for the bounty of the powerless, the Euros and Chinese), but it looks like they've ran us into a ditch, and hard.
posted by Heywood Mogroot at 6:26 PM on June 8, 2006

Only estates _above_ these values are taxable (numbers from Wikipedia):
2006 $2 million
2007 $2 million
2008 $2 million
2009 $3.5 million
2010 repealed
2011 reinstated at 2002 level

And keep in mind that those numbers are per person, not per couple. So your average, everyday millionaire family can theoretically leave up to $4 million in total without running afoul of the tax.
posted by schoolgirl report at 6:48 PM on June 8, 2006

I can't help but chime in here. I often lurk and rarely post due to blood pressure limits imposed by my holistic snake handling faith healer. :-)

First, off, why does the government deserve more of my family's money? Frankly, I don't mind paying the appropriate level of taxes for things the government was intended to do. But at this point, I sure see a lot of wasteful spending on their part. When has the government ever proven that they are fiscally responsible and can spend my family's money wisely?

Secondly, I don't buy the argument that it's OK to be taxable just because it is another transaction. I think that everyone would agree that an inheritance is usually more than "just another transaction". Given an earlier example, if my father passes away and leaves me his home and a few acres - why should I be forced to sell it just to pay taxes? What about small businesses - the backbone of the economy in America? Lot's of small businesses are barely solvent financially but have property and assets not easily convertible to cash for taxes.

Thirdly, the moribidity is appalling. Does the government really NEED my father to die in order to function next week? Of course, I am taking a small example and applying it to the extreme. Is this such a huge deal that we should even be concerned about it? I suspect that the estate tax affects far more familes people than most of us think - but at lower monetary threshold levels than commonly believed. I personally know many familes in past years that this HAS affected, and they certainly weren't what I would consider rich families.

Fourthly, seems to me that a lot of proponents are not forward thinking. This very situation might actually apply to YOUR family some day. All you guys who cashed out your stock from Silicon Valley in 2000, get ready. And so forth. Hope you have your estate planning in order.

Fifthly, somebody remind me again how pissing capital down the black hole of government is good for our nation's economy? Take even the worst case extreme, the guy who inherited a cool million cash from Daddy Warbucks. At least this will be invested, spent, or otherwise remain useful to society in the form of usable capital - "churned" if you will. Government, being so far in debt, has already spent what it doe not have and thus the money going in has no relatively useful purpose to support our own economy.

I submit to you, MeFites, that there has to be a better way of collecting taxes for our government. I pay taxes on payroll, Medicare, Social security, state income taxes, capital gains, property taxes, licenses, fees, tokens, occupational tax simply for having a job, even sales tax on everything I buy from a candy bar to a vehicle to my home. And on and on.... ad nauseum. Even after that, the government STILL wants a chunk of my "stuff" when I kick the bucket? How in God's name did we ever get to the point where this is even an issue???? I would suggest to you good citizens, that we need true TAX REFORM and change in the fundamental process of taxation and governmental spending. In the overall scheme of things, an estate tax simply CAN'T be THE answer. And if THAT is the concept that our elected officials can't get a grasp upon, then we need to excercise the principle of voter-imposed term limts at the ballot box.
posted by insulglass at 6:58 PM on June 8, 2006

That's the stupidest fucking thing I've read all week...

Pshaw! There aren't any stupid people who post to MetaFilter!
posted by oaf at 6:59 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?

I remember being told in school that the estate tax was a relic from the founding fathers of the republic- they wanted to break away from the European model of entrenched plutocracy, and redistribute wealth to some degree between generations.

There's really nothing especially holy about the US, the founding fathers, etc. The whole idea of representative democracy & economic justice has about run its course and is ready for the great ideological scrapheap anyway.
posted by squalor at 7:12 PM on June 8, 2006

I always think of this Tom the Dancing Bug comic anytime "double taxation" arguments come up. Having government collect a portion of money when you're omg! dead! is a whole lot less annoying than virtually any other time it comes up. Keep that, go after some of the others if you feel like going randomly apeshit.
posted by furiousthought at 7:19 PM on June 8, 2006

Y'know, there's just something special about how you can look anywhere in this country- government, newspapers, television, even MetaFilter- and compare the time spent debating health care for the poorest Americans and schools for the poorest of our children with the time spent debating tax cuts for dead rich people that just makes you want to find the nearest person and vomit all over them.
posted by XQUZYPHYR at 7:29 PM on June 8, 2006

Just to remind y'all how it works:

via
posted by squalor at 7:34 PM on June 8, 2006

insulglass:

why does the government deserve more of my family's money?

See above. You're asking the wrong question. Our government is providing public goods and services, so we as a nation need to pay for these.

Frankly, I don't mind paying the appropriate level of taxes for things the government was intended to do. But at this point, I sure see a lot of wasteful spending on their part. When has the government ever proven that they are fiscally responsible and can spend my family's money wisely?

ca. 1993-2000.

Secondly, I don't buy the argument that it's OK to be taxable just because it is another transaction. I think that everyone would agree that an inheritance is usually more than "just another transaction". Given an earlier example, if my father passes away and leaves me his home and a few acres - why should I be forced to sell it just to pay taxes? What about small businesses - the backbone of the economy in America? Lot's of small businesses are barely solvent financially but have property and assets not easily convertible to cash for taxes.

Talking point that is largely BS since the Estate Tax covers million dollar estates. To disarm this silly argument, let's pick a number, say $100 MILLION, to impose the Estate Tax on.

Thirdly, the moribidity is appalling. Does the government really NEED my father to die in order to function next week?

Of course not. Government has immense amounts of credit at its disposal to tide us over until your old man shuffles off. Well we did, until the Bushites took over the government.

Of course, I am taking a small example and applying it to the extreme. Is this such a huge deal that we should even be concerned about it? I suspect that the estate tax affects far more familes people than most of us think - but at lower monetary threshold levels than commonly believed. I personally know many familes in past years that this HAS affected, and they certainly weren't what I would consider rich families.

U-huh. So we need to give the Walton family a free ride based on this non-evidence?

Fourthly, seems to me that a lot of proponents are not forward thinking. This very situation might actually apply to YOUR family some day. All you guys who cashed out your stock from Silicon Valley in 2000, get ready. And so forth. Hope you have your estate planning in order.

I consider it an honor to pay taxes to the greatest country on Earth. Why don't you? Why are you so Anti-American?

Fifthly, somebody remind me again how pissing capital down the black hole of government is good for our nation's economy?

What black hole? You remove Federal Spending and millions upon millions of people will be thrown out of work. The Bush economy has been based on two things: easy credit and public sector employment. cf. the DOD. Their budget -- what, $500B now, provides 5 million jobs at $100k/yr, and THIS money then pings around our economy a couple more times.

Granted we could be doing something more productive with the money like investing in infrastructure instead of blowing Arabs up, but hey.
posted by Heywood Mogroot at 7:35 PM on June 8, 2006

The estate tax isn't bothering someone like Paris Hilton (take away $500m of her $1b and she wouldn't even notice), but it really hurts the pocketbooks of the families worth $5m-$10m, a class of largely self-made business owners.

Most of my money comes from endorsements, commercials, modeling and so on. I won't inherit all that much due to the large size of my family.
posted by Paris Hilton at 7:44 PM on June 8, 2006

And say what you will about the rich, but there are plenty of currently upper-middle class, formerly middle-class folks out there sitting on a few mil they never thought they'd have (most of it's probably in their house and land, as long as the bubble holds, but still). You need far more than a mil to live the "millionaire" lifestyle these days. You probably busted your ass to get it, too.

