Should the estate tax be repealed?

[manualman]

I see it this way:

1. Taxes are a necessity unless you are nutty enough to believe that anarchy can work. The argument is not about whether to HAVE taxes, but what kind and how much.
2. Taxing productive activities tends to discourage those activities, so governments need to be very careful not to kill the golden goose and over-tax said productive activities.
3. When you die, you move on to the afterlife with NOTHING except who you are. ALL dead men are penniless. Calling it a death tax is silly. Everybody loses all their money when they die.
4. Children inheriting large sums are essentially lottery winners. You can hardly claim that YOU earned it by virtue of being born to them, eh? It’s an unearned windfall.

Based on the above four things I believe are givens, it seems simple to me to conclude that a hefty estate tax beyond a certain modest estate sum is a smart means of allocating the tax burden in a way that minimizes the economic braking effect that all taxation tends to have. Nobody is going to be discouraged from investing and working hard because the government will take a big chunk of what’s left when they die.

As others have mentioned, the real problem with current policy is the trust fund loophole by which the ultra wealthy don’t pay estate taxes. I say abolish that first, then perhaps increase the threshold a bit at which estates become taxed. In Warren Buffet’s words “Give them enough inheritance that they can achieve anything, but not so much that they can afford to achieve nothing.”

 

[Ridgerunner]

I see it this way:

1. Taxes are a necessity unless you are nutty enough to believe that anarchy can work. The argument is not about whether to HAVE taxes, but what kind and how much.
2. Taxing productive activities tends to discourage those activities, so governments need to be very careful not to kill the golden goose and over-tax said productive activities.
3. When you die, you move on to the afterlife with NOTHING except who you are. ALL dead men are penniless. Calling it a death tax is silly. Everybody loses all their money when they die.
4. Children inheriting large sums are essentially lottery winners. You can hardly claim that YOU earned it by virtue of being born to them, eh? It’s an unearned windfall.

Based on the above four things I believe are givens, it seems simple to me to conclude that a hefty estate tax beyond a certain modest estate sum is a smart means of allocating the tax burden in a way that minimizes the economic braking effect that all taxation tends to have. Nobody is going to be discouraged from investing and working hard because the government will take a big chunk of what’s left when they die.

As others have mentioned, the real problem with current policy is the trust fund loophole by which the ultra wealthy don’t pay estate taxes. I say abolish that first, then perhaps increase the threshold a bit at which estates become taxed. In Warren Buffet’s words “Give them enough inheritance that they can achieve anything, but not so much that they can afford to achieve nothing.”

In the past, the exemption from estate tax was much lower, and caught even a farmer of modest means, thus depriving his children of the ability to follow on as farmers. They, of course, are the ones who best know how. A total waste of a lifetime skill.

I’m not sure what “trust fund loophole” you’re talking about, and perhaps you could explain. Yes, spouses can maximize their exemption to $10.5 million by utilizing trusts, but beyond that, you can’t get much in the way of exemption without a “charitable remainder” or some similar device. A very major way in which the extremely wealthy avoid taxation of their estates is to create private “charitable” (often political) foundations that their heirs control.

 

[Zoltan_Cobalt]

You do realize there is a difference between “economic inequality” and income equality don’t you? The OP said economic inequality. Do you seriously think that the nation is better off when we have great economic inequality? Or is it better off when there is less economic inequality? When I make a little less than I could, and my employees make a little more–and have less economic uncertainty–they are better employees–which in the long run is good for the both of us.

Yes, I know the difference between “economic inequality” and income equality. I read what Krugman said.

What do you consider “great economic inequality”? I ask because I don’t see it.

Our "economic classes (Upper, middle, and lower) are not static. They are very dynamic.
Rich people become poor overnight. Poor people are constantly working their way into the middle class, and people in the middle fluctuate both ways.

Economic inequality could only happen if the opportunity to succeed or fail did not exist.

 

[manualman]

Ridge, it had been my understanding that the ultra-rich generally establish a trust of some sort before they die and limit the rate at which they can withdraw from it. Withdrawals are taxable, of course, but the principle belongs to the trust which legally essentially a person who never dies. When the trustee dies the succession plan kicks in and a new trustee takes over but no estate tax is applied.

Am I mistaken in this understanding?

 

[Sunbreak]

No, there is already enough of an exemption. The estate tax is there in the first place because wealthy people have used loopholes to get out of paying taxes while they were alive, so now let their estate be taxed. Besides, why should the greedy children who did nothing to earn the money be entitled to it?

 

[Zoltan_Cobalt]

No, there is already enough of an exemption. The estate tax is there in the first place because wealthy people have used loopholes to get out of paying taxes while they were alive, so now let their estate be taxed. Besides, why should the greedy children who did nothing to earn the money be entitled to it?