Yeah, 2% of the population. /rolls eyes.
posted by Paris Hilton at 7:48 PM on June 8, 2006

Inane. In ancient Greece, you could sue a rich dude just for being rich and not living up to their social obligation. I'd stroll into court, file a complaint that Richus Toomuchus has too much money and should build us a trireme to better protect our city, which not coincidentally includes the area where Richus keeps all of his valuable shit. And then there'd be a trial, with a debate, and all things being equal, Richus Toomuchus would be told (more times than not) to pay for a new trireme. The argument that seemed to be historically most effective? That of social obligation. Those with the most stuff benefit the most from the collective security and safety of society, on account of the disproportionate share of the wealth they possess , a share that would be collectively secured by the work that others do in order to maintain a smoothly functioning and militarily secure socio-economic system.

But then some idiot had to come up with a more absolutist concept of property rights, and then some jackass thinktanks spent time and money telling everyone "it's your money, it's your money!" A claim that is then followed by some sort of pithy "you can't trust the government to correctly spend _your_ money" and a bunch of people nodding greedily. This would be merely a sad shift in social mores, if not for the fact that it's an utterly insipid claim. It's not your money. Money garners its value from actions going on all over the country, from decisions made by the Fed, by exchanges of international currency. So having your money is, at an essential level, an empty claim of the highest order, since having money means nothing if not for the aggregate actions that lends value to that money, action that involves people who you will probably never know, much less meet. At a pragmatic level, you make "your" money by having police protect your right to work, by having work conditions that are regulated for safety and minimal labor rights, by having standards and banking policies that combat counterfeit and fraud, and so on and so on.

So now we get the "waaah, I'm so rich, I don't want to have my money, which I worked so hard for, get taxed again when it's given to my children." It's not yours, it's not theirs, it's a collectively constituted value, of which you claim a disproportionate share. In which case, you'd be a complete and utter jackass to demand that you pay equally so that society can work disproportionately on your behalf (and they do - to pick an easy example, let's just think of all the stuff that the government does, just from legal and political standards, to help Bill Gates be as successful as he is, they're being paid with others money to debate and produce laws in accordance with tech standards, enforcing increasingly ridiculous intellectual property rights laws, etc, not to mention the police protection and response he could command - and btw, Bill is apparently fine with having his estate taxed, so I only pick him as an easy example of disproportionate allocation of state resources).

And even if the "your money" argument was remotely coherent, it would still be outweighed by concern over the publci good. The estate tax is what prevents an American aristocracy, and if anything we need to up that tax rate, not limit it. Case in point: Paris Hilton. Any system that would reward and/or produce Paris Hilton, a waifish moron with bad hair, who can become famous for being famously rich, needs higher taxation, not less.
posted by hank_14 at 8:00 PM on June 8, 2006 [7 favorites]

Either b_thinky or I don't understand the estate tax, here is what I think would happen in his scenarios:

What about a guy worth about $5m, with 4 kids and 8 grandkids? By the time you take out the death tax, these kids and grandkids may not even have enough to buy a house.

$5,000,000 - $2,000,000 = $3,000,000 (first $2,000,000 exempt (would be $4,000,000 if your guy was married))
$3,000,000 * .55 = $1,650,000 (estate tax)
$5,000,000 - 1,650,000 = $3,350,000 (total left over from your $5,000,000)
$3,350,000 / 4 = $837,500

Each kid would get $837,500. Maybe they can get an used house trailer or something.

Say I bust my ass my whole life to make $2m and provide for my family. I have 4 kids. The money I've earned, which has already been taxed, is now taxed yet again before I can give it to my kids, which was my dream to begin with.


$2,000,000 - $2,000,000 = $0
$0 * .55 = $0
$2,000,000 - $0 = $2,000,000
$2,000,000 / 4 = $500,000

If you only had $2,000,000, the estate tax would make no difference in the amount your kids would get.
posted by Sirius at 8:01 PM on June 8, 2006

Can anyone give a good reason why the government should have the power to take people's money when they die?
posted by JekPorkins at 4:17 PM PST

Because that is a better deal than taking it when you are alive.

(and you disappoint Jef. No complaints about the tags?)
posted by rough ashlar at 8:01 PM on June 8, 2006

I am glad that Paris is now a MeFite, though.
posted by hank_14 at 8:01 PM on June 8, 2006

I don't see how anyone can support this morbid death tax with honest intellect and a straight face. It's always fun to figure out ways to spend other people's money that you have no entitlement to. I hate how the pro-tax vultures will justify this piracy by pointing to the ultra-rich like Dick Cheney or Paris Hilton, as though it's a great idea to make a punitive tax system to punish offenders (those who earn wealth) and prevent them from passing on their hard earned money to their children.

If you really want to see a group of over-entitled pricks who don't know the value of a dollar, look no further than the kind folks in government who live off of, and figure out fun ways to spend people's money.

This is a very interesting argument though. On one side, there are the people who think we should be allowed to do as we wish with the money we've earned and already paid taxes on(!). On the other hand are those who think we are all entitled to large portions of a person's life work upon their death. It will be interesting to see who wins.
posted by b_thinky at 8:02 PM on June 8, 2006

Paris Hilton Tax: Can't we all agree that naughty sluts should be protected?
posted by BillyElmore at 8:07 PM on June 8, 2006

b_thinky, I wouldn't preface that last claim with any shout-out to intellectual honesty. The estate tax does not, as your intimate, "prevent them fro passing on their hard earned money to their children." Rather it reduces the amount of money passed on to those children. Much like income tax does not prevent you from earning any money, it just reduces the amount of take-home pay.

And the argument about how government agents are bad, bad, bad, and live off other people's money, well I would suggest that you spend a little bit of time a) thinking of other strawmen, and b) researching where big corporations get funding for some of their more adventurous efforts (import-export bank, no-bid contracts - good places to start).

Do politicians make a career spending other people's money? Umm, sure, because they do write up and approve a budget. Do they have poor spending priorities? Yup (cue Iraq War 2). That's just a reason to hold them more accountable for their priorities, not try to rig the game by taking away the money they could use on priorities of greater value.
posted by hank_14 at 8:08 PM on June 8, 2006

JP, who do you think "the government" are?

Millions of overpaid jackasses with too many benefits and time on their hands

And somehow the 'repeal of the death tax' will change this?
posted by rough ashlar at 8:11 PM on June 8, 2006

I don't see how anyone can support this morbid death tax with honest intellect and a straight face.

The tax law has been designed to be regressive...to have the people who've benefited most from the system to pay back into the system.

I'd love to see freeloaders punished. I'd love to see 2.3 trillion missing from the penta\gon alone tracked down. But the worthless system in place is what American's got. The rich have benefiteed from the Iraq war and the petro-dollar - let them pay for the war and the petro-dollar.
posted by rough ashlar at 8:16 PM on June 8, 2006

death tax

I'm surprised you all're even listening to someone who doesn't even know what the estate tax is called.
posted by oaf at 8:16 PM on June 8, 2006

(And by listening to, I mean so much as dignifying their posting with a response.)
posted by oaf at 8:16 PM on June 8, 2006

Yeah... The rich ARE a minority... Just ask The Onion...
posted by symbioid at 8:17 PM on June 8, 2006

It is nice to claim that the state needs more tax income in order to benefit those in need, but the reality is that the vast majority of the federal government goes to support the military. Estate taxes are simply going to feed the war machine, paying off the current bizarre conflict and encouraging the next.

Paris Hilton's inheritence is going straight to Dick Cheney and the rest of the military-industrial complex.

Would you rather have dumb sluts throwing stupid parties, or angry hawks starting stupid wars? Those in need aren't getting shit, Just ask anyone who survived Katrina.
posted by b1tr0t at 8:26 PM on June 8, 2006

An inheritance is unearned income.

We should be prepared to pay tax on our unearned income to do our civic duty to support the infrastructure that enable us to enjoy life the way we do.

Beyond that, I think Epenthesis' comment says it all pretty eloquently.
posted by darkstar at 8:41 PM on June 8, 2006

This is a very interesting argument though. On one side, there are the people who think we should be allowed to do as we wish with the money we've earned and already paid taxes on(!). On the other hand are those who think we are all entitled to large portions of a person's life work upon their death. It will be interesting to see who wins.

You can do what you wish with the money. Your children, however, cannot do what they wish with money that they didn't earn.

There are strict rules governing gifts inbetween people; why wouldn't this count as a gift as well?

Oh, and that person's 'life work' was probably a hell of a lot more than just the pile of dough they had left at the end. You're coming off pretty materialistic in this discussion, yaknow?
posted by Cycloptichorn at 9:10 PM on June 8, 2006

I see a very simple solution to the whole problem.

The rich should have moved to a part of the world where they would be exempt from the Estate Tax before they earned their money.

Living in our society didn't give them an edge or anything. They're such hard workers, they could have made over $2 million in Sub-Saharan Africa, right?
posted by RalphSlate at 9:20 PM on June 8, 2006

From hoverboards don't work on water link:
"If, on the other hand, wealth *can* be destroyed, but *can't* be created, that would mean that the sum total of the world's wealth must inexorably be diminishing, what with all the capitalism we've been having lately.
So how come even the rich white folks are still getting three square meals a day? How could that possibly be happening? And anyway, doesn't *consuming* a meal reduce the sum total of wealth in the world, to the tune of one meal? Where's it all coming from? Where the wealth is coming from is: people are creating it. I realize this must all sound very obvious to most of my readers, but I am describing how to knock sense into the heads of some extremely stupid people. - Brian Micklethwait"

That's the stoopitest thing I've read in a while. But basically - the Sun. We get/got a finite amount of energy from it. It's where all our energy comes from. Intellect/creativity is very useful, but it only facilitates the transition and form of that energy into wealth. Only a certain amount of phase shifting is possible and none of them are gains.
Of course, if we wanted to really create wealth without being linked to that nasty reality check energy system we could hold a gun to people's head and force them to take the money we print out at will.

...but that'd be just wacky.

The bottom line is energy, not force or novel inflammation of desire. In the long run, meeting basic human needs, improving human health, and supporting a natural world that can sustain us will require that we control consumption, rather than allow consumption to control us.
(I read that somewhere)


"That of social obligation. Those with the most stuff benefit the most from the collective security and safety of society,
on account of the disproportionate share of the wealth they possess, a share that would be collectively secured by the work that others do in order to maintain a smoothly functioning and militarily secure socioeconomic system." - hank_14

Dammit, you said that way better than I was going to.


"It will be interesting to see who wins." - posted by b_thinky

I'll have to go with the guys who have the guns and bullets instead of the paper dollars.

But it's going to happen anyway, whether now or a few hundred years. It's simply more efficient to lock energy (wealth) into the system in as broad a manner as possible.

Certainly spikes for certain highly productive individuals will be seen - but that's covered now.

The creativity Brian Micklethwait speaks of doesn't come from a small group dominating a large chunk of the resources, but from necessary resources (education, training, basic needs, free time) made available to as many people as is sustainable and the diversity of perspectives, thought, etc. etc. increases. So, he's right in a way, but you have to cast your net, because there are always monkey smart folks who want to game the meritocracy.

Well, equality tends to put the kibosh on that. And the more interconnected relationships wealth (energy) is dependant on, the more dynamic stability there is.

All generally speaking of course.

One could ask why the family structure should be privileged for the free movement of wealth and other structures not.

As, y'know, is sort of happening with homosexuals.

Structurally one move is not more efficient or more certain of worthwhile investment than another.

Indeed the children of many industrious productive individuals are not stellar performers themselves.

It's a community, no one makes wealth without the support of others (so you made a spear, killed a deer and stitched your own clothes did you?) Why does Joe Heir get the benefit of blowing that on Crystal and hookers, while the next Einstein is sitting in a moldy rotten shack in Baton Rouge dying from hepatitis because his mom doesn't have health insurance?

So why shouldn't we have some merit system in place for the inheritance of wealth rather than arbitrarily giving it to some kid who's only worth is being born to some guy who works hard?

It's a better idea than basing it on touchy feely ideas like "Gays' shouldn't do it" or "he's my kid" like there's some sort of deserving to it.

And it would certainly force parents to focus on what they can instill and teach a child rather than on what they can give him.

This "death tax" b.s. is just super-rich folks pulling for their side, but they're relying on rote thinking and inefficient, and by now, potentially dangerously antiquated systems of cooperation.
posted by Smedleyman at 9:49 PM on June 8, 2006

I may have missed this being mentioned already, but the whole campaign to repeal the estate tax has been funded by eighteen of the wealthiest families in America. That would be the guy on the right on the top tier of squalor's pyramid, for those of you following along at home.
posted by gamera at 9:57 PM on June 8, 2006

But basically - the Sun. We get/got a finite amount of energy from it. It's where all our energy comes from.

More accurately in the present era, banked solar energy in the form of fossil fuels. We could never live at the current level on the energy account from insolation. Our society consumes -- literally burns -- the equivalent of 400 years of the biosphere's primary productivity every year. Which leads us into something of a derail, but there is simply no way to look at the world today without putting oil at the very center of your thinking, because there is no artifact of modern, first-world life that doesn't derive directly from it.
posted by George_Spiggott at 10:11 PM on June 8, 2006

I just read Dune for the first time. Maybe we need people to go around collecting H20 from our corpses. Because that belongs to the tribe.
posted by bardic at 11:03 PM on June 8, 2006

Only estates _above_ these values are taxable (numbers from Wikipedia):
2006 $2 million
2007 $2 million
2008 $2 million
2009 $3.5 million
2010 repealed
2011 reinstated at 2002 level

Looks like 2010 is going to be a busy year for undertakers who deal with billionaires.
posted by Skygazer at 11:22 PM on June 8, 2006

I may have missed this being mentioned already, but the whole campaign to repeal the estate tax has been funded by eighteen of the wealthiest families in America.