Do I detect a bit of class envy here??

Suppose you had a clock that belonged to your grandparents and you wanted your son to have it after you died…you also have a nice set of dinner china that you want to go to your daughter and her family.

To be fair, both the greedy children of the rich man and your children should get nothing. Right?

 

[Memaw]

Do I detect a bit of class envy here??

Suppose you had a clock that belonged to your grandparents and you wanted your son to have it after you died…you also have a nice set of dinner china that you want to go to your daughter and her family.

To be fair, both the greedy children of the rich man and your children should get nothing. Right?

Give what you want to your children before you die if possible. Is there a tax against giving??? God Bless, Memaw

 

[stinkcat_14]

It would seem to me that the least burdensome tax I could pay is the one I pay after I am dead. If I have a choice between paying now and paying when I am dead, paying when I am dead seems clearly preferable.

 

[Catholic1954]

For the record, Chuck Norris has advocated doing away with the Internal Revenue Service.

We did just fine for over 150 years without the income tax or the IRS; we can make it for another 150 years without either one of them.

 

[Zoltan_Cobalt]

Give what you want to your children before you die if possible. Is there a tax against giving??? God Bless, Memaw

Referring to the government’s attitude toward taxation…Ronald Reagan once said:

“If it moves, tax it.
If it keeps moving, regulate it.
And if it stops moving, subsidize it.”

Gifts are taxable.

 

[sallybutler]

We did just fine for over 150 years without the income tax or the IRS; we can make it for another 150 years without either one of them.

That is because we charged tarifs on all imports. And there were other taxes.

 

[Zoltan_Cobalt]

That is because we charged tarifs on all imports. And there were other taxes.

That’s true, Sally…but why did we really need to have our income taxed?

The Catholic Church meets all of its obligations and provided for hundreds of millions of people world wide…all on contributions.

 

[sallybutler]

That’s true, Sally…but why did we really need to have our income taxed?

The Catholic Church meets all of its obligations and provided for hundreds of millions of people world wide…all on contributions.

Having been raised by an Irish Catholic mother & father – guilt may play a factor (joke)

However, the Catholic Church is not the United States Government, so I don’t see the connection.

 

[Zoltan_Cobalt]

Having been raised by an Irish Catholic mother & father – guilt may play a factor (joke)

However, the Catholic Church is not the United States Government, so I don’t see the connection.

The Catholic Church is a world wide “organization” (aside from being simply a Religion). The Vatican is, in fact, a recognized sovereign nation. While not the United States, it IS a governing body. It is supported by benevolent voluntary contributions. My premise is that a secular government (U.S.) should be able to function on voluntary contributions rather than theft it the point of a gun.

 

[Havard]

Give what you want to your children before you die if possible. Is there a tax against giving??? God Bless, Memaw

Yep, gifts over $14,000 (per giftee, per year) cut into an individual’s estate tax exemption, so as with that farmer example, he can’t just hand his farm over during his lifetime to circumvent the estate tax.

 

[Captain_America]

“Estate taxes” really have nothing to do with estates.

The owner’s dead. He can’t possess property anymore.

It is a tax on an unearned windfall.

 

[Havard]

“Estate taxes” really have nothing to do with estates.

The owner’s dead. He can’t possess property anymore.

It is a tax on an unearned windfall.

I’m not sure I follow your first comment.

In common law countries, like Australia, US, Canada, etc, the word estate does describe the real and personal property which is (or will be) left behind when a person is deceased. I would wager more that people in English speaking countries use it in that context than referring to their plots of lands as “estates”, like Tara or Pemberly. Anyone with a will has an estate, but in my experience very few people have (Thurston Howell III voice) estates.

 

[sallybutler]

The unearned windfall usually refers to the increase in value due to inflation, not to the actual physical properties.

 

[mikekle]

Think about how many different ways they tax you with one vehicle…

Sales tax when you buy the car, tax EVERY SINGLE year based on BB value, tax for the literal license plate, tax for the fuel to operate it, tax for any repairs, parts, maintenance,etc, tax on the insurance we are REQUIRED BY LAW to carry on each vehicle, then when you finance that vehicle…once again, tax on the loan/money, each month!!

GEEZ!!! Can they possibly come up with anything else to tax in regards to a vehicle? LOL

 

[pnewton]

Too late to vote, but absolutely not. Estate tax is one way to fight wealth disparity, which is increasingly an issue of economic justice. Over the last twenty years, the poor in America have stabilized while the wealthiest have become more prosperous. Estate tax is one way to deter or slow economic oligarchy.