There was a previous post about that, in fact.
posted by homunculus at 11:26 PM on June 8, 2006

have you guys seen the frontline about the marketing guy who is responsible for all of these republican talking points/memes? he's the asshat who came up with the phrase "death tax." that phrase was carefully chosen to be as repulsive as possible, to get people off of rational thought about this issue and into emotional thought. pure karl rove, actually.

the people running around spouting "death tax", in short, have had their brains hacked. you have a brain-virus which was designed to suspend your higher thought processes and engage your amygdala directly. its probably hopeless from this point forward, as the manipulators have started using the most advanced psychological techniques known to man.

i am a rich person. i support the estate tax, and many others here have put forth more eloquent arguments than i ever could have made. i have no fear that my offspring will be well-taken care of, between the exemptions, regular trusts, GSTs, etc. etc. seriously, how is it that we have kennedys, gates, rothschilds, rockefellers, hearsts, and hiltons running around if the estate tax is too high? why does bill gates sr. support the estate tax?

a pet theory that i've had for a while is that people think that all this shit was already here, and was always here, perhaps put here by god. but that is wrong. there was a time when this whole country looked like the great plains, or yosemite, or whatever. but now everwhere you look there is infrastructure that was paid for by american taxpayers, that was built by local, state and federal governments. things that private concerns would have never built if left to their Smithian devices. LIKE THE FRICKIN' INTERNET, just for example. or the federal highway system. the federal government saved this whole mess from the depression, after all. GET REAL, PEOPLE.

obviously i am completely opposed to bush, his war, his corporate welfare, and his record deficit spending and would prefer not to support this insanity with my tax dollars. but as an american, it is my duty to support this country and its government, whether asshats like bushco. are in charge or not, and hope that some day there's enough of a shred of democracy left that we can elect someone else.
posted by joeblough at 11:26 PM on June 8, 2006

b_thinky writes "Should she have to pay some type of tax for receiving these gifts that only came upon her because she's my offspring?"

If you're giving gifts of more than 10K a year yes.
posted by Mitheral at 11:27 PM on June 8, 2006

A poll conducted by Time/CNN on the estate tax issue in 2000 revealed that 39 per cent of Americans believe that they are either in the wealthiest 1 per cent or will be there ‘soon’.
heh. Is this the real definition of 'illusions of grandeur'?
posted by Cranberry at 11:34 PM on June 8, 2006

One thing often overlooked in this debate is that the rich are the population that is being served the best by the current economic system. Born into money/the upper class and you have a fantastic leg up even if you only get to keep a few of dad's millions. Since the wealthy are the best served by the system they should be the ones paying the lion's share. Let's call it taking personal responsibility.
posted by pointilist at 11:43 PM on June 8, 2006

I think I've just figured out why so many Americans are so whiny about paying taxes It's because they just don't get the best stuff from their government.

My government has given me: good healthcare throughout my life, support for my family should we fall on bad times, and an excellent education right through to university. That's not even touching the good public transit in my home city (as much as said governments are chipping away at it), and all the infrastructure (like highways to get across the country).

Your government taxes almost as much, and you get less stuff. But that's not your government's fault - it's your fault. The civil servants just do their jobs -- you (collectively the whole country) vote for their bosses. If the government isn't doing a good job in giving you good stuff, you have only yourself (or your fellow citizens) to blame.

----------------

More seriously: the government is not a freaking black hole. They are a non-profit institution which make the country function, an institution controlled by the citizens.

To repeat what joeblough said, civilized society and all the wealth and income of the United States, for better or for worse, rests on :

infrastructure that was paid for by american taxpayers, that was built by local, state and federal governments. things that private concerns would have never built if left to their Smithian devices. LIKE THE FRICKIN' INTERNET, just for example. or the federal highway system.

There is a reason you can be wealthy in the United States and not employ your own private army.

You are all telling yourself pretty lies about how you are so independent, so self-made -- no one is independent. They all become wealthy in the context of a society.
posted by jb at 12:23 AM on June 9, 2006

That said, there is a problem with Britain's current estate tax, as the taxable level is set too low and more people are starting to owe it just for owning a house. But that isn't grounds for repealing it, just grounds for revising it.

I think it would be sensible to get away from set figures all together, and go for a proportional one. The point at which the estate tax kicks in, for instance, could be set at "estates in the 2nd percentile or higher". with an exception for anything below that level (ala income tax, where you don't pay on your first $10,000 or so). That way you wouldn't have to rewrite the law everytime the property market bubbled or inflation set in. You would just have to pick a periodic time to refigure out what 2nd percentile means.
posted by jb at 12:28 AM on June 9, 2006

One thing often overlooked in this debate is that no person bequeathing their wealth ever has to pay the estate tax.

They're free to donate their wealth to charity, in which case the gubmint will not see a red cent.

It's painfully ironic that people are up in arms about a tax on income people haven't earned, while not a peep can be heard about income that people *have* earned. What's wrong with working for a living? Why is income from labor taxed? Taxes are usually reserved for bad things: alcohol, tobacco, things which we'd like to punish people for doing. Speeding tickets are a tax.

Before we even start talking about taxing people on income that they haven't earned, why don't we stop taxing people on income they have worked for under the sweat of their brow? That's genuine double, if not triple taxation: first you pay with your time, an irreplaceable item, then you pay with your grief (if work were fun we wouldn't call it that) and then we pay taxes on top of that. All for an performing an activity that without question benefits society.

So let's talk about the income tax. Tax on money people have actually earned. When we've got that taken care of, I'll be happy to discuss your concern for Paris Hilton's inheritance.
posted by mullingitover at 12:34 AM on June 9, 2006

yes, jb, i was just thinking about that. most of these "TAXES ARE THEFT!!!111" libertarian types i think are deluded into thinking that they are a) either the only people in the world, or b) the only people in the world that know what they are doing, or c) the marlboro man, out there alone on the plains, workin' hard for their family.

the lone individual achieving greatness in a vacuum is a fiction of Ayn Rand and other libertarian nuts. Everyone, EVERYONE, every last damn human stands on the shoulders of their ancestors, benefitting from the knowledge they won, or the money they earned, or whatever. you have had help every step of the way. your parents helped you, your friends helped you, issac newton helped you, einstein helped you, eisenhower helped you, ad infinitum. and in turn, you owe something back to everyone.

There is a reason you can be wealthy in the United States and not employ your own private army.

yes. and that is precisely my worry. we have something very special here that the right is currently trying its damnest to destroy. if you want to see where they are going with all the tax cutting, etc. take a look at brazil or any other latin/southern american country. completely bimodal distribution of wealth in many cases. if you are rich you have to employ people to guard your house, build a wall around your house, and have bodyguards with you at all times to avoid being kidnapped. THIS IS INSANITY. i do not want to live like that. i want to pay my taxes, make sure there is a middle class, and be happy.
posted by joeblough at 12:53 AM on June 9, 2006

I'm surprised and yet not surprised that nobody's taken this position yet, but I'm a child of one of the 13,000 estates currently taxable under this plan. When the cap raises (as far as I can tell) I'll be a child of one of the 7,000 estates then taxable. Here is my story.

My grandfather's family moved to Ohio from Germany. There, he met my grandmother, whose family had immigrated from Wales. After an off-an-on relationship they got married, and eventually gave birth to my mother. In this time, my grandfather had managed to meet enough people and prove his talent that, after his time in WWII, he moved down to Houston and rose to a position in the Texas trucking industry. He accumulated his wealth wisely, and (with a Mexican friend he had made in his less fortunate years) essentially re-founded Acapulco into a successful resort town from the poor fishing village it had been before. An able Gin player, he once won another resort in a hand of cards, again in Mexico, at Lake Tocuscatengo. The Resort was ruined by perrenial flooding due to the lake's overflow, but he installed an innovative drainage syatem and fixzed the resort, and gave it to his son (my uncle) as a sort of gift/responsibilty. He continues to invest (and play gin) tthish day, those his fortunes are mostly in junk bonds which he monitors daily.

My other grandfather was not so fortunate, though he also served in WWII, and was on the beach as MacArthur gave the numerous takes of his "I Shall Return" speech until he got it just right for the cameras. He returned home shortly before the wars end, and my father was born two months before D-Day, to the lowest rung ever possibly considered "middle class," even in Dallas in the forties and fifties. He was almost expelled in sixth grade for his troublemaking, but turned himself around and, by the end of high school, had gotten accepted to MIT as part of their newly minted Computer Science program. He couldn't afford to go, so the Dallas Morning News raised money for him to have a free ride to Southern Methodist University, and got my grandmother a job in the geology department as well. SMU created their computer science program around him, as he was the first to major in it, and while there, he met my mother in a fashion which I won't describe here, but puts all romantic comedies to shame.

Computers weren't in my father's future, but my mother was, and he worked on oil rigs to pay his dues before taking a job in oil machinery. He rose up the ranks slowly, proving himself, and taking lessons from my mother's father, who had led much the same journey. My older brothers and my sister were born and cared for, and eventually me as well. As a child, our lives weren't extravagant, but we never wanted for anything that we really needed. True, when I was seven and wanted a Nintendo, I had to work jobs in the yard to pay for it myself, but that was simply to teach me about responsibilty. My dad knew that, for all outside appearances, our family's wealth was rising, and he didn't want his children to become decadant. Looking back, it's almost alarming that he can show the same degree of devotion to us that he shows to mom, but he does. During his midlife crisis, when he wanted a little sports car (easily within his spending range) my mom had to spend three months convincing him that he could spend that kind of money on himself.

In Houston, we were upper-middle-class, but all my real needs were taken care of. When I had trouble in school, my mom hired a private tutor (and had my sister go as well, just so that she'd be beter prepared for college) and I was constantly pressed to go to private scfhool, which my parents couldn't afford for my siblings but wanted desperately for me now that they could. (I refused, out of issue with School Uniforms, of all things.) But when I was fifteen, and essentially an only child, my dad got a promotion which moved us to Bartlesville, Oklahoma. He was to head the second-largest company in town (behind Phillips Petroleum) in the second-richest-per-capita town in the country. In short, I was the rich kid in my class, but the most common response I heard to people first coming to my house was, "Wow, I never thought you were rich." My parents had tought me well.

I got into NYU, and though I had a few gimme scholarships, most of my tuition fell into the lap of my father, who was mor than happy to pay the exorbinant fee for me to go to film school two-thousand miles away, such was his faith in me. And while the pursuits of my siblings and me have been, to say the least, a little more "flight" than his, his faith has never waivered. He just gives us a bit of tough love whenever he feels we're not pushing ourselves enough towards our goals, and gives us a bit of money when he thinks we might need it to carry on with our dreams. He's self-employed now, and more successful than ever, building a family business in his retirement and working out the kinks in the business should any of us one day take over.

So after all that, do I need to tell any of you why I deserve for my inheritance to not be taxed by government lackeys with no idea of what my family has gone through?

Well I'll tell you...

...no goddamn reason at all.

I didn't earn that money, and neither did any of my siblings. We're extraordinarily lucky to just be the shildren of people as inspiring as our parents are, not to mention to get the kind of moeny which would allow us a safety net to follow dreams most people could never dream of. I can't imagine taking that money, when that awful day eventually arrives, and thinking that, well, this is nice, but I'd rather I had more of it than having it go to that soldier's body armor, or to that soldier's wife, or to that school in the Bronx which, if it were a little better, might inspire a little troublemaker to turn himself around.

Call me greedy, but as far as I can tell, my family's fortune was built in part by ingenuity, and by a lot of good public infrastructure. If I can't pay some of it back, then I'm not respecting where it came from.
posted by Navelgazer at 12:57 AM on June 9, 2006 [6 favorites]

Sorry about my spelling.
posted by Navelgazer at 1:50 AM on June 9, 2006

and by a lot of good public infrastructure. If I can't pay some of it back, then I'm not respecting where it came from.
posted by Navelgazer at 12:57 AM PST on June 9

Exactly. Tax dollars pay for you to be 'safe' on the streets, to HAVE streets to get goods to you, and the whole petrodollar and the infrastructure that has kept the dollar as the way oil has been traded.

"The Rich" may hate the bottom of the pyramid and the freeloaders in that location, but if there weren't getting $5k a year in food, what would they do in response to emply bellies? Get a job or commit crimes so they can become a $30k a year expense to the state?
posted by rough ashlar at 3:55 AM on June 9, 2006

The term "death tax" is not remotely new.

Free capitalism, the sort touted by libertarians, is only suited to saints living in paradise (eg, Galt's Gulch). Get over it. It's a utopian philosophy, as flawed as Marxism.

What would all these rich people do without young bodies to send to war, to die, to protect their wealth? So now they don't want to pay their taxes? Guess what? The Chief of Police didn't get his paycheck this month. He'll be calling by your house latter, to 'discuss' the issue.
posted by Goofyy at 4:11 AM on June 9, 2006

I don't see how anyone can support this morbid death tax with honest intellect and a straight face.

Dearie, some kind advice here: when you call it the "death tax," most people can't look at you with honest intellect and a straight face.
posted by XQUZYPHYR at 5:31 AM on June 9, 2006

This defeat of the permanent repeal effort is a major triumph for the 98% of Americans who've never been in danger of having to pay the tax...

Not really. The Estate tax raises only a fraction of one percent of GDP. Retaining the estate tax means that 98% of Americans will each receive a benefit so small that you'd need a microscope to see it. The victory here is entirely conceptual and ideological, rather than practical or financial.
posted by gd779 at 6:25 AM on June 9, 2006

gd779: so this ... "one trillion over ten years" ... is BS?
posted by Heywood Mogroot at 6:59 AM on June 9, 2006

if I may interject regarding the estimates of one trillion over ten years:

This cost includes $776 billion of lost revenues and $213 billion of higher interest payments on the national debt. Each year of repeal would cost roughly the same, in today’s terms, as everything the federal government now spends on homeland security, and more than it now spends on education.

Priorities.
posted by edverb at 7:44 AM on June 9, 2006

gd779: so this ... "one trillion over ten years" ... is BS?


Essentially. Here is a post by Harvard economist Greg Mankiw where he points out that, discounted for present value, the immediate repeal of the state tax would probably result in a loss of $250 billion dollars from 2006 to 2015. And that assumes static scoring (that is, it assumes that the repeal of the estate tax would have absolutely no impact on the behavior of taxpayers and absolutely no impact on economic growth - Professor Mankiw believes that this is not true, and that the economic impact from repealing the estate tax may in fact be offset by these factors, but he acknowledges that reasonable minds can disagree on that point).

Essentially, the $1 trillion dollar figure (as cited by edverb above) is calculated based on the future value of the revenue lost between 2012 to 2021 - which is, to say the least, a very unusual way to calculate lost income. And, again, this number assumes static scoring, which is not necessarily a correct assumption.
posted by gd779 at 7:50 AM on June 9, 2006

To put it another way, the current per capita impact of the estate tax is around $79 per person per year. Repealing the estate tax means that each american gets, on average, that amount of money back. That's not bad but, really, aren't there bigger things to fight about?
posted by gd779 at 7:53 AM on June 9, 2006

Exactly. And that isn't an argument really being made here (or elsewhere). That it isn't is telling. So much for the libertarian right.

What a bunch of bullshit. The fact that the argument isn't being made here only confirms that MeFi is largely populist, and the argument that it's not being made elsewhere is false.

And the arguments against the estate tax are simple:
1. The heirs may not "deserve" the money, but neither does the government.
2. The working rich have replaced rentiers at the top of the income distribution.
3. Compliance costs and avoidance schemes make the tax woefully inefficient.


Now, of course, those that argue for the repeal of the estate tax and the preservation of the stepped-up basis are looking for special treatment.
posted by Kwantsar at 7:54 AM on June 9, 2006

gd: anything on a per-capita basis is meaningless. $70 per-capita is $200 per tax-payer, and as a middle-class taxpayer it's more like $300 to me.

kwantsar:

1. Taxes have to be collected somewhere. I' rather see unearned income taxed rather than wages or capital returns.

2. The Estate Tax doesn't tax the "working rich".

3. BFD.
posted by Heywood Mogroot at 8:13 AM on June 9, 2006

Heywood:

1. How you can write that and call yourself a Georgist is a mystery. Income from the fruits of one's labors is most certainly "earned," and transferring some of that income to your kid doesn't make it less so.*

2. No, indeed, but the claim that the Paris Hiltons of the world are increasingly running amok with their unearned wealth is empirically false, and the "problem" of born-lucky rentiers controlling piles of wealth is diminishing.

3. You know perfectly well that all the estate money that chases accountants, advisors and attorneys represents a massive deadweight loss, and thus makes us all poorer. Your glibness is unbecoming, and "BFD," frankly, is beneath you.

*A necessary corollary of Georgism, as I read it, is that only wealth or income resulting from ownership of economic land is illegitimate.

I'm sure you're just heartbroken to learn that I think you miserably fail the ideological purity test, but my guess is that Henry George would gladly spit in your eye. As far as I can tell, you're just a class warrior who has found something neat upon which to levy a tax.
posted by Kwantsar at 8:52 AM on June 9, 2006

To put it another way, the current per capita impact of the estate tax is around $79 per person per year. Repealing the estate tax means that each american gets, on average, that amount of money back.

In sales, that's called the reduction to the ridiculous. And what's being sold is snakeoil.

That's not bad but, really, aren't there bigger things to fight about?

Yes, there are bigger things to fight about than heiress tax relief.
posted by edverb at 8:55 AM on June 9, 2006

"The Rich" may hate the bottom of the pyramid and the freeloaders in that location, but if there weren't getting $5k a year in food, what would they do in response to emply bellies?

If it was me? Revolt. Smash some grocery windows and feed my family.
posted by NationalKato at 9:14 AM on June 9, 2006

My feeling about this is that if the dead are so upset about unjust double-taxation, they should lobby their representatives like anyone else, and everyone else should just shut up about it. Seems to me that a lot of people on this board are speaking on behalf of the dead, but I wonder how many have had even cursory conversations with them. I happen to know for a fact that a number of powerful deceased people -- Andrew Carnegie, Adam Smith, Thomas Paine, and Theodore Roosevelt to name a few -- actually support a heavy estate tax. Could we hear from some dead people who oppose this thing?
posted by haricotvert at 9:34 AM on June 9, 2006

ME NO WANT ESTATE TAX
ME WANT BRAIINNNSS
posted by sonofsamiam at 9:36 AM on June 9, 2006

Only estates _above_ these values are taxable

And the numbers given refer to an amount called the "taxable estate," which amounts to the gross estate minus anything left to the spouse and anything left to charity. So if I have a $10 million estate and I bequest 1/2 of the estate to my spouse (which I can't, being gay and all, but, hypothetically speaking), so I bequest 1/2 of the estate to my spouse and $3 million to my foundation and various other charitable groups. That leaves $2 million, tax-free, to be distributed among my other heirs. For purposes of illustration, say I have 4 heirs: each gets half a million, tax free.

Or let's assume an estate of $100 million. I leave half to my surviving spouse, then say $20 million to the foundation (etc). That leaves $30 million to be distributed among my four heirs. The first $2 million is tax free. The remaining $28 million is taxed at a marginal rate of 46%, so approximately $13 million will be paid. That leaves $15 million, plus the untaxed $2 million, a total of $17 million to be distributed among the four heirs, or a little over $4 million each.

So from the $100 million estate, this is the distribution:

$50 million to surviving spouse
$20 million to charity
$17 million to other heirs
$13 million to tax.

The effective tax rate on the gross estate, then, is only 13%.

And all this is overlooking the fact that it is relatively simple to reduce the gross estate over time through gifts.
posted by La Cieca at 10:05 AM on June 9, 2006

The effective tax rate on the gross estate, then, is only 13%.

Nice sleight-of-hand there. You can leave the whole thing to the spouse, and claim that the effective rate is zero. Which works great if your spouse is immortal. You could also say you're leaving the whole thing to charity, and again claim that the effective rate is zero. In fact, by the same logic, you could claim that the effective federal income tax rate is zero.

Your $11,000 per head annual gift exemption is certain to put a big dent in your hypothetical $100 million estate, as well.

Some first-rate sophistry you've got going.
posted by Kwantsar at 10:19 AM on June 9, 2006

hey Kwantsar, you'll have to get your own walled compound, because the only way you'll be sharing in my (virtual) walled compound is through all the taxes i'll be paying. and when you get your way and i don't pay those taxes... good luck with that.
posted by joeblough at 11:28 AM on June 9, 2006

Your $11,000 per head annual gift exemption

So, I have a spouse, four children, a dozen grandchildren, and (for the sake of argument) eisght great-grandchildren. And I gift each of them $11K annually for, say, 15 years prior to my death. A little over $4 million, which admittedly does not put much of a hole in $100 million, but it does transfer a million dollars per family from me to my heirs without tax penalty.

And, of course, assuming the value of the estate I left my spouse remains static until his death, he's going to leave a $50 million estate with another $2 million exempt, and the remaining $48 million taxed at 46%. So there's $26 million now left to spread among those lucky 4 heirs, whose haul this round is $8 million each, for a grand total of $13 million per.

$13 million of unearned and untaxed income, that is, which I think is a very nice reward indeed for choosing one's parents so carefully.
posted by La Cieca at 11:46 AM on June 9, 2006

have you guys seen the frontline about the marketing guy who is responsible for all of these republican talking points/memes?

Yes. His name is Frank Luntz. Here's the interview.
posted by homunculus at 12:39 PM on June 9, 2006

Speaking of the Republican propaganda network:

Remember how Republicans stole the last election?

Yeah, they are trying to take the election security ball from the Dems, who only have it by default anyway.

The #1 threat to election security? You guessed it.

Unregistered Mexicanofascist voting illegally.
posted by sonofsamiam at 12:47 PM on June 9, 2006

“Maybe we need people to go around collecting H20 from our corpses. Because that belongs to the tribe.” -posted by bardic

Doesn’t invalidate the concept.

Plenty of cooperation in natural systems we can imitate - is there some reason biodiversity isn’t one of them?
posted by Smedleyman at 12:48 PM on June 9, 2006

3. You know perfectly well that all the estate money that chases accountants, advisors and attorneys represents a massive deadweight loss, and thus makes us all poorer.

...assuming that, of course, that those said-same accountants, etc... just take their earnings and make a donation to a tax free volcano, instead of feeding their children and buying nice houses - You know, the same sort of thing that would be done with the money otherwise.

What was that you were saying about sophistry?
posted by Orb2069 at 1:32 PM on June 9, 2006

You apparently don't know what a deadweight loss is, Orb2069.

The best definition I could find without looking too hard is "a waste of resources that could be averted without making anyone worse off."

For example, say that your job is to empty and fill the same ditch all day. The fact that you're feeding your family with your salary doesn't mean that moving dirt around with no purpose isn't a wasteful pursuit.

(Almost?) All taxes create a deadweight loss of some sort (I don't think that even Krugman or Stiglitz would disagree), and a complex, distortionary tax that offers large incentives for avoidance is sure to be an exemplar of how to create a deadweight loss.

It would be nice if you had the first clue about what you're talking about before you accuse me of sophistry.

I think you've also managed to commit the broken-window fallacy, too
posted by Kwantsar at 2:16 PM on June 9, 2006

This is some funny logic.

So if a person uses their brains and skill to provide value to society, and get paid for it, they still 'owe' society an outstanding debt? Hasn't the free marketplace determined the value of their contribution at the time it's exchanged for dolla billz ?

Or can we make the sweeping generalization that society got the raw end of the deal or was being overly generous and needs to recoup?




>>The super rich owe their fortune in a very real way to the society which allows them to get so rich, and the society deserves to get a part of this back when they are dead and no longer have a use for it.
posted by toastchee at 2:45 PM on June 9, 2006

So if a person uses their brains and skill to provide value to society, and get paid for it, they still 'owe' society an outstanding debt?

And how is "having a rich mortal parent" a case of using your "brains and skill to provide value to society"?
posted by yoink at 3:56 PM on June 9, 2006

If you really want to give your money back to the state when you die, rich or poor, die without a will.
posted by bardic at 4:00 PM on June 9, 2006

Hoverboards Don't Work On Water - since when has the estate tax ever decreased savings? WHo has ever said, "well if I can't pass every penny on, the nest egg is useless?"

Moreover, since when have decreased savings ever hurt the economy? Decreased savings mean more spending, more churning, and faster economic growth. Not that this really matters here, because the estate tax doesn't really affect savings banks at all.
posted by Navelgazer at 4:48 PM on June 9, 2006

So if a person uses their brains and skill to provide value to society, and get paid for it,

You have a funny idea about how people get rich. People who use their brains and skill earn in the range of about $0 to $350,000/year. Everybody making over that did it by fucking somebody else over.

(Tongue in cheek, but really -- what value do corporate raiders give to society? They rip companies to shreds, pocket the value accumulated by decades of other people's work including things like pension funds, leave them tottering with debt and even having to pay the costs of their own rape.)
posted by George_Spiggott at 5:00 PM on June 9, 2006

Everybody making over that did it by fucking somebody else over

economists have a fancy term for that, "collecting economics rents"...
posted by Heywood Mogroot at 5:20 PM on June 9, 2006

Since when has the estate tax ever decreased savings? WHo has ever said, "well if I can't pass every penny on, the nest egg is useless?"

This, too, is flat wrong. Reasonable people can disagree about the size of the effect, but when you tax something, at the margin, you get less of it.

If one gets X benefit from spending his money, and he gets 2X benefit from giving another dollar to his kids, and his marginal estate tax rate is 55%, then he spends his nest egg. Now, there exist certain people who dislike paying taxes because they doesn't want their wealth to go toward building bombs and killing innocent people; they'd rather die totally broke than give one nickel to the feds. For your statement to be true, you have to assume that there is no one who is like the people in my examples, or that there exists some kind of an opposite force-- people who love working so they can leave their estate to the government so it can build a better war machine. Know anyone who works or saves so that he may pay more taxes?

Moreover, since when have decreased savings ever hurt the economy? Decreased savings mean more spending, more churning, and faster economic growth. Not that this really matters here, because the estate tax doesn't really affect savings banks at all.

Wrong, wrong, wrong. Decreased savings in the long run result in slower economic growth. Y=A*K^0.3*N^0.7. Look it up.
posted by Kwantsar at 5:23 PM on June 9, 2006

How you can write that and call yourself a Georgist is a mystery.

I'd trade the Estate tax for a solid LVT regime in a second. But those hit by the Estate tax /really/ have the hate going on LVT, for obvious reasons.

Here's what I wrote, btw:

"I'd rather see unearned income taxed rather than wages or capital returns".

As a left-libertarian/Georgist I suspect /inherited/ wealth is not necessarily such a good thing (vis-a-vis near-confiscatory estate taxation), as it reduces the meritocratic nature of society (and I believe it moderate forms of redistribution (subsidized health care, transportation, education, child-care -- basically anything that makes or keeps person a productive member of society) to both increase class mobility and make life for the lower rungs -- the people who are actually doing the real work in this nation -- suck a little less). cf. T. Roosevelt and the rest of the progressives of that long-lost era. At any rate, inherited wealth is by definition unearned.
posted by Heywood Mogroot at 5:31 PM on June 9, 2006

Tongue in cheek, but really -- what value do corporate raiders give to society? They rip companies to shreds, pocket the value accumulated by decades of other people's work including things like pension funds, leave them tottering with debt and even having to pay the costs of their own rape.

George_Spiggott, I don't think that all forms of greenmail are legitimate, and I think that a lot of the tricks that management of targeted companies pull are preposterous. That being said, I'm not sure anyone who would ask that question understands how much value was destroyed by incompetent management in the 1970s and 1980s. The value that raiders serve is seperating powerful idiots from managerial positions in which said idiots turn dollars into pennies. This book is largely biographical, but at least 100 of the 500 pages discuss exactly what it is that the old-school corporate raider did.
posted by Kwantsar at 5:39 PM on June 9, 2006

At any rate, inherited wealth is by definition unearned.

All those fucking widows with their half-unearned houses.
posted by Kwantsar at 5:48 PM on June 9, 2006

All those fucking widows with their half-unearned houses

'wife is the heir' ... 32 references, most talking about Kerry's wife and ketchup.
posted by Heywood Mogroot at 6:00 PM on June 9, 2006

This is a bit of a derail, but the real question shouldn't be "how can we get more tax revenue for the government?" but "how can we get the government to do the things that it should do with the money it already has?"

States typically charge sales tax, property tax, and many charge income tax. The feds charge income and capital gains taxes. Assuming, for a minute, that capital gains are a legitimate thing to tax, why should state or federal government need any more revenue than that?

The answer is plainly that it shouldn't. Government doesn't need more money, it needs to learn how to spend the money it has now more effectively. Your civic duty isn't to hand over every last cent to Washington, but to help develop ways to address the issues we have with the funds we have.

It isn't an easy problem to solve, but real problems rarely are.
posted by b1tr0t at 6:03 PM on June 9, 2006

Your civic duty isn't to hand over every last cent to Washington, but to help develop ways to address the issues we have with the funds we have.

Why? I mean--sure, it would be peachy if the government spent its money only on things that I happen to think are worthwhile and not on a host of other things, but we already have an institution for deciding "which things are worth spending the people's money on." That's the government.

So, given that the government--which the people elect--has decided in its collective wisdom that all these things need to be funded, why is it so clearly our "civic duty" to argue against that, and not our "civic duty" to ensure that those decisions are in fact enacted and adequately funded?

You enumerate a number of different sources of revenue in your post (sales tax, property tax, income tax, capital gains tax) and say "surely that's enough"! But that's self-evidently absurd. What if those taxes were all set at a rate of 0.001%? Would that "surely" be enough? If we doubled the rate of all of those taxes without adding any other sources of revenue, would you support that?

It never ceases to amaze me that people think that setting the appropriate rate of taxation is somehow a matter of "principle." If you oppose all taxation of any kind, then you're dealing with principle. If you accept that the government should be able to raise taxes from the people at large, then all you're left to argue is the pragmatic value of given taxes, and certain rates. There's no "principle" left at issue.
posted by yoink at 6:51 PM on June 9, 2006

The federal income tax rate alone is around 30%, state rates run from 0-12%, sales taxes often hover around 7-10%.

If the state needs more than 30% of its citizen's income, you need to rethink the state.
posted by b1tr0t at 7:05 PM on June 9, 2006

If the state needs more than 30% of its citizen's income, you need to rethink the state.

That pretty much proves my point. Where does the magical "30%" figure come from? So a state that demands 35% of it's citizen's wealth is an evil tyranny, but one which demands 25% is clearly not adequately performing the duties of good governance? These are figures plucked out of the air. We all agree that taxes can be "too high" and that they can be "too low"--settling on what actual figures correspond to those assessments is a matter of political negotiation and experiment. It's not something that calls for the kind of silly grandstanding represented by a label like "death tax."
posted by yoink at 10:04 PM on June 9, 2006

i think taxes should be as value neutral as possible and i don't think a death tax at a signifcant rate in my country fulfllls that criteria.

take this very simplistic scenario:

a man is presented with two choice for each dollar he earns after tax. he can either spend it or bequeath it to his descedants.

in my country if he spends it he pays 10% sales tax. he gets to transfer around $0.91 out of each dollar.

if there was a 50% inheritance tax he only gets to transfer $0.50 out of each dollar.

so our man is effectively paying 5.5x the tax if he chooses inheritance over spending. i know it is impossible for a tax system to be value neutral but this clearly fails the test of being as value neutral as possible.
posted by drscroogemcduck at 11:58 PM on June 9, 2006

So I looked up Y=A*K^0.3*N^0.7 and you're right. I was wrong. Now that I read over your numerous numbers and symbols... no... wait...

Oh, right. Good thing I was once awarded as the #1 economics student in Oklahoma, which isn't very prestigous, but still allows for me to read and know when someone is simply throwing out theorums to confuse an issue. Which Kwantsar is doing here.

For those who didn't look it up, Y is "some production function," A is a technology measure, N is labor, and K is capital stock. If this doesn't seem to have any frame of reference to Kwantsar's statement, that's because it doesn't. This formula is about labor vs. technology and capital investment in regards to what a factory line may produce. It has nothing to do with savings, but I guess on "teh interwebs" the accountability is low enough to just shout out numbers and hope that proves your point.

There is, of course, an off-chance that Kwantsar was referring to K as savings, but even this makes no sense, as the capital stock in this formula is being spent on the production at hand. Again, he is wrong, and knew he was wrong, but simply hoped to confuse the issue. I'm startled that he would need to resort to such methods to defend a conservative pet-project.

I won't give any more creedence to his theorum. It is a good, if outdated, method of determining the value of a production line in respect to other production lines (in the 1920's) but anyone who wants to google it will immediately see through the bullshit.

Kwantsar, if you wanted an argument, it's that savings benefit the individual, who needs them in order to best divest their holdings, and to best support themselves and their family, but that doesn't mean that they are good for the economy. Any economist will tell you that when tax cuts are legislated, the lawmakers are hoping that the extra money will be spent by the people, as that is what spurs economic growth. Saving, or paying down debt, just takes that money (which must be considered constant by any monetary standard) and places it outside of the butter-churn, and as a result there is less money in the economy as a whole. This is why government surplusses are disastrous, as the money which could otherwise recirculate is held up until need for further use, and the people suffer for the lack of it.

Saving has an obvoius purpose, as the individual requires it, but it's a macroeconomic version of the Prisoner's Dillema (I'll assume that you're familliar with game theory instead of presuming your ignorance and giving you an irrelevant thread to spend your time looking up.)

Think of it this way, if every dime were saved, nothing would be spent, and money would be worthless. If every dime were spent upon receiving it, the economy would be constantly churning. Saving is neccesary for individuals, but hurts the whole.
posted by Navelgazer at 12:41 AM on June 10, 2006

And for what it's worth, I do realize that the majority of savings become long-term saving which help to stabilize the stock marketa and allow for corporations to draw from them when needed, but this does little to prove your claim. When you can give me a relevent formula (again, instead of one that you pulled out of your ass to prove nothing except that you could cite it) which shows that the income of a corporation is, on average, worth considerably less than the value of its shares, and that this somehow promotes economic growth, I'd be glad to see you defend it.
posted by Navelgazer at 12:55 AM on June 10, 2006

Think of it this way, if every dime were saved, nothing would be spent, and money would be worthless.

I think you have this backwards. Money would be worth a shitload if everyone was hoarding it.
posted by drscroogemcduck at 6:05 AM on June 10, 2006

Well, technically speaking, if no one were spending any money at all, the money-based economy would not exist. Hence, if you had a dollar, it would be worthless in an economic sense.

Of course, the rarity of that piece of paper would probably get you quite a few offers to barter for it.

Will you take four eggs for your historic "money" document? ;)
posted by darkstar at 8:21 AM on June 10, 2006

The version of the Cobb-Douglas function that I posted is from none other than Ben Bernanke, who claims that the function explains the relation between outputs and inputs in the economy as a whole, not "about labor vs. technology and capital investment in regards to what a factory line may produce." Anyone who disbelieves me is welcome to email me, and I'll send him or her an electronic copy of the chapter of Bernanke's book that discusses it.

Your further contention, that "the capital stock in this formula is being spent on the production at hand," is also wrong. Capital is not used up immediately in the process of production.

Now, I'm not the one who brought credentials into this argument, but if the number one Economics student in Oklahoma says that what Ben Bernanke has written is "bullshit," well...

Your contention that savings aren't good for the economy is wrong on its face, of course. It's like saying that eating is bad for humanity, because if everyone ate all the time, no one would fuck, and humanity would die out.

Really, Navelgazer, your comments are so confused, it's apparent that you have no earthly idea what you're talking about.
posted by Kwantsar at 11:26 AM on June 10, 2006

Tend to agree. From my understanding, a dollar "saved" is ten later loaned out -- and spent.

One of the top things I want to do in my life is write an accurate, predictive total economics simulation of say 1 million economic agents.

Theory just hurts my head, but simulation can potentially provide some insight into How Things Work.
posted by Heywood Mogroot at 11:37 AM on June 10, 2006

No, I'm saying that decreased savings aren't necessarily bad - agreeably only to a point - but that the estate tax has negligable effect on them.

I appologize for my comments earlier, which were unduly harsh, but I was in the room with a foreign exchange trader who, say what you will about me, absolutely knows what he's talking about. He was defending you a little bit - saying that the optimal savings rate for logn-term growth is higher than the optimal savings rate for shorter-term growth - but still couldn't make heads or tails of how this formula was relevent. For one thing, the capital is being spent, or else it's a meaningless number. (i.e. if I buy a candy bar for $1, that's the transaction, and it doesn't matter to the "production function" whether I walked in there with a five or a twenty.)

Also, the formula was created in the twenties with no way of reflecting shifting ratios of labor cost to materials costs, which vary wildly from nation to nation, and most oddly, can't account for the difference that A, the technology measure, can make in not just labor, but also the in the amount of capital required.

All these are niggling problems, but the point is simply that this formula doesn't convince me. It doesn't account for time, which makes it an odd choice to use to use for an explanation of savings. The capital in this formula must be spent in order for the formula to have meaning, and the formula doesn't care whether it's immediately or eventually. It can only provide a snapshot of a line's production, and not model the amount of capital from Y which is then fed back into K in order to sustain and increase further instances of Y.

Again, I'm sorry about the tone above. Clearly you know what you're talking about, but we might have to disagree here.

Oh, and people can totally eat and fuck at the same time.
posted by Navelgazer at 1:00 PM on June 10, 2006